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August 27, 2014

US: Compensation claims against GM continue to rise

The number of deaths said to be associated with General Motors’ ignition switch fault have reached 100 and are among 284 compensation claims made against the company.

The number of deaths said to be associated with General Motors ’ ignition switch fault have reached 100 and are among 284 compensation claims made against the company.

GM’s compensation fund began accepting applications for funding on 1 August and deputy administrator Camille Biros told the Detroit News it has received 184 claims for physical injuries and 100 for deaths. The fund has not determined if the deaths, considerably more than the 13 linked to the issue by the carmaker, are eligible for compensation.

Once substantiated, the fund aims to make compensation decisions within 90 days for simpler claims and 180 days for more complicated ones. Applications close on 31 December.

The newspaper said that many of the claims have been mass filings sent electronically by lawyers representing victims linked to GM’s recall of 2.6m Chevrolet Cobalts, Saturn Ions and other cars that have since been recalled for faulty ignition switches. Some have said they plan to file hundreds of claims related to the defect that can allow the key to inadvertently turn off the engine, disabling power steering and air bags.

GM said, as of last week, it had repaired 881,652 of the cars and will have made enough replacement switches to repair all 2.6m vehicles — 2.2m in the US — by October. The carmaker has set aside US$400m to pay claims but said the total could hit US$600m.

The company has recalled a record 29m vehicles this year in 66 separate campaigns. GM said it knows of 95 class-action suits claiming owners have been economically harmed by the recalls. Compensation is being sought for the diminished value of vehicles along with punitive damages. GM is fighting those claims and the victims fund offers only compensation to people injured in crashes as a result of the ignition switch defect.

The embattled carmaker faces investigations by the US Attorney’s Office in New York, aided by the FBI and a grand jury, the Securities and Exchange Commission, 45 state attorneys general and Congress. The Orange County, California district attorney has sued GM under state consumer protection statutes for economic damages as well as civil penalties and punitive damages. GM also faces shareholder lawsuits and suits connected to other ignition issues in other recalled vehicles.

Among the issues federal prosecutors are investigating is whether GM committed bankruptcy fraud by failing to disclose ignition issues at the time of its restructuring and if GM lawyers failed to disclose the issues to the National Highway Traffic Safety Administration. The company has fired 15 employees following an internal report which found that a pattern of “incompetence and neglect” led to the failure to recall the vehicles for nearly a decade.

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