On oil spill aniversary, claims fund is touted for its progress
Oil Spill claims administrator Kenneth Feinberg marked this week’s anniversary of the Deepwater Horizon oil spill (the rig exploded on April 20, 2010) by highlighting the fund’s progress and defending the fact that the bulk of the claims paid by the fund have been so-called quick payments. #
Since the final payment process began, the Gulf Coast Claims Facility has paid Floridians nearly $425 million in “quick payments,” in which individuals and businesses who have already received emergency payments can collect $5,000 and $25,000 respectively without documenting additional damages. #
The fund has paid Floridians another $34 million in interim payments, which allow claimants to come back for more money every three months, and $55 million in final payments, which require them to waive their right to sue. #
Feinberg said the large number of claimants were likely choosing the “quick pay” option because they felt they couldn’t document damages beyond those amounts. #
“Nobody’s required to take the $5,000,” he said. “It’s an option.” #
Fienberg said the fund has been working to resolve the problems that dogged the emergency process, in which claimants complained of “languishing” and struggling to comprehend the status of their claims. The fund has sent out tens of thousands of letters asking for additional documentation, but out of 278,636 claimants, only about 78,000 remain under review. #
He also said the facility is following through on his promise to beef up staffing at local claims offices. #
Feinberg also said the fund has received 8,000 “borderline” claims that raised suspicions of fraud, and has referred 1,000 to the Justice Department for prosecution. #
Here’s the executive summary of the report sent out today by the facility: #
Wednesday marks the first anniversary of the explosion of the Deepwater Horizon oil rig, and the oil spill claims fund is marking the occasion by tooting its own horn and dismissing its critics. #
As the one year anniversary of the Deepwater Horizon Oil Rig Explosion approaches, the Gulf Coast Claims Facility (“GCCF”) continues to process and pay thousands of claimants – both individuals and businesses – that have suffered damages as a result of the Oil Spill. The GCCF began operations on August 23, 2010, assuming control of the claims process from BP (which paid approximately 50,000 claimants an aggregate sum of $398 million over the four-month period from April 20 to August 23, 2010). #
The GCCF continues to staff 35 claims offices located in five states (Alabama, Florida, Louisiana, Mississippi, and Texas); it employs approximately 3,200 people including: claims evaluators, claims intake specialists, call centers, accountants, lawyers, administrative managers and other support personnel. The GCCF will continue to process claims through August 22, 2013. #
The following statistics and comments demonstrate the unprecedented magnitude of the task confronting the GCCF, and its success over the past nine months in processing claims submitted by individuals and businesses impacted by the Oil Spill: #
- Since August 23, 2010, the GCCF has approved approximately 300,000 claims for payment involving approximately 180,000 eligible individuals and businesses. During the Emergency Advance Payment (“EAP”) period from August 23 – November 23, 2010, the GCCF paid 169,035 claimants approximately $2.6 billion. Since then, the GCCF has paid an additional amount of over $1.2 billion to many of these EAP claimants as well as claimants who filed for the first time after the expiration of the EAP period.
- Since the end of the EAP period on November 23, 2010, the GCCF has received approximately 278,000 claims and has processed approximately 72% of all submitted claims. A claim is “processed” when the GCCF has made an offer of payment (to which the claimant has 90 days to respond), when the GCCF has made a payment, when the GCCF has sent a notice to the claimant of a deficiency in the proof and documentation submitted to substantiate the claim, or when the GCCF has sent a letter to the claimant denying the claim based on a finding by the GCCF that the claimant is not eligible for any compensation.
- Since August 23, 2010, the payment of claims breaks down as follows:****
- Emergency Advance Payments – Approximately 169,000 individuals and businesses received Emergency Advance Payments of up to six months duration without requiring these claimants to release their right to sue or surrender any other legal rights. The aggregate value of these Emergency Advance Payments is $2.6 billion****
- Quick Payments – 110,163 claimants (85,501 individuals and 24,662 businesses) have to date filed and accepted a Quick Payment of $5,000 for individuals and $25,000 for businesses, without any requirement that these claimants submit additional proof documenting their losses. This option is advantageous for claimants who have either already received appropriate compensation through the Emergency Advance Payment Program or cannot prove any additional damage arising out of the Oil Spill. Claimants accepting this Quick Payment option release their rights to either return to the GCCF for additional payments or file any other claims for costs or damages from the Oil Spill. The aggregate value of these GCCF Quick Payments made to date is $998,680,000.****
- Final Payments – In the past eight weeks, 16,281 claimants (15,250 individuals and 1,031 businesses) have accepted a Final Payment Offer from the GCCF. In addition, the GCCF has made approximately 16,600 additional Final Payment Offers, which claimants have 90 days to accept or reject. Claimants accepting this option release their rights to either return to the GCCF for additional payments or file any other claims for costs or damages from the Oil Spill. The aggregate value of these GCCF Final Payments made to date is $222,183,102.
- ***Interim Payments *– In the past eight weeks, 6,902 claimants (5,690 individuals and 1,212 businesses) have received an Interim Payment from the GCCF. Claimants receiving an Interim Payment do not release their rights and can return to the GCCF each quarter for additional compensation if the claimant can prove damage caused by the Oil Spill during the previous quarter. The aggregate value of these GCCF Interim Payments is $78,691,137.
Each eligible claimant – whether an individual or a business – can voluntarily elect any one of the three options referenced above (Quick Payment, Final Payment, Interim Payment). The GCCF takes no position as to which option is preferable for a particular claimant. This will depend on the circumstances surrounding each claim and the voluntary decision of the claimant as to which option is preferable. The decision is entirely that of the claimant. #
On this first anniversary of the rig explosion and Oil Spill, the GCCF emphasizes the
- following additional points which have been the subject of debate over the past nine months:* #
- *Those claimants electing the Final Payment option will be paid two times their actual 2010 documented losses (4 times actual 2010 documented losses for oyster harvesters and oyster processors) less any amounts already received from the GCCF or BP. This formula of future damages is based upon expert opinion available to the GCCF and was arrived at after all interested parties had the opportunity to comment publicly on this proposed formula. Most critics commenting on the formula opined that it was not sufficiently generous; BP publicly opined that it was too generous.The GCCF reserves the right to modify its formula for calculating future damages if warranted as subsequent events unfold. The formula is based on a reasonable prediction — not a certainty – as to the future of the Gulf and a predicted timetable for full recovery. Any claimant who believes that the formula does not adequately take into account future uncertainty may elect the Interim Payment option, which permits the filing of claims quarterly for actual documented losses, delaying the right to file a Final Claim until a future date.
- *There has been some public discussion concerning the disparity between claimant damages requested and amounts actually calculated and paid by the GCCF. But this difference in amounts requested versus amounts paid is not a fruitful subject for debate. Amounts requested by claimants very often bear no reasonable relationship to the damages actually proven; in one case a claimant submitted a claim demanding all $20 billion, while in another case a claimant demanded $10 billion. In general, amounts requested by many claimants are well out of proportion to the damage actually substantiated in the claimant’s submission to the GCCF. As a result, the distinction between the amount claimed and the amount paid is not a useful barometer of progress.
- *The GCCF has expanded and enhanced the staffing of its 35 local claims offices in the Gulf in response to criticism that these local offices were unable to respond adequately to claimant inquiries about the status of their claims or how the damage calculations were made. These local claims offices are now staffed with accountants, GCCF claims adjusters, systems personnel and local liaisons from Gulf area law firms and claims administration firms retained to meet with claimants to explain the GCCF process. These personnel are able to meet with individual claimants and provide them the type of face-to-face assistance sought by claimants.
- In an effort to promote transparency concerning the claims process, the GCCF published for public comment on the GCCF website its Proposed Final Rules Governing Payment Options, Eligibility and Substantiation Criteria, and Final Payment Methodology. After reviewing all public comments, the GCCF promulgated its Final Rules on February 18, 2011, available on the GCCF website. These Final Rules detail the methodology used by the GCCF to determine both claimant eligibility and the calculation of damages. In addition, the Final Rules also provide GCCF correspondence to claimants detailing the specific reasons why the claim is ineligible or lacking necessary proof.The GCCF claims process is a unique, unprecedented attempt to compensate hundreds of thousands of eligible claimants who have suffered financial damage as a result of the tragic Deepwater Horizon Oil Rig explosion and Oil Spill. Both the volume and complexity of the claims pose a challenge to the efficiency and fairness of the claims process. The GCCF is accomplishing the objectives set out by the Administration and BP in establishing a payment program to compensate the victims of the disaster. The GCCF will continue to make whatever midcourse adjustments are necessary to promote expeditious resolution, transparency, and consistency of the claims process.