NEW ORLEANS (CN) – Kenneth Feinberg has responded to criticism of his handling of the claims process for the Deepwater Horizon oil spill, which BP pays him $1.5 million a month to oversee. Plaintiffs’ counsel claimed that Feinberg’s Gulf Coast Claims Facility does not comply with the Oil Pollution Act’s claims process, and creates “a moving target that no claimant stands a fair chance of hitting.”
Plaintiff attorneys in July asked the federal judge overseeing the oil spill litigation to appoint a special master to monitor the claims process. They claims that Feinberg’s GCCF “violated of the spirit of the Court’s Order seeking to protect plaintiffs and putative class members from confusion and misunderstanding; and that the releases obtained from plaintiffs and other putative class members are invalid and should not be enforced.”
The consolidated litigation is overseen by U.S. District Judge Carl Barbier.
In his reply, filed Monday, Feinberg says it would not be legal for Barbier to appoint a special master to oversee the claims process. He claims the claims process is working in a fair and simple way.
Feinberg says that even claimants who end up taking the $5,000 quick-pay option (or $25,000 for businesses) which requires that waive the right to sue or seek more money from BP, recognize that the process “provides an extraordinary and generous opportunity” for payment.
In their filing in July, plaintiffs’ counsel said a special master is needed to assure compliance with the Oil Pollution Act (OPA), to ensure accurate communication with claimants, to make findings or recommendations on OPA’s presentment requirements, and to make recommendations regarding the scope and or efficacy of releases of claims.
The plaintiffs said: “The GCCF’s own June 2011 statistics reveal the GCCF has paid fewer than 16 percent of interim claims filed, compared with the 97 percent payment rate of ‘quick’ final claims accompanied by releases.”
The releases accompanying final payment bar claimants from ever seeking more money from BP or any other parties in the litigation, including the U.S. Coast Guard.
But the plaintiffs say: “By amending OPA in 1996 to establish the mandatory interim claim requirement, Congress sought to ensure that victims were paid immediately after an oil spill without losing right to pursue long-term claims.”
They add: “The abject failure of the interim claims process administered by the GCCF is the latest, and most troubling, in a long line of actions by BP designed to ‘close the books’ on the oil spill.”
Feinberg replied that the interim payments, which plaintiff attorneys say are not being paid, are not required by the OPA, and that “any reasonably objective person genuinely interested in the welfare of those damaged by the spill would acknowledge and commend the extraordinary scope and speed,” of the GCCF.
Feinberg added: “The GCCF’s exceptional job of fulfilling Congress’s intent to expedite recovery and minimize litigation was recently recognized by Mississippi Governor [Haley] Barbour in testimony before the House Committee on Government Operations:
“‘We don’t get many complaints in Mississippi [regarding the GCCF]. They’re doing something that’s complicated, and I will say this about it. It is sure better than having to litigate all this, where people wouldn’t get their money for years and years and years, and the trial lawyers would get half the money.'” (Brackets in original.)
In July, Mississippi Attorney General Jim Hood sued Feinberg to try to get access to GCCF claims filed by coastal residents. Hood said that if Feinberg would “open the books for Mississippi claims, we will find they have not treated our claims fairly,” according to a July 12 report from ABC News.
Feinberg’s document does not address his attorney general’s lawsuit.
Feinberg wrote: “Plaintiffs’ position rests on a profound misunderstanding of both OPA and the GCCF’s activities – i.e. both of the law and the facts. On the law, plaintiffs badly misconstrue OPA in saying that it contains a ‘requirement to *** pay interim claims’ and ‘requires BP to pay interim claims’ Pltfs. Br. at 1, 12. OPA provides that a claimant may sue the responsible party in court if the presentment process does not produce a settlement – hardly a scheme consistent with a mandatory duty to pay (which in any event would violate due process). Plaintiffs also err in saying that the releases the GCCF requires for the payment of final (not interim claims) are invalid (Plntfs. Br. at 1), for both the text and the legislative history of the act shows that releases are critical to OPA’s goal of settling claims outside of court.” (Parentheses and asterisks in original.)
Feinberg said that between from May 14 to Aug. 12 this year, the GCCF paid 12,440 interim claims totaling $168 million. Total claims paid so far come to $283 million, for 23,027 claimants, Feinberg wrote.
But the plaintiffs claimed that “as of late January 2011, the GCCF paid one interim claim out of the 42,155 interim claims submitted. In contrast, by the same date, the GCCF has paid 81,933 quick pay claims out of 85,741 quick pay claims submitted.”
The plaintiffs cite examples from nonprofits that help fishermen get compensation from BP. They say that claimants take quick-pay claims out of fear and desperation: “While the statistics clearly indicate that the GCCF is paying quick pay claims and not paying interim claims, they do not offer a clear understanding of the type and quality of relief actually flowing to claimants. For example, the [GCCF’s] statistics do not distinguish whether interim claimants actually received interim relief, or some other type of payment – for example, a quick payment. It is also unclear if the number of claims paid includes any or all of the 3,658 claimants who accepted final offers. Even the 13.6 percent of interim claimants who have been paid may have, in fact, been paid through the quick pay option. The GCCF Status Report ambiguously reports ‘claimants paid’ not ‘interim claims paid.’ The dollar amount of interim claims paid to individuals averages $6,441.84, barely more than the $5,000 individual quick settlements being offered by the GCCF. Similarly, businesses receiving interim relief have been paid on average $25,249.39, not even $250 more than the quick business settlement of $25,000.
“The GCCF’s figures suggest that many payments made on interim claims were, in fact, quick pay equivalents made in exchange for the claimant signing a release and assignment of rights. Regardless of the GCCF’s confusing representations on how many interim claims have been paid, one thing is clear: the vast majority of interim claimants have received no payment whatsoever. More significantly, only 184,091 of 511,171 claimants, that is to say 36 percent of all claimants, have received any payment at all from the GCCF at any time.” (Parentheses, but not brackets, in original.)
Feinberg, however, claims that the plaintiffs “fail to appreciate that the quick payment program provides an extraordinary and generous opportunity to claimants. It offers them the option to obtain $5,000 (for individuals) or $25,000 (for businesses) in full satisfaction of their remaining claims, even if the claimant cannot substantiate further losses (because of poor recordkeeping for example), or did not even incur further losses beyond those for which the claimant has already received compensation from either BP or the GCCF. It is therefore unsurprising that more than 120,000 claimants have elected to take advantage of this program.
“Plaintiffs’ suggestion that only ‘desperate people’ elect to take a quick payment … is made without any supporting evidence. Moreover, plaintiffs’ position rests on the unproven assertion that some number of claimants have accepted quick payments when they might have received greater recoveries had they elected to pursue other claim options. Even if this were true, it can be a perfectly rational decision to accept an assured short-term payment over a possibly larger but postponed long-term payment. Threatened and pending lawsuits are routinely settled on the basis of such considerations, and those settlements are not subject to challenge on the ground that a party had a choice to make between accepting an early certain payment or waiting to see whether more might be received in the future. Plaintiffs’ unsupported supposition that the citizens of the Gulf are incapable of evaluating their options and making an informed decision to accept or reject the Quick Payment option is patronizing at best.” (Parentheses in original; citations to plaintiffs’ filing omitted.)
Feinberg adds: “A recurring theme of plaintiff’s brief is that the GCCF is throwing up roadblocks to Interim Payment claimants to force them to accept Quick Payments and sign releases. E.g., Pltfs. Br. at 11 (‘GCCF is strategically and systematically forcing putative class members to accept quick payments with accompanying releases because they are offered no other viable option.). These allegations are made without a shred of evidentiary support beyond conclusory affidavits based on second-hand information and anecdotal newspaper reports about supposedly frustrated claimants who have accepted Quick Payments – inadmissible hearsay that provides no basis for reaching any conclusions about either the GCCF’s motives or its operations.
“Moreover, plaintiff’s supposed statistical evidence of the GCCF’s allegedly coercive activities – that it pays of a higher percentage of Quick Payment claims than Interim Claims (Pltfs. Br. 2, 4, 5) – has a simple answer: Quick Payment Claims are almost presumptively payable. They require no substantiation other than proof that the claimant previously received an EAP or an Interim Payment. By contrast, an Interim Claim requires the claimant to document previous earnings and claimed losses, and can include fully documented claims, imperfectly documented claims, invalid claims, and fanciful claims. … Hence one claim type presumes entitlement and is paid almost automatically while the other requires the careful attention of GCCF to ascertain whether it has satisfied certain prescribed minimum standards (as OPA contemplates).” (Some citations omitted.)
Feinberg is represented by David Pitofsky of Goodwin Proctor of New York, N.Y.
Plaintiffs’ document was filed by Stephen Herman of New Orleans and James Roy of Lafayette, both of plaintiff liaison counsel.