Published November 21, 2010
The administrator for the Gulf of Mexico oil spill compensation fund is pledging more transparency as the deadline nears for short-term claims by those looking to get a cut of a $20 billion fund set aside by oil giant BP for damages caused by the massive spill that devastated the region over the spring and summer.
Wednesday is the deadline for individuals seeking restitution. Kenneth Feinberg, who has paid out about $2 billion so far to 125,000 claimants, said he's working as quickly as he can to respond to claims.
But that hasn't stopped the Department of Justice and one Republican senator from criticizing Feinberg for moving too slowly and not allowing enough transparency into the compensation process.
Sen. Richard Shelby, R-Ala., who met with Feinberg Friday, said the claim fund is not moving "with appropriate urgency" and people aren't getting the payments they deserve.
"Businesses along the Gulf Coast are not only trying to survive now but also prepare for the next tourist season, which is quickly approaching," Shelby said. "These victims deserve a fair opportunity to appeal inadequate payments, particularly in light of the lack of transparency, clarity, and consistency in the payment process."
Associate Attorney General Thomas Perrelli wrote Feinberg on Friday to ask him to expedite the process, which the Justice Department has complained is forcing individuals to wait for payment without the means to support themselves.
"While you have indicated that poor documentation has made it difficult to address some claims quickly, over the past two weeks the number of claims requiring additional documentation has actually gone down -- while the number of claims under review has increased significantly," Perrelli wrote to Feinberg.
In a statement to Fox News, Feinberg, whose company is earning $850,000 a month to administer the claims, said he's responding to the government's complaints.
"I think it's always wise to listen carefully to constructive criticism from the Department of Justice," Feinberg said. "They want me to improve transparency, and I plan to do so."
Feinberg said he estimates that about $6 billion of the fund will be spent, including government and cleanup claims, allowing BP to reclaim the remainder once all the settlements are paid out by August 2013.
He added that the fund is doing the best it can given the more than 400,000 claims filed so far. Of those paid out, 80 percent have received full compensation.
But another 147,000 are clogging up the process because they have little or no documentation to support losses, Feinberg said, noting dozens are under review for potential fraud. About 60,000 claims have already been denied payment, and nearly 72,000 remain under review.
Those companies and individuals who receive a pay-out from BP will forfeit their right to sue the company over the oil spill that lasted more than 100 days after an explosion on the Deepwater Horizon rig on April 22. Eleven rig workers died and about 5 million barrels of oil spilled into the Gulf of Mexico scaring away tourists from beaches and freezing the fishing industry.
But victims aren't bereft of alternatives if they file now and have to wait for compensation. The fund is open for three years, and victims can receive interim payments by submitting for accumulating damages every three months during the application process. That also allows them the option to back out and sue BP.
Shelby said that decision arose from a pledge by Feinberg to address concerns.
"Any business that believes it was treated unfairly will now be able to file for an interim payment every three months for the next three years. ... I appreciate Mr. Feinberg's pledge, but I will be monitoring the situation closely to see that it is fulfilled," he said.
On the flip side, those who decide to wait out the process may find that a gamble since the Gulf recovery could limit their options for claiming losses.
"If they decide a year from now, I'll take the final payment, they're going to have to show prospective damage," Feinberg said in a recent interview with The Associated Press. "But my offer may not be available to them a year from now if everything is back to normal."
Many business owners, particularly ones with larger claims, say they feel Feinberg is shortchanging them or keeping their claims under review to force them into accepting the final settlement offer because they'll be so far behind on bills, they'll have no choice.
"If he keeps everybody hungry, they're going to have to take any kind of settlement," said Keath Ladner, a Mississippi seafood processing company owner who employs about 70 boats. His company has been at a standstill since April 20 and claims to be out $1.7 million. "We'll have to take whatever he offers."
Feinberg, who also oversaw the $7 billion government fund for families of victims of the Sept. 11, 2001, terrorist attacks, said larger business claims are taking longer because they're more complicated.
The Associated Press contributed to this report.