Kenneth Feinberg says 80 percent of pending oil spill claims lack sufficient documentation

Oil spill claims czar Kenneth Feinberg said there are more than 105,000 claimants who haven’t produced sufficient documentation to establish their 2010 losses.

Feinberg’s Gulf Coast Claims Facility posted a notice on its website, www.gulfcoastclaimsfacility.com, warning that claimants could risk being denied payment entirely if they don’t send in the documents.

In an interview with The Times-Picayune, Feinberg said many of the claims are lacking documentation from November and December 2010, making it impossible for his staff to send offers for paying a final settlement or three-month interim payments.

A notice on the website suggests that individual claimants may be having trouble proving their income from May through December 2010 because of delays in getting their W-2 or 1099 tax forms from their employers. Nearly 1,500 individuals have received interim payments so far, but there are more than 100,000 who are still under review, and Feinberg’s group says that fewer than 20 percent of those have complete documentation.

For businesses, the documentation requirements are more rigorous. Feinberg’s organization has asked nearly 30,000 business claimants to turn in three years of tax returns, all employee W-2 and 1099 forms, three years of monthly profit and loss statements, insurance forms, and – for fishing businesses – government reports of all landings in the last three years, fishing licenses and more.

This latest difficulty comes as plaintiffs lawyers make a new push to draw claimants out of Feinberg’s process and into private litigation against BP, Transocean, Halliburton and other companies involved in the Deepwater Horizon accident.

Claimants who seek compensation from Feinberg can also file suit, but once Feinberg makes a final offer, they must foreswear any lawsuits if they want to collect. Eventually, all claimants must decide if they want a final payment from Feinberg offering or pursue the possibility of more through litigation.

Some plaintiffs lawyers are choosing to help claimants negotiate with Feinberg and charging about 10 percent of whatever he pays them, but litigation stands to be far more lucrative for the attorneys, who are charging 25 or 33 percent or more and promising to go after punative damages for their clients.

Since taking over the spill claims process from BP in August, Feinberg has paid nearly 170,000 individuals and businesses close to $3.5 billion. Most of that was during an emergency payment process last year.

But the process got significantly tougher in 2011 as Feinberg pushed to get final settlements that require claimants to sign away their rights to ever sue BP and the other responsible parties for any effects of the spill, past or future. Feinberg introduced a new methodology for calculating final settlements on Feb. 2, and after a two-week public comment period, implemented the procedure.

In the two weeks since he began paying final and interim claims, 1,500 claimants have received an average of about $13,000, but all but two of them were interim payments, meaning their claims remain open and they still have the right to sue.

Meanwhile, Feinberg has completed more than 92,000 claims through a quick payment option and has made final offers averaging $8,400 to just over 9,000 others. That leaves about 132,000 claimants under review for final or interim payments, but that’s where Feinberg says he’s encountered the documentation problems.