MOBILE, Ala. – The contract that Ken Feinberg’s law firm signed to run BP PLC’s oil spill claims operation calls for BP to set the firm’s pay every three months. That stipulation is causing concern that the company could pressure Feinberg into keeping a lid on claims payments.
The contract, signed Jan. 6 – nearly six months after Feinberg was hired to operate the Gulf Coast Claims Facility – also calls for Feinberg to turn over all claims documents to BP after his operation shuts down in August 2013.
Those documents include private financial information about claimants such as tax returns and business profit-and-loss statements.
Many claimants had to give those documents directly to BP last summer before Feinberg took over the claims process.
Amy Weiss, a spokeswoman for the claims operation, said that Feinberg continues to discuss his law firm’s fee with BP. She declined to comment further.
BP, through a spokesman, declined to comment Tuesday.
Feinberg’s claims operation is offering three options to spill claimants:
- Final settlements for all present and future damages that require the claimant to agree not to seek future compensation or sue anyone involved in last year’s oil spill.
- Smaller interim claims that do not require a lawsuit waiver.
- Quick payments of $5,000 for individuals or $25,000 for businesses that require a lawsuit waiver but, unlike with final or interim payments, don’t call for financial documentation. Only those approved last year for emergency claims can take a quick payment.
The 46-page contract between BP and Feinberg became public on Jan. 7, when it was filed in U.S. District Court in New Orleans as part of multi-district spill litigation against BP.
According to the contract, BP paid the Feinberg Rozen firm $850,000 a month to administer the claims process through Saturday. Now, the Washington-based firm’s fee will be “mutually agreed to by the parties on a quarterly basis in advance of the first day of each successive calendar quarter.”
Joanne Doroshow, the executive director for the Center for Justice & Democracy in New York, a group that promotes the right to jury trials in civil cases, suggested that BP could tie the amount of its payments to Feinberg Rozen’s success in limiting BP’s liability.
Gulf Shores Mayor Robert Craft said it wouldn’t be fair to claimants on the coast if that were the case. “If there’s some type of performance program for how much he saves BP, he can’t be our advocate,” Craft said.
Feinberg in November told Alabama Gov. Bob Riley that compensation for anyone working for the claims operation was unrelated to the number of claims handled or the size of the payouts.
The Jan. 6 contract stipulates that BP will “not be subject to any restrictions or limitations whatsoever with respect to any such claims information” that Feinberg must turn over to the company.
“I do not believe that the claimants who settle through the GCCF have any idea that their files are being turned over to BP,” said Doroshow of the Center for Justice & Democracy. “At a minimum, there must be disclosure to the claimants and more protection for them.”
Bert Sanders, a Gulf Shores accountant who is working with several businesses claimants, said he and his clients have wondered what would happen to the financial documents being handed over, first to BP and then to Feinberg’s facility.
“BP’s position is, ‘This is what you have to provide if you expect us to pay you.’ No other options were given,” Sanders said. “The problem is, who is maintaining these documents and what ultimately happens to them?
“There’s sensitive data in there – names, Social Security numbers, addresses,” Sanders said. “An unscrupulous employee within that system would have access to all that data.”
BP would need to obtain approval of the U.S. Department of Justice in order to terminate the contract and its relationship with Feinberg Rozen, the terms stipulate.