The General Motors compensation fund set up to pay victims of ignition-switch-related accidents saw a surge of applications in the final week before the deadline last Saturday, by which they had to be postmarked. The fund, created to reduce the number of lawsuits the automaker would confront in the courts, received more than 1,000 claims last week, to 4,180, GM confirmed Monday.
Detroit-based GM says 455 of these claims are for deaths caused by an engineering miscalculation that causes the ignition key to sometimes accidentally slip out of place. The glitch results in an unexpected engine stall and disabled air bags, power steering and power brakes. Kenneth Feinberg, administrator of GM’s ignition compensation claims resolution facility, has offered payments on 51 death claims and 75 claims of injury, including six for serious life-altering conditions like amputation, brain injury and paralysis.
Feinberg told CNBC’s “Squawk Box” on Monday the final tally of claims will be out in about 10 days.
“We’ve already noted that about 3,000 of them are either ineligible, deficient — they send in a photo or a police report that doesn’t say very much, or nothing,” he said. “About 1,500 claims have no documentation at all.”
Feinberg says GM’s offers will be at least as much as plaintiffs would win in court. As of Jan. 23, 1,294 claims have been rejected for insufficient proof, while 1,649 are under review. (These numbers do not include the estimated 1,100 claims GM received last week.) Feinberg has said it could take well into the spring to process the claims.
More than 150 cases have been filed against GM related to the ignition-switch flaw, including suits from families who object to GM’s stance that it will not recognize claims in accidents where the air bags deployed. GM is also fighting drivers who are suing over the lost resale value of affected cars, most of them Chevrolet Cobalts and Saturn Ions. GM says the cost of paying out death and injury claims could reach $600 million.
General Motors Co. (NYSE:GM) will announce its fourth-quarter earnings on Wednesday. Analysts polled by Thomson Reuters forecast the world’s third-largest automaker earning net profit of $1.42 billion, up from $1.153 billion in the same quarter the previous year. The automaker is seen earning $40.12 billion in revenue, down from $40.49 billion in the fourth quarter of 2013. Per-share earnings are expected to be 80 cents, up from 57 cents in the year-ago quarter.
GM’s stock was up less than 1 percent to $32.76 in Monday-morning trading. The stock has shed 6 percent since the start of 2015, underperforming compared with the Dow Jones Industrial Average, which is down 3.6 percent. GM's shares are down 9 percent over the past 12 months, while the Dow increased 9.4 percent in the same period.