NEW ORLEANS - The court settlement between BP and thousands of private oil spill claimants set up a new claims facility on June 2, and it offered a smoother, more generous process than the one Ken Feinberg ran for BP for 18 months.
But with a Nov. 1 deadline looming for claimants to opt out of the settlement, the court-appointed claims administrator, Patrick Juneau, is feeling the pressure – and running into some of the same problems in paying claims that vexed Feinberg.
At Juneau’s urging, BP and the class action lawyers have agreed to ease some documentation requirements.
Chiefly, BP agreed to waive any and all license requirements for businesses and individuals claiming they lost wages because of the spill.
“The big boy in the fence is the licensed requirement,” Juneau said. “This is where people had to go get licensed over multiple years – business license, variances license – and that’s a hard thing to obtain.”
And other criteria were relaxed as well because Juneau was running into a documentation road block with many claimants.
“We are pleased that BP has agreed to a number of changes that will speed up the processing of claims, and get the people and businesses of the Gulf paid quicker,” lead class counsel Steve Herman and Jim Roy said in a statement. “We expect the pace of checks sent to claimants to pick up as we work to ensure that all spill victims are paid the entirety of what they are owed in a timely manner.”
A quick comparison with Feinberg, who was appointed by BP and the White House and paid by BP: In his first two months of paying fully reviewed claims in 2011, Feinberg paid out $700 million to 17,000 claimants, a sixth of everyone seeking a full-review final payment at that time.
In the two months since Juneau started cutting checks under the court settlement, and he has paid out $26 million, serving a little over 1 percent of the 45,000 claims he’s received to date.
Juneau said the comparison is “apples to oranges” because Feinberg’s documentation requirements and methodology were not as clear and transparent as his. And, in fairness, about half of the claims Juneau’s gotten are ones that were unresolved or even rejected by Feinberg, so they are clearly not the low-hanging fruit.
Juneau’s payments have been slightly more generous on average. Feinberg earliest full-review final payments averaged $41,000. Juneau’s have been about $50,000 on average.
Still, the documentation issues are very similar. On Sept. 5, Juneau reported to the court: “We are becoming concerned… about the numbers of incomplete claims we are seeing in our reviews.”
In that report, Juneau said that 40 percent of claims reviewed so far are missing at least one document required to make them eligible.
About half of those deficient claimants already had a claim in with Feinberg and more than half are represented by a lawyer.
“If we don’t have those documents, we can’t process the claim, so we need help,” Juneau said. “We need the people filing these claims to help us do our job.”
The problem is especially bad for commercial fishermen and seafood harvesters. The settlement requires them to submit either trip tickets or some other documentation showing revenues from the catch they bring to dock. Half of the 3,300 vessel-owner and boat-captain claims had trip tickets, but the other half did not and not one of them had sufficient alternate documentation to justify their claim.
After paying $7 billion in claims in the first two years after the April 2010 oil spill, BP estimates the court-supervised settlement will require it to pay another $7.8 billion in claims.
As of Sept. 4, Juneau had offered 3,347 claims a total of $138 million, an average of $41,386 per claim.
The Seafood Compensation Program is capped at $2.3 billion. Juneau has found 102 of the 5,802 seafood program claims eligible for a total of $8.5 million, an average of $83,771 per claim. So far, one seafood claimant has been paid $40,972.
The largest single group of claims under the settlement are for Individual Economic Loss – mostly from people who work for businesses in coastal communities. There are 15,000 of those claims.
Only one of them has been ruled eligible two months after settlement payments began. That person has accepted a $2,572 settlement and had not been paid as of Sept. 4, the most recent data available.
Business Economic Loss payments have been almost as slow. Less than half of 1 percent of the 10,000 claims in that category have received offers… none have been paid.
There may be new hope for another group of fishermen, mostly in the Vietnamese communities, whose families subsist on part of their catch. Feinberg negotiated for months with subsistence claimants and never managed to pay more than a handful. The court settlement didn’t change that immediately.
More than 3,800 subsistence claims have been filed and none have been ruled eligible yet.
Juneau said the first determination letters for those subsistence claims should be mailed Sept. 30.
He said he’s acutely aware of the importance of the Nov. 1 opt-out date and promised that some big-ticket settlements will be paid in the next 30 days.
Both Juneau and Feinberg have been special masters or claims administrators in some of the largest, most complex litigation settlements. But both say they were taken aback by just how unwieldy and massive this BP oil spill case is.
“All others pale in comparison to the complexity of this case,” Juneau said.
|1st two months (full-review)||1st two months|
|$700 million||$26 million|
|17,000 claimants||520 claimants*|
|$41K avg.||$50K avg.|