Channel | Auto Industry News

GM Gets Deadline Flurry of Compensation Claims

The Jan. 31 deadline for claims to General Motors’ victim compensation fund spurred a flurry of 1,100 new filings, reported The Detroit Bureau.

The rush brought the total number of filings to 4,180, including 455 death benefits: an increase from 338 the week prior. Claims for the most severe injuries rose to 278, up from 224 a week earlier, and filings for less severe injuries jumped to 3,447 from 2,508 a week earlier.

The fund is administered by Kenneth Feinberg, an attorney whose firm oversaw similar funds related to the BP oil spill and other issues, who said in a radio interview yesterday that he expects the total number of filings to rise a bit more because any claims post marked for Jan. 31 will be accepted.

Last week, two U.S. Senators – Richard Blumenthal (D-Conn.) and Edward Markey (D-Mass.) – asked GM to extend the deadline because they believed the claimants did not have enough information to make a decision on whether or not to file. The automaker declined. It would have been the second extension of the deadline as Feinberg convinced the company to extend the original Dec. 31 deadline by a month.

Feinberg said he believed the second extension was unnecessary and if someone didn’t know about about the deadline they were “living under a rock.” Georgia attorney Lance Cooper, whose firm submitted 45 claims to the fund, including 20 for deaths, told the Detroit News he felt the number of lawsuits agains the automaker would rise because the of the failure to extend the deadline. Cooper believes potential claimants should have had a year to file.

The lawsuits may come anyway. The U.S. Bankruptcy Court is considering allowing suits to be filed against the automaker, which was formed out of bankruptcy, despite the new company’s liability shield. The company is not using the shield against those who filed claims with the fund.

Thus far, Feinberg and his team have approved death benefits for 51 people, which is up from the initial 13 deaths attributed to the problem. There also have been eight claims for serious injuries approved and 69 for lesser injuries. The amount of the benefit varies upon the circumstances, but each death benefit recipient receives at least $1 million.

The fund, which could pay out as much as $600 million, was established by GM last year for victims and their families who were killed or injured as a result of the company’s faulty ignition switches. The switches could toggle out of the “run” mode in to “accessory” mode cutting off the vehicle’s power steering and brakes as well as shutting off its airbags.

Ultimately, GM recalled nearly 2.6 million of the vehicles – some of which were a decade old – last year and made multiple appearances before Congressional committees and is subject to a variety of lawsuits as well as an investigation by the Justice Department.

A federal bankruptcy court is deciding whether to let claims proceed. General Motors Co., which was formed in a government-sponsored sale of assets from its predecessor’s 2009 bankruptcy reorganization, has said it will not invoke its bankruptcy liability shield in the case of injuries or deaths to avoid paying claims, but is fighting other claims made by owners of vehicles for economic losses.

A hearing is set for Feb. 17 in U.S. Bankruptcy Court in New York on the issue. If GM wins, victims of crashes before the restructuring likely could not sue GM.

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