Gulf Coast Con: BP Compensation Fund Deems 40 Percent of Victim Claims “Deficient” or “Ineligible”


Claims czar Kenneth Feinberg is nearing the first anniversary of his tenure as the administrator of BP’s $20 billion victim compensation fund – and he’s congratulating himself for a job well done. As many of you might imagine, Gulf Coast residents see things a bit differently.

While Mr. Feinberg pats himself on the back, many spill victims struggle to understand why their “final settlement” claims have been denied. Others try desperately to fight off creditors until their next quarterly interim payment arrives – an indication that those pay outs are woefully insufficient. But at least they’re getting something.

Lest we forget, there are the tens of thousands of victims up and down the Gulf Coast who are still waiting for resolution of any kind on their claims. Even those who have sought the help of state-financed claims advisers are having little success in getting settlements. Some sources are saying up to 70 percent of those victims with “state assisted” claims haven’t been paid.

So why is Feinberg so pleased with his performance? Well, at first blush, statistics from the Gulf Coast Claims Facility (GCCF) look promising, like nearly 150,000 claims settled and $4.5 billion paid out to victims of last year’s massive 200-million-gallon oil spill. But a closer analysis reveals some troubling trends that continue to leave Gulf residents and coastal communities – particularly those tied to the seafood industry – in dire economic straits.

Here are some of the most egregious problem areas based on statistics from a June 20 Times-Picayune article:

1. The GCCF has deemed a full 40 percent of the 300,000 claims filed before the end of May either “deficient” or “ineligible.” That means roughly 120,000 claims – meaning 120,000 individuals and families – will likely be denied.

2. The GCCF has rejected more than half of the 115,000 “final settlement” claims, considering only 54,000 to be eligible for pay out. Final offers have been made to “eligible” claimants but only half of those settlements have been paid out, indicating a painfully slow reimbursement process as well as a reluctance on the part of claimants to accept what’s being offered. Claimants have 90 days to accept or reject what Mr. Feinberg puts on the table.

3. Law requires the GCCF to pay for ongoing economic damages without forcing claimants to sign away their right to sue BP in the future – but Mr. Feinberg has made only 16,000 such payments. Critics allege that the GCCF is dragging its feet on those payments to push victims into lowball final settlements.

4. So far, only 24,000 fishermen, crabbers, shrimpers, oyster harvesters and seafood processors have filed for final settlements, and only half of them have settled. The vast majority – roughly 11,000 – took the so-called “quick pay” option (better known as the “shut up and go away” option) of $5,000 for individuals or $25,000 for businesses. All claimants accepting a final settlement, including quick-pay checks, must sign a waiver giving up their right to sue BP in the future. The uncertainty of the long-term health of Gulf fisheries has legal experts concerned that final settlements – particularly quick-pay settlements – tied to the seafood industry may fall drastically short of covering actual losses.

In light of the fact that many, highly regarded independent researchers are stating that Gulf fisheries could take 5 to 10 years to fully recover, compensating commercial fishermen with $5,000 “quick pay” settlements is downright despicable. During peak season, Gulf fishermen can make $5,000 in a week.

Fox News-affiliate WVUE-TV in New Orleans quotes Marty Nunez of Nunez Seafood located in the Saint Bernard fishing community of Yscloskey:

“Prices, the bottom just fell out, you know, lack of sales from what I’m hearing from all our processors they can’t move the shrimp, they can’t get back to 50-60 percent of their normal sales.”

Bottom line: The “final settlement” formula Mr. Feinberg is using for fishing-related claims is completely unrealistic – two times 2010 losses for all fishers except oystermen who will receive four times their 2010 losses. Many of my fishing clients are starving as their business has not bounced back even the slightest bit, and few can see any light on the horizon. And just as a point of reference, the fishing losses in Alaska are still ongoing – more than 20 years after the Exxon Valdez spill. My “fishing industry” clients will never accept a final settlement based on the current formula and will, unfortunately, likely have to fight it out in court.

So, despite Mr. Feinberg’s high marks for himself, BP’s compensation process continues to confuse and confound. I would suggest the GCCF negotiate fairly with those seeking final settlements by reworking the compensation formula. It’s in everybody’s best interest to provide fair compensation – in the quickest possible manner – to those who have had their lives turned upside down by BP’s massive spill. If that happens, perhaps spill victims will begin to affirm Mr. Feinberg’s self-congratulatory back-slappings.

Read the full Times-Picayune article here:

Read a story about the problems Gulf shrimpers are dealing with:

© Smith Stag, LLC 2011 – All Rights Reserved


  • You are so on POINT! I was one of the 300k that’s been waiting for a decision on my FFr claim. I 1st applied for the EAP……DEnied! Then GCCF came up w/ the FFR or Interim Claim…..I opted to do the FFR. To make a long hurtful story short, GCCF denied my Final claim as no direct relation to the Spill as of 07/11/2011! Did it take 9 months to tell me no? this is BS! I guess GCCF is playing w/people’s livlihood and taking kickbacks! Me & my family will never recover from this debt burden that we are in! Advance check, rent, lights, food, car, insurance about to be canceled! I’m done! I don’t know where to go from here!everybody is crooked! Even the Lawyers! All they want is 40% of your $! Who has that to give when I’ve been employed for 1year and bills done overflowed out the ceiling?! After being laid off from my job in May 2010, BP Contractor Ashland Contracting offered employment for the Oil Spill clean up, I was hired & work for approx 2.5 months after being promised @ least 3-5 years of work and wasn’t called back to my job @ the time of the Oil Spill and GCCF has the nerve to say that my being laid off has no relation to the Oil Spill?! If the truth be told, EVERY Industry had a feel of the effects of the Oil Spill disaster!I want to go to the United States Supreme Court and tell the Government entities who are suppose to look out for us how crooked this process is! I know individuals who filed fraudulent claims & got paid! People who never worked! Hairdressers! Strippers!

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

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