“Do I have a case? How much is my case worth?” Everyone injured in an accident and contemplating making a claim asks these basic questions. Soon, we will post an article detailing how we evaluate and argue liability in different common accidents and how we calculate damages and value a claim. But, this recent article on the NY Times (November 15, 2014) was too good a case study to pass up commenting on.
The article is about the recent GM crisis. The company has come under scrutiny for because several makes and models of GM vehicles were produced with dangerously defective ignition switches that would turn off the vehicle while it was being driven. Consequently, the vehicle becomes difficult to steer to a stop. And, if the car is involved in a collision after the ignition with is untimely turned off, the airbags would not deploy. Importantly, the approximately 2000 claimants alleging they were injured as a result of an accident caused by the faulty ignition switches point to internal GM documents that demonstrate the company knew about the potential for the ignition to be a deadly flaw while designing and building the vehicles. Despite this, GM pushed ahead with production.
GM initially managed the claims asserted against it. After acknowledging about a dozen claims, GM hired Ken Feinberg, a victim compensation expert, to manage their claims process. Mr. Feinberg was given complete discretion to evaluate a claim and determine its eligibility and value. Generally, this is the process of a lawsuit. But, for a combination of public relations and (perhaps) economic incentives, GM has authorized that settlements be offered based on Mr. Feinberg’s evaluation of a case and its value. What a case study.
Mr. Feinberg first assesses each cases “eligibility” for compensation. These eligibility thresholds of each claim are an evaluation of liability. In English: is GM liable for this particular claim? While GM was managing the claims, it only identified about a dozen cases it thought were caused by the faulty ignition switches. Mr. Feinberg, however, has already found about three times that number of eligible claims. This is mostly because Mr. Feinberg has accepted circumstantial evidence of the accident’s cause such as photos and witness statements as opposed to GM’s limited look at the vehicle’s black box.
Once Mr. Feinberg has a claim that is eligible for compensation, he must decide how much that claimant and his/her family should be compensated for the loss. According to the article, Mr. Feinberg simply starts at $1 million per death and will add to that figure based on expected earnings that individual would have made. Additionally, he will offer each family member $300,000. If the claimant is alive, the calculation is a bit more difficult because projecting future medical costs is a tricky forecast. Mr. Feinberg said the compensation amounts for living claimants can climb into the double digit millions of dollars. Mr. Feinberg's system, while certainly personalized and done carefully, seems much more straightforward than a presentation in court. In court, medical bills are scrutinized and wages are checked and double checked. The parallel between Mr. Feinberg and any other personal injury case is that after liability is determined, damages must be calculated.
At this point, an eligible claimant has been assigned a value for his or her loss by Mr. Feinberg. He and GM make an offer of that amount to the claimant or claimant’s estate. If the claimant settles, the tradeoff is that he or she will not sue GM. This is essentially a simplified and reduced personal injury lawsuit, but with a glorified adjuster with authority and who is not advocating the interests of either party.
The main difference between the GM settlements Mr. Feinberg produces and the settlements in a more traditional and non-class action size case lawsuit is that there is not a neutral party to decide liability and value of losses until a jury hears and sees the evidence in a case. And, because most cases never make it to the jury, these cases are resolved by and through advocates representing the insurance company and those injured claimants. Without the fair and neutral “adjuster” like Mr. Feinberg, it is important to hire an attorney to present your claim.
All cases must be brought in a reasonable time after the accident. This window is called the statute of limitations. Absent some unique circumstances, Texas has a two year statute of limitations for filing a lawsuit that alleges damages from an auto accident. As one can imagine, in a case like GM's, where the liability isn't discovered until potentially years after the accident, some claimants may simply be too late. On Monday, GM and Mr. Feinberg announced that they would extend the deadline for claims to be filed. While this extension is not exactly tolling the statute of limitations, it is at least analogous.
In any event, the GM crisis is representative of a traditional personal injury claim in so far as the process of determining liability and evaluating damages.