By on December 14, 2015

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General Motors victims compensation fund is paying for injury claims older than the company’s 2009 bankruptcy and, in some cases, for injuries sustained by drivers who were drunk or weren’t wearing their seatbelts, according to the New York Times.

The newspaper reported the findings by attorney Kenneth Feinberg, who was hired by the automaker to manage the company’s fund to pay for victims of its faulty ignition switch that killed 124 people.

According to the report, 128 claims — roughly one-third of the claims against the automaker — were for injuries before the company’s 2009 bankruptcy. GM fought successfully this year to protect itself from lawsuits against “Old GM.” In April, a judge protected “New GM” from many of those lawsuits.

Nonetheless, Feinberg noted that “New GM” was still paying many of the old claims with a “non adversarial” approach, according to the automaker.

“We faced the ignition switch issue with integrity, dignity and clear determination to do the right thing both in the short and long term,” GM spokesman James Cain told the New York Times.

Feinberg’s report also showed that many claims were paid after evidence had suggested that victims were unbelted, speeding or drunk. According to the report, 124 of the 399 eligible victims weren’t wearing a seatbelt, 151 were speeding and drug or alcohol abuse was found in 68 cases.

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35 Comments on “‘New GM’ is Paying ‘Old GM’ Claims, Even Though They May Not Have To...”


  • avatar
    redliner

    So then the question becomes, is GM paying out of the goodness of their heart or is the fund being managed by incompetents?

    • 0 avatar
      APaGttH

      Because they want this to go away, and they gave this to a third party to be completely transparent and basically ask, “so Mr. and Mrs. Jones, how many zeroes needs to be on this check to make this go away.”

      I know that doesn’t seem logical, especially when you look at how VW, Takata and Toyota handled their respective issues – but this is why in the land of moral equivalency, GM has handled this crisis in an outstanding fashion. One family being paid out the driver of the Cobalt committed suicide by car, note and all, unbelted and speeding. They paid out to that family among other victims.

      Other companies that have successful navigated being caught red handed in deep scandal for reference would be Jack-in-the-Box and their handling of their e-coli debacle. This would be in contrast to Chipotle today that can’t catch a break (hint Chipotle, you have a systemic problem in your food handling protocol, I don’t need a masters in public health to figure that out).

      Does this make GM qualified for sainthood, as a couple of people will likely reply I just suggested – ludicrous. Their actions were reprehensible. Did GM handle this crisis once they were exposed in a positive way, that will be studied for years to come – absolutely. GM has paid out as i understand over 1/2 a billion, and over 90% of claimants took the offer. In this money grubbing, greedy, litigious society can you image over 90% of personal injury lawyers looking at a we don’t even have to go to court offer and telling their clients, “take the deal!”

      Their PR, legal, corporate affairs, and the fund managers were outstanding.

      The business decisions and engineering choices that caused the problem in the first place was complete and total crap.

      VW could learn something here – and I’d like to believe that GM learned something from Toyota on how not to respond.

      And before the usual, “Toyota was framed,” replies fly, I submit for your reading pleasure, TTAC writer Jack Baruth’s write up on the findings around Toyota, and why they were punished by the government.

      https://www.thetruthaboutcars.com/2014/03/the-united-states-government-acting-at-the-direct-request-of-some-union-somewhere-extorts-over-a-billion-dollars-from-toyota-while-in-the-parking-lot-outside-the-justice-department-defective-gm-ig/

      • 0 avatar
        kit4

        Lol this delusion.. The same people who said we were done with recalls, then days later recalled even more are the “outstanding” PR and execs you’re rewarding. Then there’s Bloody Mary going to Congress and having no idea how this could’ve happened, even while being head of “quality” when this was going on. Their actions will be studied for years, all right, about how one of the biggest corporate Rapists in this country got away with killing over 100 people for a defect they knew about. Those GM pay checks must feel good?.

    • 0 avatar
      amca

      Goodness of their hearts, sorta. The claims in fact remain with Old GM. But New GM would get completely and totally crucified in the court of public opinion if they tried to say no.

      There’s an argument possible that the claims were hidden from the bankruptcy court such as to constitute fraud, but that’d be uphill battle for the plaintiffs to win. And it wouldn’t be surprising if Congress got into the act and did something to make New GM pay.

      Either way, it makes sense for New GM to pay up on this.

      • 0 avatar
        28-Cars-Later

        It makes sense depending on the cost. If there were some kind of defect which killed thousands of people and would cost them many billions, they’d be sticking with the legal protection.

        Here’s an interesting thought. Say GM did diesel prior to 2009 like VAG and was caught doing it… would they just pay billions in fines or say “Old GM” did it?

        • 0 avatar
          Pch101

          The principle of successor liability is that the buyer of assets out of bankruptcy does not acquire the liabilities.

          The new GM agreed to assume responsibility for recalls of cars built before the bankruptcy, but not for crashes that occurred prior to the bankruptcy. It’s strictly for PR that the new GM is paying these claims, including cases in which the drivers were partly negligent. From a legal standpoint, there is absolutely no reason for the new GM to pay a penny for those pre-BK incidents.

          • 0 avatar
            DenverMike

            They’re the *same* company though.

            If the new GM tried to weasel out of paying my claim because they’re the new GM, I would sue on the grounds of them not going by the trademark “New GM” or something else.

            Take the good with the bad, or change the name completely. If I buy out the bankrupt Mark-1 Plumbing, the new name is “Mike’s Pluming”. I want none of the “good”, because of the “bad”.

            I’d want no confusion or active Mark-1 warranties/liabilities/etc. Zero!

            And all GM’s car names should change too. Bowtie gone. Dead. Or pay me. They can’t have it both ways.

          • 0 avatar
            Pch101

            You’ve gone full BAFO again.

            The new GM is a completely separate company from the old GM. The fact that you refuse to understand this does not have any impact whatsoever on the legal reality.

          • 0 avatar
            DenverMike

            No I know the rule. Does that mean it can’t be challenged if GM wasn’t so “generous” and paying the claims? If I’m not seeing and overt or a even a subtle name change, GM is still the old GM.

          • 0 avatar
            Pch101

            It’s funny and a bit sad that some of you who post here are so absolutely dedicated to being wrong, no matter what.

          • 0 avatar
            heavy handle

            There’s another legal rule that you two are forgetting about. If paying-out costs a similar amount or less than litigation, then pay. Even if you think you would have won.

            GM’s a public company. They can’t go to their board and say “we will spend hundreds of millions fighting this. We will probably win, but there’s a 30% chance that we will be made to pay a lot more than we can settle for right now.”

            Pay it, get it off the books, move forward.

          • 0 avatar
            Pch101

            The litigation isn’t that costly, as the plaintiffs of the crashes that occurred prior to the bankruptcy have no legitimate claim against the new company.

            They are free to sue the old GM, of course, but that prospect isn’t very interesting to the plaintiffs’ attorneys because the old GM has no money.

          • 0 avatar
            heavy handle

            “The litigation isn’t that costly”

            128 claims, likely in 128 jurisdictions, with any single failure leading to a complete reassessment of all claims? You must be a lawyer if you think that’s cheap.

            If any portion of these cases goes to jury, you have to assume that GM will lose. No legal team can go 128-0.

            Even with a strong legal footing, the only rational choice is to take the hit. You can’t carry that liability on your balance sheet for the next decade.

          • 0 avatar
            Pch101

            They have no claim against the new GM at all, since the new GM is a completely different company.

            The cases won’t go very far, because this distinction is very easy for the new GM to establish. (Denver Mike may be utterly unable to comprehend it, but a judge will.) There’s no case to bring to a jury.

          • 0 avatar
            heavy handle

            Pch,

            It’s never that simple with death and injury trials. The argument that the victim “should have crashed their car a few weeks later” is very unlikely to fly 128 times in a row, in front of 128 different judges, and 128 different juries.

            Never mind that even if they win they loose big in terms of PR.

            It’s not about who is right or wrong. It is 100% a numbers game. GM has figured it out; you haven’t (yet). Settling is cheaper, and it involves less risk. It’s a no-brainer for a public company.

          • 0 avatar
            DenverMike

            As long as they look the same, sound the same, smell the same, they’re the same as far as I need to know before suing “GM”.

            GM is wildly profiting by not changing their name to “Generic Cars” for example. If they did that, then I would be satisfied the old GM is dead and gone, with me out of luck.

          • 0 avatar
            Pch101

            “The argument that the victim “should have crashed their car a few weeks later” is very unlikely to fly 128 times in a row, in front of 128 different judges, and 128 different juries.”

            You don’t grasp the concept of successor liability, either. But judges do, and efforts to rope the new GM into the old GM cases are invariably tossed out, so they don’t go to trial.

          • 0 avatar
            heavy handle

            Pch,

            Let me repeat myself: It’s never that simple with death and injury trials.

            Many courts won’t accept the argument that “new” GM inherited all of GM’s assets but no liability, and that grieving families have no option for seeking justice.

            It works that way for unpaid bills, but not when lives are at stake. That’s why the few decisions so far have been so expensive, and why they don’t ensure that future cases will be “tossed out.”

            This case is especially hard for GM to defend since it involves an arbitrary cut-off date, and they’ve acknowledged liability for deaths after the date, even if it involves cars built before the date.
            It’s plain to see that this is the same company, operating under the same name, staffed by the same people, and selling the same product. They need to convince 128 courts that they are not morally liable.

            Even if cases do not go to trial, they can eat-up weeks in front of a judge. What’s a few weeks of time worth to a large legal team, playing out of town? It’s knocking on 7 figures, easy. Repeat 128 times, and add-in the cost to GM every time the evening news runs a story about a local family that was denied justice.

            GM loses even if they win. And they won’t win 128 times in a row. The only sane option is to settle.

          • 0 avatar
            Pch101

            “Many courts won’t accept the argument that “new” GM inherited all of GM’s assets but no liability, and that grieving families have no option for seeking justice.”

            That’s just nonsense.

            Various plaintiff attorneys have tried a variety of workarounds in order to find a back door method that could be used to implicate the new GM in old GM cases, and they have all predictably failed.

            “It’s plain to see that this is the same company”

            Yes, I can see that YOU believe this. But it is false, and a judge would understand this. You are projecting your ignorance onto other people who know better.

  • avatar
    readallover

    They do it because, unlike lawyers, auto journalists, and wall street types, to the vast majority of Americans there is no difference between the `old`GM and the `new`GM.

  • avatar

    this empty figurehead belongs in prison rather than being glorified. she was in charge when the crisis brewed. rather than awards, she deserves sentencing. that is all.

  • avatar
    laserwizard

    This is no goodwill gesture – the Witch Barra was placed as CEO for sympathy – no one wants to beat up a woman unless they are Big Ben with the Pittsburgh Rusty nails or a Baltimore Ravens’ player.

    The money will come directly from the $20 billion plus of taxpayer money that the company hasn’t yet spent – so in effect the company that murders its owners will be shifting the payments from themselves to the taxpayers. There is no legal action blocking them from doing so and the company has not made enough profits since bankruptcy to explain away that magical $20 billion plus in cash they are sitting on without paying a dime of interest or tax.

    Make no mistake – no goodwill gesture. It really bites that they can kill their owners and pay nothing.

    • 0 avatar
      alluster

      “the company has not made enough profits since bankruptcy to explain away that magical $20 billion plus in cash”

      Wow, you have uncovered a major conspiracy. $20 billion in “magic money” and it didn’t occur to anyone except you to check. GM almost got away with it.

      My math says yearly profits since 2010 through Sep 2015 at $27.4 billion. Minus $5 billion for stock buyback and $2 billion for profit sharing, puts their cash balance right at $20 billion. Surely there must me deceit involved.

  • avatar
    George B

    Another way to look at this is that New GM is deploying both a carrot and a stick to settle lawsuits quickly in private. They offer a settlement while being able to remind the opposing lawyers that New GM holds a strong legal position if this were to go to trial.

  • avatar
    Duaney

    I’m still amazed that any people were killed due to this ignition switch problem. Over the years I’ve driven many (yes older and not in goood shape), vehicles and had the engine quit due to a fuel delivery, vapor lock, bad points, etc problem. I’ve always pulled off to the side of the road. I’ve never so much as scratched a fender due to this, let alone kill myself. I think if a driver is that incompetent as to crash a car when the engine dies, they shouldn’t be driving.

    • 0 avatar
      alluster

      Not trying to defend GM but I believe a majority of the fatalities were not caused by the ignition switch itself. The cars involved were from a period when GM had about 20% market share so statistically about 20% of the crashes and 20% of the fatalities involve a GM vehicle. The cars could have crashed/flipped/driver lost control for whatever reason and the ignition could have turned to off after impact. The switches were clearly defective (turn to off with little impact)

      GM must have wanted to get this over with as quickly as possible. That is why I believe they accepted cases even with a 1% probability. No point in sparring over a $1M settlement when they were losing a lot more in lost sales due to negative publicity.

    • 0 avatar
      VCplayer

      “I think if a driver is that incompetent as to crash a car when the engine dies, they shouldn’t be driving.”

      People are too emotional about GM to be rational, but this is a big reason why no one is going to jail or why the company isn’t on the hook for $10 billion. GM is only partially to blame for the accidents that these ignition switches may have caused, and proving even that much is REALLY difficult.

      It may not be satisfying to everyone’s sense of justice and/or dislike of GM, but they are being reasonably held as accountable as they reasonably can be for their probable culpability. Saying GM “murdered” people with ignition switches is gross hyperbole.

    • 0 avatar
      redmondjp

      Duaney,

      I had the exact same reaction as you. I read a bunch of the accident descriptions that were included in that big report they released a few years ago, and it seemed a stretch to blame the ignition switch in many if not most of the given examples.

      If you drive off the road at high speed and slam into a tree without your seat belt on, airbag or not, you’re probably going to die. In a vast majority of the cases in that report, the person killed was not wearing a seat belt – how is that GM’s fault?

      I, as well, grew up driving 1960s and 70s vehicles and it was fairly common (as compared to today’s cars) for something to conk out en-route and cause you to have to coast off to the side of the road (or to have to put the thing in neutral while still rolling down the road and attempt to restart it).

  • avatar
    kit4

    Government Motors loves to shove their history down our throats when it suits them, like the 1909 founding by Durant, how “American” they are when it suits them. Then hide behind the bankruptcy judge when their crap cars kill people. GM deserves to rot alongside the Enrons, Continental Airlines, and AT&Ts of the world.

  • avatar
    Silence

    Reason #937387529438572198357293457295872395872394871134863945762349872364 never to buy any GM carbage.

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