Next Score View the next score

    GM’s payouts to start at $1m for deaths

    No cap on awards for victims; firm seeks to avoid suits

    Compensation expert Kenneth Feinberg will administer General Motors’s plan for victims.
    Alex Wong/Getty Images
    Compensation expert Kenneth Feinberg will administer General Motors’s plan for victims.

    WASHINGTON — A $1 million starting point for each death anchors the formula to pay families of those who died in accidents caused by a defective ignition switch in General Motors cars, under a plan unveiled Monday by a compensation expert hired by the automaker.

    The plan, disclosed by Kenneth R. Feinberg, is broad and inclusive and seems certain to account for deaths beyond the 13 that GM has publicly linked to the defect.

    There is no cap on the amount of money GM has agreed to spend on victims’ payments, Feinberg said, and the company will not invoke its protection from liabilities involving incidents before its July 10, 2009, bankruptcy restructuring agreement.


    Under Feinberg’s formula, families of those who died are entitled to at least $1 million, and added to that will be a calculation of lifetime earnings lost and $300,000 for a spouse and for each dependent.

    Get Talking Points in your inbox:
    An afternoon recap of the day’s most important business news, delivered weekdays.
    Thank you for signing up! Sign up for more newsletters here

    In a hypothetical example given by Feinberg in an interview, the family of a 25-year-old married woman with two children who was earning $46,400 a year at the time of her accident would receive $4 million.

    People with life-altering catastrophic injuries could receive considerably more. A child who became a paraplegic as a result of a crash could potentially receive a payout in the double-digit millions, he said, based on a lifetime medical care plan, lost earning power, and other exceptional factors.

    The broad protocol, which provides for payouts even for accidents that have not yet happened (crashes through Dec. 31, 2014, are eligible) could cost the company possibly billions of dollars but is an important step toward restoring public trust. Mary T. Barra, GM’s chief executive, has called it the company’s “civic duty” to compensate victims.

    In determining who is eligible, Feinberg has come up with more flexible criteria than the standards the company had been using to determine victims. For example, victims of rear and side impact crashes are potentially eligible, he said.


    Claims may be filed starting Aug. 1 until Dec. 31. The first checks are likely to go out in the fall, and Feinberg and his associates said they hoped to issue the final payments by the middle of next year.

    That element of speed and certainty, GM hopes, will lead victims to seek relief through Feinberg’s program rather than through the courts. But, in a nod to the many plaintiff’s lawyers he consulted in developing the plan, Feinberg said victims do not have to forgo their right to sue to file a claim. It is only if they agree to accept the money from GM that they waive that right.

    Feinberg, a Massachusetts native, has overseen funds set up to compensate victims of the Sept. 11, 2001, terrorist attacks and the Boston Marathon bombings.