Bankruptcy agreement sends claims from pre-bankruptcy crashes to ‘Old GM’
By Tom Krisher
AP Auto Writer
DETROIT (AP) — The families of 51 people who died in crashes caused by faulty ignition switches in small General Motors cars will get payments from a company fund, but others will have to wait months for decisions on thousands of new claims.
Compensation expert Kenneth Feinberg has also deemed 77 people injured in crashes as eligible for payments from the fund, which received at least 4,180 claims by a Saturday deadline, including more than 1,100 in the past week.
But attorneys, lawmakers and at least one family member say some were forced to settle with Feinberg rather than run the risk that they would not be able to sue GM because of its 2009 bankruptcy agreement.
Camille Biros, deputy administrator of the fund who has worked with Feinberg to compensate victims of the 9/11 terrorist attacks and the BP oil spill, said the last-minute flurry of activity is common in compensation cases. She says the number of claims could rise, because those filed by mail had to be postmarked by Jan. 31.
More death and injury claims are likely to be granted, Biros said, but it could take until late spring to sort through all of the paperwork.
GM was aware of faulty ignition switches on Chevrolet Cobalts and other small cars for more than a decade, but it did not recall them until 2014. On 2.6 million GM vehicles worldwide, the switches can slip out of the “on” position, causing the cars to stall, knocking out power steering and turning off the air bags.
Plaintiff’s attorneys and some lawmakers have said the fund deadline should have been extended because victims do not know yet whether they can sue General Motors Co., the new company that emerged from bankruptcy protection in July 2009.
The bankruptcy agreement sends claims from pre-bankruptcy crashes to “Old GM,” which has few assets. Some lawyers are seeking to overturn that, claiming that GM deceived the bankruptcy court by hiding the switch defect. GM has asked the court to enforce the bankruptcy order, and a hearing is scheduled for later this week.
Ken Rimer, whose 18-year-old stepdaughter, Natasha Weigel, was killed with two other women in a 2006 Cobalt crash in Wisconsin, felt the legal system was stacked against his family, almost forcing them into a “take-it-or-leave-it” situation with Feinberg.
The family, he said, was not sure if the bankruptcy ruling would prevent a lawsuit against the new General Motors. Also, the case could have been caught up in the federal court system, avoiding a hometown jury. Then it would be returned to Wisconsin to set damages, and he says that state has a cap on the amount that can be awarded in a child’s death.
“You either take it or you’re done,” he said. “That was our best opportunity with the cards that we had been dealt.”
Once he got to Feinberg, though, he felt the family was treated fairly. The family has not disclosed how much money it received.
Bob Hilliard, a Texas attorney who represented Weigel’s family and has more than 1,100 other clients suing GM, said there was no way he could advise those with post-bankruptcy crashes to reject Feinberg’s offers.
“You’re not playing at a fair table when you don’t know the consequence of your turning down an award,” he said.
Although Biros said the settlements were comparable to what people would get in a lawsuit, Hilliard disagreed, saying a jury verdict would be substantially higher.
She said that families often want closure rather than worrying about the uncertainty of a lawsuit. She said the deadline was previously extended by a month, and more than 1,600 claims were filed in January, the most of any month.
As of Sunday, the fund had received 455 death claims and 3,447 for injuries. Of the total, Feinberg has decided that about 12 percent, or 482, aren’t eligible for payment. Another 965 have deficient information, while 1,502 were turned in without documentation. Another 1,103 claims are under review, according to a posting on the fund’s website.
People will be given several chances to provide information to back up their claims, Biros said. Most of the denied claims were not models covered by the fund, or the air bags inflated in the crashes. If the air bags deployed, that means the cars had power and the ignition switches were working and not at fault, Feinberg has said.
About 40 claims have been paid thus far, but Biros and GM would not say how much money had been awarded.
Around half the death and injury claims granted so far involve people 25 years old or younger, Biros said. The Cobalt and other small cars with the bad switches were sold largely to younger people because they were inexpensive and marketed by GM as being safe. But experts say younger, inexperienced drivers would be less able to handle a car that had stalled and lost its power steering.
Initially, GM had said at least 13 people had died in crashes caused by the switches, but the company has always said the toll would rise. Legislators have estimated that at least 100 people were killed.
Last year GM set aside $400 million to make payments, but conceded that could grow to $600 million. Compensation for deaths starts at $1 million. GM has placed no cap on the amount of money he can spend, Feinberg has said.
