We previously reported on the GM recall and the ignition switch problems associated with the vehicles. Now on the heels of one recall, GM has issued another massive recall of 8.4 million automobiles with ignition switch problems. So far this year GM has recalled 29 million cars in North America. The safety repairs are estimated to cost the company $2.5 billion this year and that does not include the payments of personal injury claims.
GM has hired Kenneth Feinberg to develop a settlement matrix for the death and injury claims from crashes caused by the switches. Notably, Feinberg indicated that there was no limit or cap on the amount that GM was willing to pay.
As we discussed previously, the ignition switches in 2.6 million GM compact vehicles sold between 2003 and 2010 were defective and would switch from “run” to “accessory” causing the engines to stall. This can make it difficult to control the car and disables air bags.
During a congressional hearing, secret documents related to the ignition switch problems were unearthed. It is believed that the CEO signed off on an ignition switch change but failed to cite to the part number making it difficult to track. Many have claimed that GM’s actions were a wide scale cover-up.
The settlement matrix related to death cases and personal injury cases. The death cases take into consider age, annual income and the umber of dependents. Either claimants can opt for a quick settlement that will total more than $1 million per death case or they can petition extraordinary circumstances that may warrant additional compensation. One such extraordinary circumstance was a potential $7.8 million award to a 10-year old whose crash injuries paralyzed limbs.
The GM recall has come under fire given that many believe there is evidence that the company knew about the ignition switch problems prior to the recall. In a case that was settled by GM last October, Melton v. GM, a 29 year-old nurse died after an ignition switch flaw. The family settled with GM for $5 million but is now urging the Court to re-open the case. The family is claiming that GM covered up the ignition switch problems and that the GM engineer who designed the switch lied under oath.
One of the benefits of the GM settlement matrix is that it will allow claimants with incidents that occurred before its 2009 bankruptcy agreement to seek compensation.