In the News

BP's claims process leaves some spill victims happy, many confused

July 22, 2010

By Bart Jansen • bjansen@gannett.com • July 22, 2010

PENSACOLA, Fla. -- Deciding who's legitimately lost money because of the Gulf of Mexico oil spill is often an easy call.

Fishermen are clearly entitled to compensation, with one-third of the Gulf closed to fishing. Beachfront hotels can point to canceled hotel reservations. Many restaurateurs can clearly show lost business.

But along with the black-and-white cases, there's plenty of gray.

How about a canceled real-estate deal? Or a decline in inland property values? Will compensation extend to lost tourism in places such as Tampa and St. Petersburg in Florida, which are far from the spill but have seen lots of canceled reservations?

Answers to those questions ultimately will come from Kenneth Feinberg, an administrator of the Gulf Spill Independent Claims Fund. The $20 billion fund, which is financed by BP but will operate independently of the company, soon will take over the task of covering cover economic damages from the spill.

"Every claimant is not eligible," Feinberg told a House committee June 30. "There's not enough money in the world to pay everybody who would like some money."

To date, BP has been paying claims at 35 offices set up along the Gulf Coast and staffed by 1,000 employees, a system Feinberg plans to build on. An 800 or toll-freenumber is available for people to get a claim number, but they must document lost income through pay stubs or tax returns.

"We won't be starting from scratch," Feinberg said.

By July 15, BP had received 110,724 claims and paid out $191 million to claimants in Louisiana, Mississippi, Alabama and Florida.

The key for claimants is to show a direct harm from the oil spill and corroborate it. But eligibility gets muddy as the losses ripple inland from the coast.

When Democratic Rep. Nydia Velasquez of New York asked Feinberg at a recent hearing whether the $20 billion fund would pay compensation in places where no oil had washed up on the beach, Feinberg replied, "It's a tough question."

"If there's no physical damage to the beaches and it's a public perception, I venture to say that it is not compensable," Feinberg said. "How we deal with that problem is something I've got to address."

Some people who have filed claims with BP are happy with the results.

Katrina Mougey, who owns two rental properties in Pensacola Beach, has received three checks totaling $11,000 to cover cancellations.

BP honored her claim, even though at that time oil hadn't yet washed ashore in the area. Mougey said that didn't matter to her potential tenants.

"They'd say they can't take the chance of coming and having the oil hit when they're here," she said.

Others found the process more frustrating.

Jim Phillips said he visited a BP claims office six times to recoup losses at his business, MBT Divers scuba shop in Pensacola, but each time left empty-handed. And the money he's paying an accountant to document his losses are adding to the problem.

George Hartley said tip-dependent employees at the three beachfront restaurants he owns in Seaside, Fla., don't have the proof of lost income that BP requires, even though business is down at least 25 percent.

"No employee has two years of pay stubs," Hartley told a federal panel investigating the response to the oil spill in Seaside. "I'm more concerned for my employees than myself."

In Biloxi, Miss., a recent claims fair attracted 600 people.

"One concern was just fear or confusion about filing a claim to begin with, whether they could provide the documentation," said Martha Bergmark, founder of the Mississippi Center for Justice, which provides legal assistance to the poor. "How far will the ripples flow out to touch the people who may be laid off, like the restaurant waitress or the hotel maid versus somebody who actually owns a piece of the beach or owns a boat?"

Legal advocates from Louisiana, Mississippi, Alabama and Florida met with Feinberg on Friday to pass along such concerns and offer suggestions for handling claims.

"There's a lot of hope that Feinberg's process will begin to rationalize some of those things and operate more quickly than the BP process is," Bergmark said.

Alison Davenport, a real estate broker in Perdido Key, broke down in tears at a BP claims office July 9. She estimates she's lost $100,000 in commissions because of the spill, but it's not clear BP will compensate her.

Feinberg also will be asked to approve claims for physical ailments such as respiratory problems blamed on oil or the chemical dispersants used to break it up.

Answers about how to prove those claims and others will begin to emerge in two to three weeks, when Feinberg announces new rules for claimants. One change he wants to make is to let people file claims on the Internet. The Postal Service has offered to put claims forms in every post office.

It's not clear how long the BP-financed fund will remain active. A similar fund for victims of the 2001 terrorist attacks, also administered by Feinberg, remained open 33 months, but compensating economic victims of the Gulf spill could take longer.

"I would urge all of those people, take heart," Feinberg said. "I can't help in other areas -- personal areas -- that you may have. But when it comes to financial uncertainty, take heart. There is a program in place. We're gearing up."