Gulf of Mexico oil spill victims can apply for ‘interim payments’


Tuesday (Nov. 23) marks a critical moment in the Gulf Coast oil spill claims process.

It’s the deadline for individuals and businesses to file applications for emergency payments from BP’s $20 billion compensation fund, and it also marks the start of a new round of claims to be filed to the fund’s independent administrator, Ken Feinberg.

Feinberg told The Times-Picayune on Thursday that applicants who feel shortchanged by the emergency payment process, or those who aren’t ready to accept a final payment and waive their right to sue, will get a new bite at the apple through something called “interim payments.”

Feinberg began offering spill victims the chance to collect emergency claims payments three months ago. They could cover as much as six months of documented losses and the individual or business could collect the money without having to give up their right to sue BP or others responsible for the massive oil spill, which began in April.

Feinberg’s Gulf Coast Claims Facility has paid out nearly $1.9 billion of BP’s money to cover more than 116,000 emergency claims, most of which covered six-month time frames. Feinberg said he’ll continue processing payments for an estimated 10,000 more emergency claims that have been filed or will be filed by the Tuesday deadline, and those should push the total payout over $2 billion.

The general idea is to get applicants to accept a “final payment,” a one-time lump sum intended to cover all true current and estimated future losses due to the spill. Accepting it requires the claimant to waive his or her right to sue BP or any of the other companies — such as rig-owner Transocean and well cementer Halliburton, firms named as BP’s co-defendants in multi-district civil litigation.

But spill victims will now be able to continue getting payments without giving up their right to sue. To do so, they’ll have to re-file for interim payments to cover “trued up” losses every three months. These new claims can be filed starting Wednesday and the application period will continue for an as-yet undetermined length of time. Feinberg said that by choosing to refile for interim payments, rather than accepting a final payment, spill victims would be deciding “in effect to continue with emergency payments.”

He also said the interim and final claims process will provide those who are unhappy with the emergency payments they’ve received — or who dispute a rejection of their previous claims — to present a new case to Feinberg and his team.

“Whether you file for a final payment or an interim payment, if you feel I shortchanged you with a previous payment, I will take another look, based on documentation, of course, and recalculate and add that to your interim payment or final payment as well,” Feinberg said.

Feinberg said he and his team have struggled with some claims that have come in within the past month and raised what he called “tricky issues.” He said, for example, wholesalers and distributors are explicitly excluded from compensation under the Oil Pollution Act of 1990, the law that governs oil spill compensation, but he said he is not bound by that law, and promised to be more generous. Still, Feinberg said he must limit what claims he’ll accept and he’s decided to deny claims filed by people like wine distributors.

Wholesalers who work on commission and have lost income as bars and restaurants have lost customers have questioned why they’re being denied, even as the businesses they normally supply and the bartenders and other employees who usually serve their products are getting sizable claims checks. Feinberg acknowledged denying a wine distributor’s claim outright recently because her loss was considered “indirect” damage, but he said he would reconsider if she refiled for an interim or final payment.

There are tens of thousands of claims that do not have adequate documentation to approve emergency payment. Statistics released by the Gulf Coast Claims Facility show that the vast majority of the claims paid so far are for less than $100,000, with just 50 business getting payments of more than $500,000. Alabama officials have written letters recently complaining that their coastal businesses are getting “pennies on the dollar of their total claim,” although Feinberg told the investigative website ProPublica this week that 85 percent of businesses got the whole amount they documented.

Slightly more claims have been paid in Florida than in Louisiana, but Louisiana’s 40,000 paid claims have totaled $640 million, more money than any other state has received. Less than $50 million, about 2.5 percent, has gone to residents of non-Gulf Coast states.

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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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