WASHINGTON — A $1 million starting point for each death anchors the formula to pay families of those who died in accidents caused by a defective ignition switch in General Motors cars, under a plan unveiled Monday by a compensation expert hired by the automaker.
The plan, announced by the expert, Kenneth Feinberg, is broad and inclusive, and seems certain to account for deaths beyond the 13 that GM has publicly linked to the defect.
Feinberg said Monday he will begin evaluating victims’ claims starting Aug. 1 and will start to pay damages from a GM fund within 90 to 180 days from when a claim is submitted.
There is no cap on the amount of money GM has agreed to spend on payments, Feinberg said, and the company will not invoke its protection from liabilities involving incidents before its July 10, 2009, bankruptcy restructuring agreement.
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The program provides a sliding scale of payments depending on the severity of injuries or whether a person was killed in a crash linked to the defective switch.
It will range from $20,000 for someone who was slightly hurt to more than $5 million for a 25-year-old who was married with two children and earned $75,000 annually.
Under Feinberg’s formula, families of those who died are entitled to at least $1 million, and added to that will be a calculation of lifetime earnings lost as well as $300,000 for a spouse and for each dependent.
People with life-altering catastrophic injuries could receive considerably more. A child who became a paraplegic could potentially receive a payout in the double-digit millions, Feinberg said, based on a lifetime of medical care, lost earning power and other exceptional factors.
In determining who is eligible for payments, Feinberg has crafted more flexible criteria than the standards GM had been using to determine victims. For example, victims of rear- and side-impact crashes are potentially eligible, he said.
The fund won’t pay for property claims and other types of damages, such as the loss of resale value because a car is one of the models linked to the switch problem. It also won’t cover emotional and psychological injury claims.
The broad protocol, which provides for payouts even for accidents that have not yet happened (crashes through Dec. 31, 2014, are eligible) could cost the company possibly in the billions, but is an important step toward restoring public trust. CEO Mary Barra has called it GM’s “civic duty” to compensate victims.
There are two fixed thresholds for eligibility. The crash must have involved one of the models the company has recalled for the defective switch, including Chevrolet Cobalts, Saturn Ions and others. A complete list is on a website for the compensation program at: www.gmignitioncompensation.com.
Also, there must be evidence that the air bags did not deploy.
The defective switch can suddenly shut down the power in a moving car, disabling air bags and other safety features like power steering and brakes.
If the air bags deployed, or seat belts locked, Feinberg said, “that means the power was on” and the faulty switch was not responsible.
However, Feinberg said he would accept evidence other than definitive black-box proof that air bags had failed and would work with claimants to help find that evidence.
Among the possibilities, he said, were police reports, witness statements, photographs, hospital reports, insurance claims, even warranty and maintenance records that showed the vehicle had a history of unexpected stalls.
Families may choose a different review if they feel they have exceptional circumstances that deserve a higher payment, Feinberg said.
Information from the Los Angeles Times is included.