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GM Close to Establishing Settlement Fund for Ignition Defect Claims

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Individuals and families of relatives injured or killed in an accident involving a defective GM vehicle may soon be eligible to receive payments through General Motor’s compensation plan.

Following the recall of millions of vehicles because of an ignition switch defect that kept some air bags from deploying in car crashes, GM is facing a number of personal injury lawsuits filed across the country. According to the Wall Street Journal, GM is working with an attorney to devise a settlement fund that would offer claimants payments ranging from $20,000 to several million dollars. Victims of wrongful death would automatically receive $1 million for pain and suffering.

GM Delayed in Addressing Ignition Switch Defect

Earlier this year, GM recalled vehicles affected by an ignition switch defect that could result in the ignition turning off indiscriminately, potentially shutting off power to air bags during an accident. Vehicles affected included varying models of Chevrolet Cobalts and HHRs; Pontiac G5s, Pursuits, and Solstices; and Saturn Ions and Skys.

The company implemented the recall this year, but later investigations found evidence that they had been aware of the issue since at least 2004. The company has admitted to about 13 deaths and fewer than 50 accidents where the ignition switch defect was a factor, though a March 2014 report from the Center for Auto Safety estimated the potential deaths to number higher than 300.

The National Highway Traffic Safety Administration (NHTSA) and the Justice Department are currently investigating the company to determine whether they violated any criminal or civil laws.

Details of GM’s Planned Compensation Fund

Claimants wishing to receive payments through GM’s new program would have to prove that air bags on their vehicle did not deploy during an accident. If the air bags did deploy, even if the vehicle was one of those recalled, the victim will not be eligible for payments through this program.

GM plans no overall monetary limit to the fund, and is also planning to offer payments to claimants who already accepted out-of-court settlements prior to the 2014 recall. The company has been working with the Center for Automotive Safety and plaintiff lawyers in coming up with the rules of the plan. The fund will be open through the end of 2014, according to current reports.

Concerns About the Program

There remain some questions as to exactly how plaintiffs are supposed to prove the air bags didn’t go off. It is hoped that the plan will allow for the presumption that if the vehicle did power off, the plaintiff’s claim will be considered valid.

There is also concern that GM may try to “hurry the process along,” and resolve most of the cases before the results of the Justice Department’s and the NHTSA’s investigations have been completed. As their results may influence any claims, plaintiffs’ lawyers are hopeful that GM will allow victims to wait for those results before applying for compensation.

The company has also indicated that it will fight against any lawsuits involving economic damages. GM wants to compensate victims who were injured or killed, but does not plan for the fund to be used for reimbursing car owners for things like depreciation in value of the vehicles or other economic claims.

The U.S. Judicial Panel on Multidistrict Litigation (JPML) is currently considering a potential consolidation of all federal lawsuits dealing with GM’s ignition switch defect.