LEGAL EXPERT: Large Number of Claimants Signing Away Legal Rights Is “An Enormous Problem”


Those quick-pay settlements – the public policy equivalent of a payroll-check cashing operation – are being heralded as popular, but legal advocates are up in arms over the deals and they should be.

For one thing, critics complain that a promised legal counseling service is still not functioning, meaning that many people are signing away their legal rights without really understanding the implications. That means they don’t understand, among other things, the way juries can punish Big Oil companies when lawsuits get to court. You can be sure that’s in the front of BP’s mind.

Hey, it’s not like we weren’t warned. Alaska residents who lived through the Valdez spill predicted a confusing, foot-dragging claims process that would create a few “lottery winners” to keep everyone else hoping for payment. Eventually, they said, victims would be worn down. And here we are.

The “quick pay” option – or the “go away” option as many are calling it – offers $5,000 to individuals and $25,000 to businesses if they have already qualified for payment under the old “emergency” system. Or you can hold out for a “final settlement” based on actual documented losses or you can keep filing every three months. The last of those options does not require you to give up legal rights, but it does require you to trust the payment process. To date, more than 50,000 claimants have accepted the quick-pay option.

Reporter Dan Murtaugh at the Press-Register newspaper out of Mobile has a helpful report that includes statements outlining the debate.

First there are comments from BP claims czar Kenneth Feinberg, who said the acceptance “… demonstrates that many claimants don’t have a problem with the waiver.” Feinberg said that he believes the quick payment option is popular because people have already been satisfactorily compensated for their spill damages or know they can’t prove further losses.

But the report quotes Joanne Doroshow, executive director of the New York-based Center for Justice and Democracy, who called the large number of people signing waivers “an enormous problem.”

“It’s not possible that everybody understands it,” she said. “The whole process has been horribly confusing. I think some people are just giving up at this point because it’s been so burdensome to get anything from the fund.”

My guess is that she’s right, especially when it comes to the wild card of BP liability – punitive damages. Juries are unlikely to take the “everyone is to blame” approach of many government regulators, and they will respond accordingly. It’s one of the huge factors that Mr. Feinberg and others often omit when discussing legal options.

I’m guessing at least some of those 50,000 “quick pay” claimants may have understood the implications of the deal, but just could not hold out any longer. They got paid less than they claimed to start with, and now they’re just tired of it all.

Exactly as those folks from Alaska predicted months and months ago.

Here’s the Press-Register story:

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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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