Playing the oil spill claims game

Published: Monday, December 20, 2010, 5:00 AM

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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Gov. Bob Riley: No lawsuit waiver on final oil spill claims

Published: Saturday, December 11, 2010, 5:00 AM

Alabama Gov. Bob Riley urged BP PLC and President Barack Obama to make sure that Gulf Coast residents don’t have to sign liability waivers to accept claims payments.

Oil spill claims czar Ken Feinberg recently launched the second stage of his claims process, in which he will offer people final settlements or interim quarterly payments.

The final settlements require the claimant to sign a release and covenant not to sue BP and other parties, while the interim payments do not.

In letters to the president and to BP Chief Executive Officer Robert Dudley, Riley said that the waiver that people are being asked to sign upon their acceptance of a final settlement from Ken Feinberg’s Gulf Coast Claims Facility is “over-broad and simply unconscionable.”

Riley’s complaints are that the release:

• Waives liability not just for BP, but for “anyone who is or could be responsible or liable in any way for the incident.”

• Requires the claimant to promise that his spouse, heirs, parents, partners and others won’t sue on his or his affiliates’ behalf.

• Frees BP and others from all claims and liabilities, not just those covered by the claims facility.

“If BP wishes to disclaim responsibility for this outrageous demand, the simple and credible response would be to tell Mr. Feinberg not to do it,” Riley said in the letter to Dudley. “If BP believes it is entitled to this unfair advantage, then stop telling the victims of your oil spill that you are going to tirelessly ‘make this right.’”

Feinberg, through a spokeswoman, declined to comment. BP and the White House could not be reached for comment Friday night.

Gulf Shores Mayor Robert Craft, when told of Riley’s request to rid the final claims process of the release, said that the interim claims option is enough to ensure protection for claimants’ rights.

“I don’t know that it’s reasonable to ask for a final claim without releasing them,” Craft said.

Riley is joining a large chorus of public officials who have criticized the Feinberg’s liability release.

Alabama Attorney General Troy King has attacked the idea of a release of liability since it was first proffered in the summer. Mississippi Attorney General Jim Hood on Monday said he believes that the language in the waiver is unfair. U.S. Assistant Attorney General Tom Perrelli criticized the release last month because it required people to release BP from behavioral health claims, although the claims operation is not writing checks for those.

Feinberg responded to Perrelli’s criticism by amending the waiver to stipulate that it does not apply to claims for bodily injury.

Riley wants Feinberg to take it a step further.

“BP should instruct Mr. Feinberg not to require releases for claims payments, including payments characterized as ‘final,’” Riley said in his letter to Dudley. “If a release is absolutely necessary, write one that is limited to the person making the claim, the company paying the claim, the damages asserted in the claim, and the information available as of submission of the final claim.”

Feinberg took over the claims process for individuals and businesses on Aug. 23. He plans to end on Wednesday the first phase of the operation, in which he made emergency payments worth up to six months of losses without requiring any waiver. He has given out more than $2.4 billion in emergency payments across the Gulf Coast.

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Ken Feinberg: Oil spill claims changes made to answer Justice Department concerns

Published: Tuesday, November 30, 2010, 7:16 PM ??? Updated: Tuesday, November 30, 2010, 7:17 PM

MOBILE, Ala. -- Oil spill claims czar Ken Feinberg said Tuesday that he made several changes to his final claims process to answer concerns that a Justice Department official raised last week.?

Feinberg also agreed to Assistant U.S. Attorney General Tom Perrelli’s request to process all emergency claims by Dec. 15.?

Feinberg’s Gulf Coast Claims Facility stopped accepting new emergency claims Nov. 23, but there are more than 67,000 still awaiting review and another 147,000 that require more financial documentation before they can be approved.?

Feinberg has approved payments for more than 140,000 claimants and given out more than $2.1 billion across the Gulf Coast.?

Feinberg also said he would make the following changes that were requested by Perrelli in a Nov. 19 letter:?

• Interim payments will be given out more frequently than once every three months if the claimant shows a need for it.?
• When claimants accept a final settlement from BP PLC, the release of liability they have to sign will not waive their right to seek future payment for physical injury, including behavioral health claims, unless the payment specifically covered such damage.?
• A limited appeals process will be included allowing both claimants and BP to dispute payment amounts. Feinberg will choose a retired state or federal judge to name the members of the appeals panel.?

Feinberg did not, however, agree to a wording change that could be important.?

Perrelli had asked Feinberg to change the protocol to make it clear that the claims operation would pay all people damaged "as a result of" the spill. Feinberg said that he would continue to use the term "proximate cause" as his standard.?

Dane Ciolino, a law professor at Loyola University New Orleans, said the "as a result of" standard, also known as "actual cause," means that a claimant would just need to show that their damage linked back to the spill, whereas proximate cause calls for a much more direct connection.?

"If you drew a Venn diagram, actual cause would be the big circle, while proximate cause is the little circle inside it," he said.?

Feinberg told Perrelli in his letter that he believes his operation will be more generous than the law requires, regardless of the language.?

In the letter, Feinberg also told Perrelli that he would make his operation more transparent, although he did not offer specific details as to how he would do so.?

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U.S. Rep. Bonner unimpressed by Feinberg's latest claims announcement, says he's 'lost trust'

Published: Wednesday, November 24, 2010, 4:34 PM ??? Updated: Wednesday, November 24, 2010, 4:34 PM

MOBILE, Alabama -- U.S. Rep. Jo Bonner is not impressed with Gulf Coast claims czar Ken Feinberg’s new rules governing final payments to people and businesses damaged by this summer’s oil spill.

The Mobile Republican, who has called for a Justice Department investigation of Feinberg’s Gulf Coast Claims Facility, said that he has no confidence in Feinberg’s protocol for final payments or the Claims Facility’s ability to pay remaining emergency claims by Dec. 15.

“Mr. Feinberg’s new offer is simply a new verse to the same old song of unfulfilled promise on top of unfulfilled promise,” Bonner said in an e-mail. “Like many business owners who have been abandoned by Mr. Feinberg, I have lost all trust in his ability to manage the claims process or in his credibility in following through with new promises.”

Feinberg did not specifically respond to Bonner’s letter to the Justice Department. But he said he is troubled by the concerns Bonner has expressed to him directly.

"I have a very high regard for Congressman Bonner. I consider him a very important and credible constructive critic," he said. "One does not ignore Congressman’s Bonner’s criticism. ... And I plan to deal with the problem."

Feinberg’s Gulf Coast Claims Facility this morning also released a 54-page study by a Harvard Law School professor that Feinberg said demonstrates people indirectly affected by the oil spill likely would have much narrower legal claims to compensation than they would get from his claims process.

Claims for final payments will be open to all residents and businesses, whether or not they sought emergency relief and even if they were turned down initially, Feinberg said. Under the process laid out by Feinberg today, those initially opting for interim payments could ask for a lump sum at any time until the claims process ends Aug. 23, 2013.

Feinberg said the quarterly payments would be deducted from the final check. He said claimants very well could get more by accepting a one-time payment up front.

Feinberg also detailed appeal options for claimants and for BP, which agreed to put up $20 billion to fund the claims process.

People and businesses with claims exceeding $250,000 can appeal to a 3-judge panel that soon will be set up. BP also can appeal Feinberg’s decision to pay if claims exceed $500,000. His spokeswoman, Amy Weiss, said the BP appeals process is mandated by the federal Oil Pollution Act.

Also, after 90 days of no decision, or if a claim is denied, any claimant can appeal to the U.S. Coast Guard and then to federal court.

“I am determined to be more generous than the courts would be or the Coast Guard would be,” Feinberg said.

BP spokesman Justin Saia said the company would defer comment to Feinberg.

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