NEW ORLEANS (CN) – Attorneys general across the Gulf Coast have renewed their criticism of BP’s claims payment process, saying BP uses “economic duress to manipulate financially desperate claimants into providing BP … with an improperly broad release of claims and legal rights in exchange for inadequate consideration.”
Mississippi Attorney General Jim Hood laid the blame squarely in the lap of Kenneth Feinberg, the facilitator of BP’s claims process through the Gulf Coast Claims Facility.
Hood last week filed an updated notice on BP’s “continued violations” of the Oil Pollution Act, saying the claims process is still murky, in great part due efforts to Feinberg’s efforts to obscure public perception.
“This distortion of the truth is emblematic of the media campaign launched by Mr. Feinberg, acting on BP’s behalf, to mislead the public regarding the GCCF [Gulf Coast Claims Facility] and to conceal the repeated violations of OPA [the Oil Pollution Act] by BP, through the GCCF claims process,” Hood wrote in his 13-page federal filing.
The Oil Pollution Act is meant to guide BP, as a responsible party, in paying claims of people affected by the spill. It’s Mississippi’s second notice of BP’s failure to comply with the OPA by failing to process claims and pay Gulf Coast residents, many of whom have suffered catastrophic losses as a result of the spill.
Because of the murkiness of the claims process, Hood says, “this court can only rely on anecdotes from claimants to the press and to state consumer protection officials … to form the basis for any challenge to the adequacy of the current BP claims process or to fashion a remedial order to cure alleged violations of OPA by BP and the GCCF.”
Hood says the efficiency of the claims process has deteriorate since February, when U.S. District Judge Carl Barbier ruled that court intervention in the claims process was unnecessary.
Hood says: “A breaking point in the health and economic vitality of our coastal citizens and communities has now been reached as the result of the failure of the claims process to timely and fully compensate claimants with legitimate claims for the losses.”
Hood adds that BP, through the GCCF, uses “economic duress to manipulate financially desperate claimants into providing BP, and other responsible parties, with an improperly broad release of claims and legal rights in exchange for inadequate consideration.”
Hood says the need for court supervision of the GCCF is dire.
Otherwise, “BP and its agents, Mr. Feinberg and the GCCF will continue to subvert the remedial purposes of OPA. As a result, the people of the Gulf region will continue to be denied the compensation they are owed for their damages resulting from the Deepwater Horizon incident.”
Alabama Attorney General Luther Strange said that of the GCCF claims that have been paid, “almost all – 98.9 percent (96,417 out of 97,423) are of express-line quick-pay option requiring no processing by the GCCF, and disturbingly, that the claimant was required to forfeit any and all other legal recourse for compensation.”
Strange’s statement added that “officials also are troubled that the GCCF continues to rearrange data in a way that hinders true transparency. … a multimillion dollar public relations campaign has been used to distort the truth.”
In his March 21 letter to Feinberg, Strange asked: “Why doesn’t the GCCF release the data that would reflect the ratio of what is being paid versus what is being claimed? Paying $3.5 billion when claimed losses are many billions more is hardly a reason to claim success. Providing the complete picture of claims versus payment is essential for an accurate and fair evaluation of the GCCF process.”
The average quick-claim payment has been $12,000.
When taking a quick-claim payment, claimants must sign away their right to future payments from BP or any other oil spill defendants.
“At the end of the day as we look around our community, we find that the level of personal stress created by this dysfunctional claims process far exceeds the level of stress created by the oil spill itself,” said Bob Higgins, senior vice president of the Baldwin County Economic Development Alliance and chairman of Coastal Resiliency Coalition.
“The problem that the claimants are faced with is that if you are already near financial ruin, the only way to receive any payment with certainty is the quick-pay process. Even if you decide that it is not enough money to compensate you, it is still more than your other choice, which is complete uncertainty. There is no wonder people would give up their right to sue and accept a quick claim payment instead of continuing in this broken process that may never lead to anything at all.”
BP announced on March 25 that it had increased Feinberg’s pay from $850,000 a month to $1.25 million a month, retroactive to Jan. 15.
Hood’s document states that Feinberg’s raise “speaks volumes about what services that BP requires Mr. Feinberg to perform, if BP believes that his performance to date merits more than a 47% increase in compensation retroactive to January 15. In the absence of swift, firm and decisive judicial intervention and the imposition of Court-mandated and Court-controlled supervision of the claims process provided by BP, the remedial purposes of OPA will continue to be subverted by BP, through the improper denial or delayed payment of legitimate interim, short-term damage claims.”
During last summer’s oil spill, President Obama directed BP to set aside $20 billion to pay oil spill-related damages.
Through Feinberg, the GCCF makes payment to claimants out of that $20 billion.
Feinberg has said he is unlikely to pay more than $20 billion to claimants: “I am cautiously optimistic that $20 billion will be enough,” Feinberg said, according to The Guardian, a British newspaper.
Any money remaining from the $20 billion would be returned to BP, under an agreement with the White House. According to The Guardian, Feinberg said: ‘”My understanding is that if $20 billion is sufficient and there is money left over it is retained by BP. That is not on my watch; that is not my responsibility.'”
The Guardian story ran under the headline: “BP Fund Lawyer to Refuse 100,000 Gulf Spill Disaster Claims[.] Vast majority of 130,000 unsettled claims do not have adequate documentation, says Ken Feinberg.”
But The New York Times reported on April 3 that BP has set aside $40 billion for oil-spill claims, not $20 billion. Asked in an email where the Times got the figure, a reporter who co-wrote the story said he assumed it came from BP: “that it was based on company statements.”
Feinberg’s Gulf Coast Claims Facility’s latest estimate is that 65 percent of the claims have been paid. But a Louisiana attorney who is familiar with the oil spill litigation doubted that.
“While we do not have access to Feinberg’s records to know whether his 65 percent number is fully accurate, on an anecdotal basis, in dealing with our clients and with knowledge of a large number of other claimants with real damages issues arising from the BP oil spill, I would have serious doubts about any representation by the GCCF that its claims program has reached any benchmark of success,” the attorney wrote in an email, speaking on condition of anonymity.
He added: “The GCCF may be making payments to a large number of small-dollar-amount claimants, but the bulk of claimants with large damages that I am aware of are facing multiple hurdles and barriers to any real satisfaction of their claims by the GCCF.”