Gulf oil spill claims complaints rise as payments slow


MOBILE, Ala. – After a flurry of large payouts in late September and early October, the Gulf Coast Claims Facility has noticeably slowed the money flow in the past two weeks, much to the chagrin of officials on Alabama’s beach community.

“We had that great uptick, and then it just died,” said Orange Beach Mayor Tony Kennon. “I feel like I’m back in the dark. The payments have shut off, denials are going up, and we have no communication and no answers.”

The dissatisfaction is just the latest shift in a season in which people have teetered back and forth between hope and despair when it comes to the oil spill claims process.

Kennon and Gulf Shores Mayor Robert Craft said they are trying to schedule a meeting this week in Alabama with Ken Feinberg, the administrator of the claims facility. A date had not been set as of Friday.

One person looking for answers is Pedro Mandoki, owner of Mandoki Hospitality Inc., which manages half of the 608 units at Gulf Shores Plantation on the Fort Morgan peninsula.

He said he filed a claim in August for about $1.4 million in lost earnings. He received a check last month for $14,000. He and his accountants have been trying to get Feinberg’s adjusters to reconsider ever since then.

“We won’t be here next spring” without a significant claim payment, said Mandoki, who employs 30 people in the off-season and more during the summer. “I hate to even think about it, but it sure could happen.”

Craft said the area’s biggest accommodations companies are the ones that are struggling the most with the claims process. Those companies are the area’s largest employers, he said, and their marketing efforts draw in visitors who spend money in all kinds of other businesses.

“That’s the one element in our economy we can’t lose,” he said. “Building back without them is going to be difficult.”

Shortly after the spill began on April 20, Gulf Coast residents and officials began to fear the worst for the seafood and beach tourism industries — the latter of which is the economic engine for south Baldwin County.

BP PLC, which owns a majority stake in the well that leaked nearly 200 million gallons of oil into the Gulf of Mexico, promised to make affected people whole, but the company’s claims process was quickly attacked for slow payments and bureaucratic hassles.

Feinberg, who ran the victim compensation fund for the Sept. 11 terrorist attacks, took over the oil claims process on Aug. 23 at the behest of President Barack Obama. He promised fast payments and checks worth six months of lost income, and he was hailed a savior by many business owners and elected officials.

Those people quickly changed their tune after Feinberg’s operation couldn’t meet his lofty promises. Politicians wrote him scathing letters, and residents yelled and insulted him during visits along the Gulf Coast.

After hearing the criticism, Feinberg made rule changes in late September that resulted in faster turnarounds and larger checks. The facility went from paying out $11.1 million a day from Aug. 23 to Sept. 23 to $48.8 million a day from Sept. 23 to Oct. 14.

Since Oct. 14, though, the facility has only paid out $15.6 million a day, according to data.

Amy Weiss, a spokeswoman for Feinberg, said the drop in payments is due to a lack of claimants who can prove their damage.

“There is not a change in policy but a change in quantity and quality of emergency claims filed,” she said.

Bert Sanders, an accountant for Gulf Shores-based Grant, Sanders and Taylor PC, said one of the biggest problems he encounters with the system is a lack of available information.

People have trouble getting any information about their claims until adjusters approve, deny or determine they need more documentation, he said. And when claims finally are paid, there’s no information about how the amount of the check was determined, he said.

Weiss said people can now get more information about their claim status online, and the facility will soon hire people in coastal communities who can discuss claims issues. Feinberg promised to hire such workers more than a month ago.

Sheila Hodges, owner of Meyer Real Estate, was quite literally the poster child for the claims process when BP ran it, appearing on television commercials in which she told business owners that they should apply for compensation.

She said she received checks on a monthly basis from BP, and while they weren’t perfect, the payments kept her 300-employee business operating smoothly.

She filed a claim in the millions with Feinberg on Oct. 7. She said she was told the facility did not need any more financial documentation from her more than a week ago, but she has not yet received a check and can’t get any more information about the status of her claim.

She recently had to cancel a $500,000 contract to print 100,000 pamphlets promoting the Gulf Coast and her company’s rental properties.

That hurts the printing company and the U.S. Postal Service, which she uses for distribution, she said. It also could dampen her business next summer, which in turn would have ripple effects on restaurants, stores and other businesses in south Baldwin County.

“Some people look for that right after Christmas to start planning for next year,” she said of the publication. “If it doesn’t show up, will they think that means I’m not still here? It sends out a negative message.”

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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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