In an ongoing scandal involving the inappropriate handling of a General Motors Co. ignition switch defect that led to millions of vehicle recalls and over 100 deaths, a settlement has been reached. The deal will charge GM with criminal wire fraud stemming from misleading statements and the concealing of critical information about the defective ignition switch. The fine will amount to $900 million. If GM agrees to repair their recall processes under the watchful eye of the Justice Department, the counts could be dropped within three years.

How Was the Settlement Reached?

The Court’s decision to defer prosecution was based on a number of factors which the Court felt was demonstrative of cooperation by GM throughout the investigation, including:

  • Assisting with a swift and detailed internal investigation
  • Providing copious amounts of fact based documentation
  • Cooperating with timely communication with the government
  • Terminating those employees found to be directly at fault
  • Establishing a victim compensation program

US Attorney Preet Bharara has indicated that if any means become available to prosecute individuals for wrongdoing in this case, the door has been left open.

Over the next three years, the Justice Department will monitor the procedural changes and safeguards that GM has reported to ensure that substantial preventative changes have been made and will remain in place. Some of these changes include:

  • High level decision makers will decide and review issues of vehicle safety.
  • A new position, VP of Global Vehicle Safety, has been established.
  • Over 200 new employees have been appointed to the Global Safety organization, responsible for identifying and resolving safety concerns.
  • “Speak up for Safety” program was established to allow for the internal reporting of safety concerns.
  • New policies and procedures have been implemented to streamline the recall repair process.

What Does This Mean for Victims?

The financial penalty imposed upon GM is less than the $1.2 billion Toyota Motor Corp. settled for in 2014 in a similar case. GM’s cooperation during the process has been cited as the primary reason for the reduced penalty.

Prior to the settlement, GM had agreed to settlements offered to 124 families whose loved ones were killed as the result of the defect as well as 275 additional people who were injured. Additional lawsuits are currently being filed on behalf of an additional 370 injury victims and families of an additional 84 victims who were killed.

A settlement fund was created in 2014 and is being administered by Ken Feinberg, who is the lawyer who handled the 9/11 victim compensation fund. Many victims are unhappy with, what appears to be, a lax compensation settlement.

The amount received by the victims and their families can range from $20,000 to many millions depending on the following factors:

  • Category of the injury, for example: death, catastrophic or moderate
  • Whether family members are eligible
  • Whether the payout was constructed using a presumptive compensation” method or an “extraordinary circumstances” method.
  • Whether or not the airbags were deployed

A National Motor Vehicle Crash Causation Report that was presented to Congress in 2008 cited non-driver related crashes where vehicles malfunctioned as a cause and serious concern in a substantial number of crashes. That number is expected to have grown and is of critical importance to drivers of vehicles. When accident victims suspect that the accident was the result of a vehicle system malfunction, it is important to seek professional advice.