Oil spill claims checks aren’t close to covering losses, say business owners


On Aug. 23, Sheryl Lindsay filed her paperwork with Ken Feinberg’s Gulf Coast Claims Facility, asking for $240,000 to cover six months’ worth of lost business for her company, Orange Beach Weddings.

After waiting for more than three weeks, she got a check on Friday.

It was for $7,700, she said.

“Now I’m going to have to get an attorney and file for bankruptcy,” she said. “My banker goes to church with me, and I told him, ‘How am I going to face you in church every Sunday when I can’t pay back the loan you gave me last year’”

While most complaints about Feinberg’s process have concerned the slow rate of check-writing, several business owners in Alabama said that the new and bigger problem is that the checks are being written for only a fraction of what they requested.

Feinberg could not be reached for comment Monday to address the concerns.

Robin Lambert, owner of Old Bay Steamer in Fairhope, said she received a check for $16,000 on a claim of $159,000.

Bert Sanders, an accountant with Grant, Sanders & Taylor PC of Gulf Shores, said that not a single claim he worked on for his clients has been paid in full by Feinberg’s group. Sanders has been involved in preparing hundreds of claims from beach communities.

One client, for example, submitted a claim for $383,000 and got a check for $129,000, Sanders said.

“That’s 34 percent,” Sanders said. “That’s not enough to keep him going.”

Feinberg’s operation has written more than 6,000 checks to businesses along the Gulf Coast. About 4,000 of those have been for $10,000 or less, according to claims facility data.

In Alabama, about 75 percent of the 1,400 business claims paid thus far have been for less than $10,000. Only 23 checks have been for more than $100,000.

“A lot of companies didn’t get anything from BP,” Sanders said. “If they’re getting a third or half of what they should receive, they’re going to have a difficult time making it through to next spring.”

Lindsay, Lambert and Sanders said that Feinberg’s operation gave them no information about why the checks differed so substantially from the claims.

Sanders said he believes that the disparity exists because Feinberg’s accountants are making faulty estimates about reduced business costs, then deducting that amount from the claim.

For example, Sanders said, the accountants might assume that a business has deeply slashed payroll or utility costs, when, in fact, those may hardly have changed at all.

“These are assumptions that they have not spent the time to verify,” Sanders said. “None of the businesses have been contacted by Feinberg’s group to discuss these issues prior to payment.”

In some cases, Sanders said, beach businesses increased costs in advertising and marketing this summer as they tried valiantly to lure tourists.

Feinberg took over as claims czar after complaints about BP PLC’s claims process prompted President Barack Obama to pressure the company to put aside $20 billion and let an independent entity handle disbursements from it.

Now, Sanders said, business owners are having buyer’s remorse. “We had payments under BP that we thought were fair, plus we were able to get calculations,” he said.

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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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