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Tuesday, May 21, 2024 | Back issues
Courthouse News Service Courthouse News Service

Audit Finds $64M Hole|in Paid Oil Spill Claims

NEW ORLEANS (CN) - An independent audit found that the Gulf Coast Claims Facility could have made $64 million more in payments to 7,300 more individuals and businesses hurt by the BP oil spill.

The Deepwater Horizon rig exploded off the coast of Louisiana on April 20, 2010, killing 11 and unleashing the worst oil spill in U.S. history. Hundreds of thousands of people and businesses across the Gulf Coast suffered physical and economic damages as a result.

Four months later, at the suggestion of the Obama Administration, BP set aside $20 billion to pay economic claims arising from the spill. The Gulf Coast Claims Facility was set up to process and pay claims.

Following criticism from public officials and Gulf Coast residents that the GCCF was not processing all claims in a fair and timely way, the attorney general ordered a third-party audit on the claims process.

Announcing those findings, the Department of Justice said Thursday that the audit found thousands of unpaid claims.

"Approximately 7,300 individuals and businesses throughout the Gulf region will now see the benefits of that action, to the tune of over $64 million in additional payments," Tony West, acting associate attorney general for Justice Department, said in a statement. "While there's no question that the independent GCCF labored under extremely challenging circumstances to get a huge number of payments processed successfully, the fact that this audit has resulted in tens of millions of dollars being made available to claimants who were wrongfully denied or shortchanged underscores the importance of the audit."

West said checks worth $64 million are now being sent to roughly 7,300 claimants who received less than that to which they were entitled from the GCCF.

The report additionally identified more than 2,600 individuals whose claims were erroneously denied or to whom payments or offers were not issued because their claims files did not contain information needed to determine financial loss.

Some claimants were also overpaid as a result of errors applying the GCCF's procedures, according to the report. Attempts to identify all the claimants who were overpaid or to quantify those overpayments have not been made, and the GCCF is not making any effort to recover those overpayments.

The report also noted the unprecedented nature of the spill, and the context under which the GCCF's operated. There was an intense pressure to pay claims quickly, a claimant community that was experiencing significant economic pressures after a very difficult post-spill tourist season, and more than a million claims, including many with complex economic losses.

During the year and a half it was in operation, the GCCF paid out $6.2 billion to more than 220,000 claimants. Its doors closed last month amid the settlement between BP and the private plaintiffs. Payments to claimants are continuing through a court-appointed third party.

BDO Consulting conducted the evaluation, scanning tens of thousands of claims files and searching the GCCF's entire database of more than one million claims to identify other claims that may have suffered from the same errors.

According to BDO's findings, the GCCF paid a total of more than $6.2 billion to more than 220,000 individual and business claimants.

BDO will publish a full report of its findings later this spring.

Follow @SabrinaCanfiel2
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