Ignition Switch Defect in GM Cars Results in Massive Compensation Fund
- Tree of Knowledge Research
- Jun 1, 2015
- 3 min read
January 31, 2015 marked the last day for victims and their families who were injured by an ignition-switch defect to submit claims to General Motors (GM). GM established an uncapped victim compensation fund to handle the thousands of potential claims related to injury or death caused by a faulty ignition switch. The program began accepting claims for compensation on August 1, 2014 and in the last six months has reached 4,374 claims with 474 being death claims and 278 being claims of injuries so disabling that they require lifelong care plans.
The notorious defect causes the ignition switch to slip out of its position causing the car to stall, which then disables the air bags, power steering, and brakes – ultimately causing drivers to lose control of the vehicle. Ignition switch defects left at least 51 drivers dead – counting only victims in the front seats who would have otherwise been protected had the switches stayed turned on and the front airbags worked correctly. Between February 25th and April 9th, GM recalled a total of 2.59 million cars related to the ignition-switch defect from models including Saturn Ion, Saturn Sky, Chevy HHR, Pontiac Solstice, Chevy Cobalt, and Pontiac G5. The defective ignition was installed in these car models from 2003 through 2011 despite the fact that evidence of the dangers of this faulty ignition date back to 2004. The New York Daily News reported that in 2004, GM engineers encountered stalls while driving during test-drives of the Chevy Cobalt before the car went to market.
GM admitted to being aware of the defect; however, waited until 2014 to actually notify customers of the consequences of the problem. In addition, the Wall Street Journal reports that GM ordered 500,000 replacement ignition switches nearly two months before it alerted regulators to a defect in the switches. Ironically, GM could have fixed the defective switch for as little as 57 cents per vehicle. Alerting U.S. auto-safety regulators in a timely manner of a potential defect is required under federal law. Due to GM’s delay in informing safety regulators of the ignition-switch defect, GM had to pay a $35 million civil fine last year. GM is suffering major criticism due to these delays and inactivity in mitigating injuries caused by the defects, resulting in numerous investigations, including a criminal inquiry by the Justice Department that is still open.
More than three-dozen current and former GM employees are set to be deposed or have been questioned as part of a series of lawsuits consolidated in the federal district court in New York. Raymond DeGiorgio, a former GM engineer, is scheduled to be deposed on June 18 and June 19 in Detroit concerning the deaths caused by the defect. Mr. DeGiorgio is one of 15 employees who GM let go due to the failure of the company to recall the vehicles within the first 10 years of being aware of the defect. According to the Wall Street Journal, “Mr. DeGiorgio approved putting the switch into production with a deviation from GM’s specifications, then later green-lighted changing the design without formally telling anyone,” -- this may have complicated GM's ability to discover the defect.
The compensation fund only accepts claims related to physical injury or death from the GM defect, which it categorizes as: deceased; Category one (quadriplegia, paraplegia, double amputation, permanent brain damage, or pervasive burns); or Category Two (injuries that required a hospital visit within 48 hours of an accident). Although the compensation has not been capped, GM has set aside at least $400 million to cover the costs, including at least $1 million payout for eligible death claims.
Setting up the fund has been a strategic move for GM – allowing victims to settle and avoid saving them the trouble of long, drawn out, expensive court cases while at the same time keeping GM from image-damaging litigation. According to the New York Times, the independent administrator of the program has made 93 payment offers to people who were seriously injured and to families of those who have died and these offers have been accepted. So far, 2,094 claims have been ruled ineligible, leaving more than 3,000 claims still needing review.
