Rising Concerns About Legitimacy of BP Claims Process

Kenneth Feinberg, a Washington lawyer, was brought in during the summer to administer the 20 billion dollar fund that British Petroleum set up to compensate victims of the April oil spill from the Deepwater Horizon. Now, amid charges from the Attorney General for Louisiana and others that Feinberg is not acting independently of BP, we learn that of the 91,000 Gulf oil spill claims, just one has resulted in final payment being made.

Furthermore, we now know that Feinberg's office approved that final payment of $10 million to one of BP's business partners without his office even inspecting the claim for merit. As he put it, "We never reviewed the claim; we honored the request of the parties to fund the claim." In other words, ten million of the fund set up by BP is gone to BP's business partner without any oversight whatsoever by Feinberg. In many people's minds, this makes Feinberg's administration of the fund suspect.

With that in mind, there are 3 ways to make claims to the fund now. First, victims can file for a quick one-time payment of five thousand dollars for individuals and twenty-five thousand for businesses. A release of all claims, except for future claims for bodily injury, must be signed. The person or business cannot make any further claim. The right to sue BP and other defendants will be waived. Signing a release is dangerous since the long term effects of the spill are largely unknown.

Other oil spills, including the one in Alaska from the Exxon Valdez, have proved that. Damages from submerged oil and damages to the seafood continue twenty years later. Second, it is possible for individuals and businesses to file for interim payments and to be paid if they can continue to show losses. Third, claimants can opt for a final settlement of all present and future damages, but to do that, they would have to sign a release. Again, that seems to be a dangerous thing to do in many cases, because if the long term effect of the oil isn't known, how can claimants compute future damages at this point?

If the claims fund administered by Feinberg disagrees with a victim's assessment, the victim can appeal to a 3-judge panel. But guess who picks the panel. Feinberg. The appeals process hasn't been used yet, so many questions remain about how it will be used. Dangers and pitfalls are associated with the signing of any release. The same is true of releasing BP when any option other than interim payment is selected.

The required release contains language waiving the claimant's right to sue roughly 120 other possible defendants and even gives BP the right after a settlement to get all of its money back from the other companies and more in some cases. What small sum is Kenneth Feinberg being paid by BP for his administrative work? Only eight hundred fifty thousand dollars a month. Does this cause you to be suspicious of whatever he does?

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