Claims Facility Offers Victims Pennies on the Dollar; Bon Secour Business Gets $15,600 Check For $612,000 Claim


When Kenneth Feinberg announced that his “independent” Claims Facility would provide emergency payments for six months – instead of the much shorter terms BP was providing – I thought it could be a huge (financial) setback for BP. Why? Such emergency payments would ease the financial panic that often forces victims to accept a “final settlement” that requires signing away future legal options. You offer even a tiny bit of breathing room through emergency payments, and victims are likely to insist that BP actually make them whole.

Of course, that’s only true if Feinberg’s Claims Facility pays the true extent of the damages. What we’re seeing across the Gulf is not only slow payments, but payments of only pennies on the dollar. And nobody at the Claims Facility is explaining the shortages. So BP gains the leverage of increased financial stress as people desperately await payments. Then the company gains even more leverage by short-changing claims, as victims are given a small dose of hope and become more dependent on the claims process to keep their businesses out of bankruptcy. Even better for BP, it gains this leverage and upper-hand from an administrator the company recruited, but who was ultimately approved by the President of the United States. Hey, I never said these guys were dumb.

A WKRG-TV news report offers a real-world example of how this process is working: Deborah Nelson had “hoped everything was going to be okay” when Feinberg took over the claims process. She and her husband run one of the few boats that exclusively fish for the deep-water, royal red shrimp. The Bon Secour (Ala.) couple filed a 192-page claim complete with pier forms, business records, even tax records. They got only $15,600 of their $612,000 claim – a devastating blow to the Nelson’s business.

That’s typical of what we’re hearing, but watch the story to the end (see link below) and note this: “In the meantime, Deborah called the claims office about the amount of the check and was told no one could explain why she got the amount she did but if she wasn’t happy with the amount she could go ahead and file for a final payment.”

Right. Move directly to a final payment with a financial gun to your head. Delay, delay…then underpay. That’s the strategy here. It increases the financial pressure to accept a final payment that releases BP from liability if damages turn out to be much worse than thought. That’s especially important if the oil spill wipes out entire fishing stocks – as happened in Alaska – some time from now. So much for Mr. Feinberg’s process offering any “setback” to BP.

Watch Debbie Williams’ report here:

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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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