GM To Pay $1 Million And Up For Defective Switch Deaths
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The formula to pay families of those who died in accidents caused by a defective ignition switch in General Motors cars -- with a $1 million starting point for each death -- was revealed on June 30 by compensation expert Kenneth R. Feinberg. The plan is broad and inclusive, and seems certain to account for deaths beyond the thirteen that GM has publicly linked to the defect.
There is no cap on the amount of money GM has agreed to spend on victims’ payments, Feinberg said, and the company will not invoke its protection from liabilities involving incidents before its July 10, 2009, bankruptcy restructuring agreement. Under Feinberg’s formula, families of those who died are entitled to at least $1 million, and added to that will be a calculation of lifetime earnings lost as well as $300,000 for a spouse and for each dependent.
In a hypothetical example given by Mr. Feinberg in an interview, the family of a 25-year-old married woman with two children who was earning $46,400 a year at the time of her accident would receive $4 million. People with life-altering catastrophic injuries could receive considerably more. A child who became a paraplegic as a result of an accident could receive a payout in the double-digit millions, he said, based on a lifetime medical care plan, lost earning power and other factors.
The broad protocol, which provides for payouts even for accidents that have not yet happened (crashes through Dec. 31, 2014, are eligible) could cost the company financially — possibly in the billions — but is an important step toward restoring public trust. Mary T. Barra, GM's Chief Executive, has called it the company’s "civic duty" to compensate victims.
Hours after the details were announced, General Motors revealed it will stage another six separate recalls covering 7.6 million vehicles sold in the U.S.
That move not only brings to nearly 26 million the number of GM vehicles recalled since just the beginning of the year, but also brings to nearly 39 million the overall tally of vehicles recalled by all automakers operating in the U.S. this year, exceeding the previous annual record by almost 15 percent – and in just six months.
The vast majority – nearly 7.4 million of the vehicles covered by the latest GM recall blitz involve what the automaker describes as "unintended ignition key rotation," a problem in which a driver can inadvertently nudge the key or key ring and turn the car off. If that happens, it will likely lose its power brake and steering assist while the airbags would be disabled. GM says it knows of seven crashes, eight injuries and three fatalities related to the latest recalls, all in vehicles with the ignition key problem.
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