For Oil Spill Victims, Fair Compensation Requires a Crystal Ball

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Thursday, July 22, 2010 at 6:00 am

Kenneth Feinberg, administrator of the BP Oil Spill Victim Compensation Fund, testifies before the House Judiciary Committee on Wednesday. (Pete Marovich/ZUMApress.com)

George Barisich — a third-generation shrimper in Saint Bernard Parish, La., whose livelihood has come to a screeching halt as a result of the Gulf oil spill — hasn’t got the slightest idea when he’ll be able to get back to work.

“God hasn’t shared that with me yet,” he said.

[Environment1] For Barisich and thousands of other victims of the spill, the inability to work has brought about substantial financial hardship. Now, with BP nearing the final stages of its three-month effort to stop thousands of gallons of oil from leaking into the Gulf of Mexico, the big question they’re all asking is how they’ll be compensated by BP for the economic damage they’ve suffered.

But as officials unveil details of the claims process, spill victims face a conundrum: Many of them will be required to predict the long-term damages they will face as a result of the oil spill years before the true damages are known.

Kenneth Feinberg is the man in charge of what is likely to be one of the largest claims processes in U.S. history. Feinberg was appointed by the White House last month to oversee a $20 billion escrow account being put aside by BP to pay claims from the spill.

He has been trekking across the Gulf Coast region over the last several weeks in an attempt to gain the trust of oil spill victims. For the most part, people seem to like him. They appreciate his candor. “This program I am running is absolutely voluntary — nobody has to do it,” Feinberg told Louisiana residents last week, according to The New York Times. “It’s my opinion you are crazy if you don’t participate.”

But first impressions don’t mean much in the Gulf, which has faced more than its share of tragedies and government recovery efforts. Observers say they are waiting to see just how Feinberg restructures the claims process.

While Feinberg has not outlined his plan in great detail, a major battle over the claims process is looming. BP has been offering interim payments to oil spill victims to hold them over until the leak can be capped. While there have been complaints about this process (including frustration over the disbursement of second payments), the White House says BP has not denied any claims. As of Tuesday, “119,012 claims have been opened, from which more than $220 million have been disbursed,” the White House says.

But these are just interim payments. Feinberg has outlined a process whereby, beginning three months after the well has been permanently capped, victims will need to file claims for the total damages they expect from the oil spill. They will then be offered a single payment. If they accept the payment, they must sign a waiver saying they cannot sue BP for more money. If they aren’t happy with the payment, they can sue BP, entering a legal process that could take years to resolve.

Observers and lawyers in the region say this scenario raises several questions, the main one being: How can you calculate the economic damages you’ll suffer before you know what the true consequences of the oil spill will be years and even decades down the road?

Barisich, who is the president of the United Commercial Fisherman’s Association, put it this way: “It’s a crap shoot. It really is. … Fishing may come back within two years and then you win. But if it doesn’t come back, if it takes four, five, six, or 20 years, then you lose.”

Barisich said there are no accurate estimates for when the fishing industry will fully recover. “Nobody can give you that answer,” he said. “If somebody tells you, it would be a best guess. [The spill is] so vast, it’s so huge, it’s so spread out. They tell you it’s going to come back in two years. Would you put your salary up on that estimate? Because you’re sure as hell putting my salary up on it.”

Richard Shore, a partner at the law firm Gilbert LLP, which has worked on litigation resulting from the Exxon Valdez oil spill, echoed Barisich’s concerns. During the next six months to a year, as Gulf Coast residents become more desperate for a settlement, they are more likely to accept what BP has to offer, even before the full consequences of the spill are adequately understood, Shore said.

“People with claims against BP will need income, but they won’t know the full extent of their damages,” Shore said. “People shouldn’t be forced to choose between going for long periods without compensation and guessing prematurely what their full damages might be. In the longer term, what Mr. Feinberg is saying is that people will have to make an educated guess about what their full damage is.”

While any victim can choose to sue BP for more money, Shore warns that this process can be expensive and time consuming. “The litigation route has its downsides and may create pressure on people to accept an offer of compensation from BP,” he said. “That will result in a lot of scrutiny on the Feinberg process.”

Ed Sherman, a law professor at Tulane University, said the process Feinberg is implementing is very similar to the one he employed as the head of the 9/11 Victims Compensation Fund. But Sherman noted that the wide-ranging nature of the spill makes it different from the 9/11 attacks. The spill is “unlike 9/11, where a loved one was killed or there were injuries and you have a fixed condition on which to base a claim,” he said.

Still, Sherman said that outside of the BP claims process, courts are tasked with making these kinds of determinations all the time — for example, when determining compensation for long-term disability. Sherman said Feinberg will likely review the data in detail to form as accurate an estimate for long-term damages as possible to use as a basis for assessing the claims.

Feinberg did not respond to requests for comment, but a source in his law office confirmed his plan for long-term compensation for spill victims.

Regardless of the outcome of the claims process, it could be some time until Barisich and others are able to get back to work.

“We don’t know if the Gulf is going to be screwed up for years,” Barisich said. “It’s our mother basically. It gives us our product.”

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“How can you calculate the economic damages you’ll suffer before you know what the true consequences of the oil spill will be years and even decades down the road?”

The BP fund is an attempt to buy peace by overwhelming potential plaintiffs with “easy” money. Companies have tried that before, with mixed success. Asbestos manufacturers failed miserably when they negotiated a global settlement with plaintiff lawyers in the early 1990s under which they’d pay out $300 million to injured workers in exchange for having cases of workers who were exposed, but not sick, valued at zero. The Supreme Court rejected the settlement in 1997 because it bound future claimants to terms they had no part in negotiating. The companies were out the $300 million and still faced thousands of asbestos lawsuits.

All victims of the BP oil gusher should read this article:

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I feel a tad stress in what to do after well is caped. I think what was said here is good. I work at a shrimp factory and I do not know how much we are going to work. It is a guess,because you cannot say what the effects will be. Bp has given me a little ease. And I was patient and fell behind in my bills. I live on each week of pay checks. I did not complain and took what my adjuster choose to give me . But I think I will go for a six month damage for I do not no what is to come and settle with this and this will give me a little peace of mind. I hope others will do the same. dj


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http://www.chicagooilscandal.com I have a story that I am sure is very news worthy with respect to what has happened in the Gulf region. My family as well as other residents from Chicago,have been fighting Bell Fuels,Inc. for over eight years now.To make a very long story short,Bell Fuels Inc. contaminated residential homes including mine with what is called LUST(UNDERGROUND LEAKING STORAGE TANKS. We have been fighting in the notorious Cook County court system all this time. During this time,because of the negligence of the EPA,IEPA,and our state and local politicians,we have lost our beloved home. This also boils down to the TOXIC RIGHT TO KNOW PROTECTION ACT PUBLIC S595. I believe whether an oil company leaks one drop or 500 pounds of toxic chemicals that are cancer causing,the community needs to be alerted. We were not afforded this until way too late. I have been single handedly emailing,writing,phone calls etc to everyone including our attorney general in Illinois. Everything seems to fall on deaf ears. I am a mother whom believes in always trying to do the right thing. My son was an infant when the one of the oil Corporations representatives asked that they could perform environmental testing on our properties. That was just the beginning of our nightmares! My son is eight now and we had to move in with another party involved in this. My Godmother. So,a family of three are basically sharing one bedroom, from having a wonderful home that we adored. We are sick and tired of being neglected and victimized over and over again. I am a fighter and will keep fighting but I need help DESPERATELY to bring to light this issue. British Petroleum was made to be held accountable. What about us? I guess living in Chicago a lifelong resident those in power now consider us “the little people”. I would love to help others as well as myself in bringing the subject to light that not only can these oil companies ruin a Gulf region,but many residential areas in local communities. Families are truly suffering. There are many children and elderly that live on our block affected. Lives have been ruined. I would appreciate it with all my heart a response and any help that could be given to us.
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