BP Claims Process: The Big Chill


The Gulf coast claims process is becoming a bigger and bigger story, at least in part because people understand that BP is stalling on claims while not yet paying into the $20 billion victims’ fund to be administered by Mr. Kenneth Feinberg.

In the meantime, observers continue to monitor what Mr. Feinberg says about what the final process might look like, an important task since the rules are being formed in near absolute secrecy.

From an attorney’s standpoint, one consistent claim from Mr. Feinberg is very troubling. He has repeatedly said that lawyers “will get 40 percent” of what their clients are paid, and that’s just not what we’re seeing. My firm is agreeing to 10 percent to handle the administrative claim and given the complexity of many claims that is extremely fair, particularly when you consider we are advancing costs, including those for experts.

Mr. Feinberg also promises that his claims payments will be “more generous” than the courts would be, and again that’s not likely to be the case. While it may be the way to go for some, for others it is much less promising. For example, those seeking punitive damages – money that juries award to punish the companies for behaving badly – will have no recourse through the $20 billion fund.

But when Mr. Feinberg says “well, you have to prove your claim,” then I suspect that will signal to people that they should consider getting some professional help. It’s an adversarial system that we’ve seen from the start. The essence of the process from BP’s perspective is: You’re claiming these losses, it’s not our job to help you get it. It’s YOUR job to prove your claim. And from what we’ve seen so far, BP is making the process of proving claims extremely difficult, especially in regard to required documentation.

Here’s a recent quote that makes the point about this being a “big issue.” Mr. Feinberg has said: “When I go to the Gulf, I hear a lot about the underground economy. ‘Mr. Feinberg, I got paid $5,000 a month all cash. Do I have a claim?’ Well, you have to prove your claim. There’s nothing illegal about all cash business, but do you have your tax return? . . . Do you have documentary evidence? . . . Will your ship captain vouch for the $5,000? . . . I need something. I can’t be paying claims that can’t be proven. And I can tell you that this is going to be a big issue.”

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Stuart H. Smith is an attorney based in New Orleans fighting major oil companies and other polluters.
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