In a previous post on this blog, I discussed the growing ignition switch scandal and recall at General Motors. The whole situation brought to light grave issues surrounding employee training and widespread panic within the automotive industry. Now, since we’ve had some time to digest the information that has surfaced since the scandal broke, I would like to provide you with an overview to date and an update.
Scandal in Review
For the better part of this year, General Motors has been embroiled in scandal. It began in February, when the automaker recalled thousands of small cars for faulty ignition switches. Those defective switches, it turns out, had been in cars for more than a decade, and they have been linked to numerous road accidents and 13 deaths.
Earlier this summer, as part of its effort to manage the crisis, GM launched a compensation protocol to pay back people who were seriously injured, or had lost loved ones, in crashes involving the ignition switch problem. GM tapped lawyer and compensation guru Kenneth Feinberg to manage the General Motors Compensation Protocol.
The list of eligible vehicles, though, is shorter than you might expect. Not all cars with faulty ignition switches, or key rotation problems, qualify for the Feinberg protocol.
Among the vehicles recalled since March, there have been three fatalities in two crashes involving Chevrolet Impalas, [Spokesperson Alan] Adler said.
A major sticking point for people is the fact that GM knew of the issue, yet still sold the faulty vehicles to unsuspecting customers. Writing for Ring of Fire Radio, Joshua Schwitzerlett says this in an August 20th article (emphasis added):
At issue for many people are the faulty vehicle ignition switches that GM was aware of when it continued to sell them to people. The switches would allow the vehicle to randomly shut off at the slightest disturbance. The effect was potentially lethal. If an accident occurred during one of the incidents when the vehicle had randomly shut off, the airbags would not deploy.
Even after the threat was known and the danger was reported within GM, the company didn’t immediately recall the potentially deadly vehicles. Instead, GM engaged in a series of cover ups and minimizations to try and limit letting the public know how much damage had been done.
Update: More Death Claims
107. That’s the number of death claims the GM Compensation Fund has received – not 13 as we originally thought. Fortune’s Ben Geier has more in this August 27th article (emphasis added):
The GM Ignition Compensation protocol has received 107 death claims since it started accepting claims on Aug. 1, a spokesperson for the protocol said Wednesday. Some of those are claims for multi-fatality accidents. The spokesperson did not release how many fatal accident claims were multi-fatality versus a single fatality.
The number of death claims is higher than the 13 deaths that GM has officially attributed to the faulty switch.
The fund started accepting claims on Aug. 1 and will remain open until Dec. 31.
Claims for compensation will be evaluated by the fund’s administrators. They will look at whether the ignition switch was responsible for a severe physical injury, or a death, and Feinberg and his team will decide how much money to award.
GM has estimated the protocol will pay out between $400 and $600 million.
Worse than the lack of employee training we previously reported is the fact that the company withheld this information from the public. I understand that companies need to make money, but doing so at the risk of harm (or even death in this case) to your customers is unconscionable. One can only hope that this is a lesson to other companies and that GM satisfies every legitimate claim so the victims’ families receive some semblance of justice.
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