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GM Wraps Up Compensation Fund Leaving Many Victims High and Dry

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Last August 2014, General Motors (GM) created a settlement fund to compensate individuals who were injured or killed in accidents linked to the faulty GM ignition switch. Now, about a year later, the fund has completed its review of over 4,300 claims, and has approved payments for 124 death claims and 274 injury claims.

The number of deaths acknowledged by the company is over 10 times higher than it was in February 2014, when GM first started recalling vehicles because of the ignition switch problem. Yet the fund rejected 91 percent of the claims.

GM Approves Only a Small Fraction of the Total Claims

GM has been under investigation by the National Highway Traffic Safety Administration and the Justice Department for their mishandling of the ignition switch issue. Evidence revealed in court showed that the company was aware of the problem as early as 2004, but failed to take appropriate action to protect the public.

At issue was the fact that the switch could turn to the “off” position without warning, robbing the steering, brakes, and air bags of power. If this happened during an accident, the air bags would not deploy, potentially making the accident much more dangerous for the occupants.

Facing increasing litigation, GM established the compensation fund and hired attorney Kenneth Feinberg to run it. Feinberg’s office reviewed the claims over the past year, and determined which they believed were eligible for compensation. They told USA Today that those claims that were rejected did not show a sufficient connection to the ignition switch as being the cause of the accident or injury.

Not All Plaintiffs Have Accepted Payouts

The fund has made offers of payments for the 124 approved death claims and 275 injury claims. Families of those who died will receive at least $1 million, with GM having set aside $625 million to cover all the claims. So far, 325 of the plaintiffs have accepted the payouts. Eight have rejected them, and 65 remain undecided.

Those who accept the payments forfeit their eligibility to file a future lawsuit against GM for ignition switch claims. Those who reject the claims can still file separate personal injury lawsuits in court if they wish.

Many Victims Remain Uncompensated

Despite the conclusion of the settlement fund, GM isn’t finished yet dealing with this issue. They face nearly 200 other lawsuits related to the ignition switch problems in both the U.S. and Canada. All federally filed cases were consolidated into the Southern District of New York in June 2014, and are currently proceeding under Judge Jesse M. Furman.

It’s also unclear how many people may have been affected by the problem. Many may not have filed claims through either the compensation fund or in court because they lack supportive documentation to prove their cases.

It seems that some injury claims were rejected, as well, simply because the victims were not hospitalized. Neck and back injuries often show up months after the accident, but even if victims ended up in surgery later, at that point it would be more difficult to link the injury to the GM vehicle accident.

A decision is believed to be forthcoming soon from the Justice Department on whether to charge GM for delaying recalls. The company may be facing additional fines, as well.