Gulf oil spill claims administrator promotes payments to avoid lawsuits


WASHINGTON — The administrator of the fund paying claims related to the BP oil spill acknowledged inconsistencies in payments today (Dec. 20) but said rules providing greater transparency will be released within two weeks.

Ken Feinberg told the USA TODAY editorial board that inconsistencies are unavoidable in a process that has paid 170,000 claims worth $2.5 billion. But he also said neighbors comparing notes about payments might not be familiar with how each claim was resolved.

“I’m not biased against you,” Feinberg, independent administrator of the Gulf Coast Claims Facility, said of a hypothetical conversation with a Gulf resident. “Your next-door neighbor had different circumstances, different documentation, different facts — so your next-door neighbor got Y and you got X.”

Feinberg urged people who are upset with their emergency payments to apply again for a final payment as an alternative to filing a lawsuit that could drag on for years.

“I don’t need a CPA to bring all that documentation to me in a wheelbarrow, but don’t come to me with nothing — that we do everything here with a handshake,” Feinberg said.

BP committed $20 billion to set up the Gulf Coast Claims Facility after talks with the Obama administration. The fund expires in 2013. It pays claims for economic losses from the oil that poured into the Gulf for three months after the April 20 explosion of BP’s Deepwater Horizon rig off Louisiana.

Emergency payments ended Nov. 23. Feinberg is urging claimants to consider final payments that will end their claims in exchange for surrendering their right to sue BP, Halliburton, Transocean or other companies involved in the spill.

Tempers are flaring because most claims haven’t been paid. Of about 450,000 filed, Feinberg said 125,000 arrived with no documentation — resulting in automatic rejection — and another 100,000 came in with “woefully inadequate” paperwork.

About 2,500 claims appeared fraudulent. Fifty of those have been referred to the Justice Department for criminal investigation. Hundreds more may follow.

Lack of documentation isn’t criminal by itself, Feinberg said. He said 5,000 claims from Plaquemines Parish in Louisiana —each using identical language claiming inability to fish for food because of the spill and each lacking critical documentation — were rejected.

“That’s not fraud, that’s just a denied claim,” Feinberg said. “That’s just trying to game the system.”

Questions involving eligibility and documentation are Feinberg’s toughest challenges.

Eligibility is clear for commercial fishermen unable to earn a living because of the spill, and for a hotel with oil on its beachfront. He said he initially denied claims from distant hotels claiming lost tourism because of news coverage of the spill but has since paid $200 million in claims from hotels as far away as Tampa and St. Petersburg.

“I don’t think a court would ever recognize that claim. It’s too far away,” Feinberg said. “Nevertheless, I paid those claims.”

The claims facility paid $1.23 billion to people who were living in Florida or suffered economic losses there. Of that, less than $600 million went to the five counties where oil washed up on shore: Escambia, Santa Rosa, Okaloosa, Walton and Bay.

Keither Overton, chief operating officer of TradeWinds Island Resorts and chairman of the Florida Restaurant and Lodging Association, praised Feinberg today after complaining in the past about slow payments. He said the claims fund has paid $1.3 million to condominium owners on St. Petersburg beach.

“Mr. Feinberg has assured me that other Gulf Coast tourism businesses who filed for emergency money will begin receiving checks this week and over the next several weeks, assuming claims are not lacking necessary information,” Overton said. “The system is not perfect, of course, and we understand that not all of our member companies have received payments they deserve.”

Feinberg said he has paid claims to companies as far away as Tennessee and Illinois that could show direct losses. One such company might be a Knoxville business that processes Gulf shrimp for regional distribution, he said.

“Eligibility is Solomonic at the end of the day,” Feinberg said. “You’ve got to decide who’s eligible and who isn’t.”

Feinberg also cited three examples of tourism-related claims he’s rejected: chiropractors who say they’ve lost fishermen as patients, beer distributors to coastal restaurants, and golf courses 10 miles inland.

“No court is going to recognize that claim,” Feinberg said of a restaurant in Idaho complaining they couldn’t sell shrimp scampi. “There’s got to be some limits.”

Documenting losses is another major challenge for claimants. Feinberg plans to release more details within two weeks about how he assesses claims.

But he said that in many cases he’s accepted far less documentation than a court would demand. For example, he said he accepted a letter from a fishing-boat captain to corroborate a crewman’s losses.

“There is an underground economy in the Gulf,” Feinberg said. “I’ll accept some hearsay representations.”

Although emergency payments have ended, claimants can still file for “interim payments” once every fiscal quarter without waiving their right to sue BP in the future. But they also must decide how much to demand in exchange for surrendering that right.

Under the “quick payment” option, people and businesses that received an emergency payment can permanently settle their case for an additional payment —$5,000 for individuals and $25,000 for businesses — without filing additional paperwork.

A restaurant worker who receives a $2,000 emergency payment and an additional $5,000 quick payment may seem to be getting a windfall, Feinberg said, but he said those amounts are worth it to prevent lawsuits.

“To the extent that that huge number of people who received an emergency payment can be winnowed down, that is in everybody’s interest,” Feinberg said.

The “final claim” option requires claimants to document past, present and anticipated future damages. Those claimants also agree not to sue.

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

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