Settlement Offers in Disguise: GM's Compensation Program for Ignition Defect

A major auto recall is underway, accompanied with an attempt to settle numerous injury claims. This recall is of particular interest to our law firm because the defect has reportedly claimed numerous lives and, beyond typical recall remedies, GM is extending settlement offers to those affected. According to our local ABC affiliate, in the first nine days of the recall period (which will last until the end of the year) the team administering General Motors' response received 125 claims, including 63 alleging death, although whether or not the claims are truly valid and eligible for payment.

Ignition Switch Defects Lead to GM Recall

The Wall Street Journal provided a bit more detail on the recall which involves a whopping 2.6 million cars. The issue is a faulty ignition switch that could slip from the "on" setting causing the vehicle to stall and disabling the air bags. According to the WSJ report, GM was aware of the underlying defect for more than a decade but only issued a recall to repair the cars until February. The report also suggests a new ignition-key problem arose this week that could lead to window-switches on certain SUVs catching fire.

GM's "Compensation Plan"

Payouts under GM's compensation plan and are expected to range from $20,000 to several million dollars. Claimants would need to show they were injured or their loved one died in a crash that involved a GM vehicle on the recall list for the defective ignition switch. A police report or similar trustworthy record would need to show that the air bags failed to deploy. Fatalities would, under the plan, automatically qualify for $1 million in pain and suffering damages beyond other damages

Kenneth Feinberg has been hired by GM to oversee the claims and compensation program. He noted that 65 of the first 120 claims involved families who allegedly lost a loved one in accidents caused by the defect, another dozen involved catastrophic injuries, and the remainder involved hospitalizations purportedly tied to the GM defect.

Feinberg added that the auto giant is just beginning to review the claims and expects it will take until after Labor Day to announce initial conclusions regarding eligibility. Ultimately he hopes that once an application is ruled eligible, payment can be made within 90 days on simple matters and 180 days for complex cases.

Recalls and the Right to Compensation for Injuries and Wrongful Death

The National Highway Traffic Safety Administration publishes a booklet explaining the recall program and its safety goals. Recalls can be issued when: a) a vehicle or piece of equipment fails to meet Federal Motor Vehicle Safety Standards or b) a safety-related defect exists. Manufacturers can remedy a defect by repair, replacement, or refund.

Beyond the vehicle fix, victims injured by a defect that is the subject of a recall have the right to compensation for their injuries, just like any other wrongfully injured party. A program such as GM's will likely require waiving other legal claims in return for the injury compensation payments. They are essentially settlement offers and, as always, we would urge the injured and the grieving obtain legal counsel before signing anything.

If you were injured or lost a family member in the Florida Panhandle region due to faulty GM ignition switches or another recall-related defect, call our law firm. We will work with you to get the compensation you deserve.

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