National Consumers League

GM announces how victims will be compensated


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Kenneth Feinberg arranged compensation for victims of 9/11, those affected by the BP oil spill, and now, he has announced compensation arrangements for those injured or killed by GM’s faulty ignition switch. Feinberg, a guru of compensation, was a 2010 NCL Trumpeter honoree.

Here’s the system he’s worked out – If you can prove your airbag didn’t go off and you were injured as a result, you’re entitled to compensation. Proving that for victims may be difficult, however, Feinberg said he’s talked to the Center for Auto Safety (CAS), plaintiffs’ lawyers, and victims before determining how the payouts would work.

Anyone who lost a family member gets an automatic $1 million payout. Spouses and dependents get $300,000 each. And it won’t matter if the driver was drinking or bore some responsibility for the crash  - that is different from a lawsuit where a jury would hear that evidence.  The mother of one young victim said, “Its hard to see my daughter reduced to a figure.”

I couldn’t agree more. 

These terrible cases of GM’s negligence, including GM lawyers fighting every claim and denying the defect for years, is hard to swallow. The value of the Feinberg approach is that victims don’t have to spend years litigating and proving their cases. It’s voluntary and if you want to sue, you still can. Bob Hilliard, a plaintiff’s lawyer from Texas who has many of the victims cases in a class action, is quoted in the WSJ as saying he thinks these settlements “don’t seem unfair” and that he is cautiously optimistic. Clarence Ditlow of the CAS thinks Feinberg’s fund should include a presumption that if your GM car stalled, your claim is valid.

But one wonders whether the culture of secrecy at GM and so many companies whose products have hurt consumers will really change. Yes, this will cost GM an estimated $7 billion but that becomes the cost of doing business. No one goes to jail, no one is criminally prosecuted. If corporate officials thought they might go to prison for putting dangerous products on the market and then denying responsibility that would change the calculus in my view. For now, it’s good to know that GM is admitting its wrongdoing, it’s good that Mary Barra is talking about a culture change, and most important, it’s good that victims are getting compensation.