In a dramatic step, General Motors (NYSE:GM) confirmed Monday that 19 deaths were caused by a faulty ignition switch in older sedans, a 50 percent increase over the 13 deaths the Detroit automaker previously acknowledged.
GM has received 445 claims related to accidents caused by the defect (pdf), including 125 for deaths and 58 for serious life-altering injuries such as quadriplegia, according to Ken Feinberg, the high-profile lawyer in charge of handling the automaker's compensation fund for accident victims. His office has acknowledged 31 of these claims as legitimate, including 19 deaths and four instances of serious injuries.
The previous tally was 13 deaths from 54 accidents. Feinberg didn't say how many accidents are involved in the 445 claims. The National Highway Traffic Safety Administration says the death toll is larger because GM had been counting only deaths from frontal airbag failure, excluding deaths and injuries of back-seat passengers.
"This new information reinforces that GM may not have been as forthcoming as we would have hoped about how serious the defect was and how not responding was a major mistake," Kaitlin Wowak, assistant professor of management at Notre Dame University who specializes in supply chain risk, said in an email Monday.
GM's recall of 2.6 million older sedans, mainly the Chevrolet Cobalt, earlier this year came about a decade after individuals inside the company were first aware of a problem with the switch. Insufficient torque on the ignition key causes it to easily slip out of the "on" position while the car is in motion, shutting off airbags, power steering and power brakes. Many believe the death toll over the years is much higher than GM currently asknowledges.
GM's compensation fund pays relatives of those killed in accidents linked to the defect and ensuing airbag-deployment failures; it offers $1 million in compensation for each death plus an estimate of the deceased’s future earnings potential. In exchange, families must agree to not sue GM in court. The company’s 2009 government-administered bankruptcy that cost taxpayers $11.2 billion shields it from injuries that occurred under the “old GM” prior to July 10 of that year.
The “new GM” that emerged was allowed to waive most liabilities, but the courts are considering how that protection applies to the way GM handled its yearslong ignition switch problem, which it did not disclose during its bankruptcy proceedings. GM higher-ups claim they didn’t know about the problem at the time, but lawyers seeking compensation for victims argue their clients lost their constitutional right to due process because they didn’t know at the time of their injuries that they could be connected to the switch failure.