For the better part of this year, General Motors has been embroiled in scandal. It began in February, when the automaker recalled thousands of small cars for faulty ignition switches. Those defective switches, it turns out, had been in cars for more than a decade, and they have been linked to numerous road accidents and 13 deaths. Since the spring, GM has issued over 50 recalls for millions of cars in a sprawling crisis that has left the American automotive brand in tatters and CEO Mary Barra, just months on the job, in constant damage control mode.
Earlier this summer, as part of its effort to manage the crisis, GM launched a compensation protocol to pay back people who were seriously injured, or had lost loved ones, in crashes involving the ignition switch problem. GM tapped lawyer and compensation guru Kenneth Feinberg to manage the General Motors Compensation Protocol. At the time he said that the “only limitation [GM] really laid out, was the limitation that only certain eligible vehicles are subject to this program.”
The list of eligible vehicles, though, is shorter than you might expect. Not all cars with faulty ignition switches, or key rotation problems, qualify for the Feinberg protocol. Alan Adler, a spokesman for the Detroit automaker, confirmed to Fortune that only the roughly 2.5 million cars involved in the initial ignition switch recalls, which took place between February and March, would be eligible for the compensation protocol. A total of 17 models were recalled in that time frame and are included in the compensation plan. These models include Cobalts, several Pontiac models, and two Saturns.
That leaves more than 10 million cars that GM (GM) has recalled since March for the same problem — faulty ignition switches leading to “unintended key rotation and the possibility that air bags might not deploy in a crash because of a loss of power” — whose owners are not eligible to file a claim under the Feinberg protocol, according to Adler.
Camille Biros, the deputy administrator of the protocol, told Fortune that the list of eligible vehicles was entirely in the hands of GM. GM’s Adler confirmed this to be true.
Among the vehicles recalled since March, there have been three fatalities in two crashes involving Chevrolet Impalas, Adler said. He noted that GM does not know for sure that ignition switches causing airbags not to deploy were involved in these crashes, but it cannot be ruled out.
Despite this, GM doesn’t think the problems in the 10 million cars recalled since March rise to the levels of those in the cars recalled in February and March. Adler also said that extensive testing has been done on all of the cars recalled for ignition switch problems, and that “nothing suggested that it was warranted” to include the rest of the recalled cars in the Feinberg protocol. He noted that GM had received few complaints and that “nothing led us to believe that there was anything approaching” the level of problems that were in the Cobalts and other cars included in the compensation protocol.
Adler said that the recalls done since March have been the result of GM’s own investigations and testing, not complaints from customers. He did note that since the recalls were issued, the company has asked customers to come forward with similar issues. He added that cars recalled in February and March will have a full parts replacement, while those recalled after March only require an ignition insert that prevents the key from rotating when it’s not supposed to.
If a customer believes GM should compensate them for an incident that took place in one of these cars, they’ll have to go about it in the more traditional way, Adler said — by taking GM to court. That option is, of course, available to any GM customer, but those who decide to participate in the compensation plan are required to waive their right to sue the company.
Last week, a judge named lawyer Steve Berman as co-counsel in a class-action suit against GM focusing on customers whose cars lost value as a result of the recalls and scandal, and who are not included in the Feinberg protocol.
Berman said he thinks the compensation program is a good idea, but it should cover all cars recalled for ignition-switch issues. And, while he admitted it might be seen as a cynical view, he added that GM’s compensation plan could be motivated partially by public relations.
“It was maybe a partial offer to ease the congressional heat a little bit,” he said. “Congress has a short attention span.”
Berman will look to file a consolidated complaint in October before moving ahead and meeting with GM. He led a class-action suit against Toyota (TM) following its own recall scandal a few years ago. That suit was eventually settled for $1.6 billion.
