Playing the oil spill claims game


MOBILE, Ala. – As the oil spill claims operation enters its final stage, many business owners along the Gulf coast are preparing to play a game of Deal or No Deal, with billions of dollars and perhaps the survival of hundreds of ventures at stake.

For most larger businesses, the claims process will come down to a choice between taking a one-time, lump sum payment or continuing to take smaller, quarterly checks, giving owners and managers more time to judge the future impact of the spill.

Both claims require financial documentation. Either choice has pros and cons.

A business that accepts a lump sum to cover projected losses — and signs the required waiver promising not to sue or return to the claims process — won’t be able to get additional compensation if the oil continues to harm the coastal ecosystem or economy.

If the economy returns to normal faster than expected, the lump sum becomes a windfall that won’t be seen by businesses that opted for interim payments. But interim payments provide a hedge if future impacts are worse than anticipated.

Businesses that accept the lump sum also rid themselves of dealings with Ken Feinberg’s Gulf Coast Claims Facility, no small benefit for many who have spent dozens of hours since the summer collecting financial documents and talking to adjusters.

Sheila Hodges, owner of Meyer Real Estate, one of the coast’s largest condominium rental firms, said the uncertainty is too large to take a lump sum payment.

“When the majority of your income comes during a small time in the middle of the year, you can’t have a dialogue without going through at least one summer,” she said.

Others said that if Feinberg can make it worth their while, they’ll be happy to take one final check and move on.

“If it’s worth enough for me to survive for a while, I’ll take the final offer,” said David Wright, who owns a construction firm that lost home-building contracts after the spill hit. “I don’t want to drag this out any longer than they do.”

Feinberg is also offering quick, no-proof-necessary payments of $5,000 for individuals and $25,000 for businesses to anyone who was approved for an emergency claim. Those payments are geared more toward individual workers or small business, Feinberg has said.

Feinberg said he hopes the quick-pay option will clear a lot of claimants from a system that got some 466,000 requests for money and has paid 168,000 claims.

For those who eschew the quick-pay option, Feinberg’s operation will review financial documentation on losses to date and consult with experts to try and gauge the length and severity of spill impacts.

Adjusters will tabulate both a final settlement offer and an interim check amount, then let people choose, Feinberg said.

“If you’re satisfied, we will cut the check,” he said. “If you’re not satisfied, here’s the interim payment, come back in three months if you want.”

Feinberg told the Press-Register that he knows he has to pay a premium to get claimants to bear the risk that comes with accepting a lump sum and signing the lawsuit waiver.

“They’re going to say, ‘If you want me to sign a piece of paper that says I won’t be back, what are you offering me?’ That’s a fair question,” he said. “Generosity is going to have to be a major part of this.”

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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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