Gulf oil spill claims categories restricted by Feinberg
Oil spill claims czar Kenneth Feinberg remains under severe scrutiny and criticism for his handling of payments for BP’s $20 billion compensation fund. On February 4, 2011, the US Justice Department reprimanded Feinberg for applying broad industry categories to determine whether or not claimants should be compensated for damages from the April 2010 Gulf oil spill. A senior federal attorney said that this move by Feinberg is more restrictive that what the law allows.
Feinberg, who oversees the Gulf Coast Claims Facility (GCCF) that is administering the BP fund, had been dividing claims into categories of either eligible or ineligible during the process for determining emergency payments. Associate U.S. Attorney General Thomas Perrelli, sent a letter to Feinberg telling him that these categories were not part of the Oil Pollution Act of 1990. The letter stated that an individual claimant's connection to the spill zone and activities affected by the spill, and not the type of business he owns or works in, should be the factors used in determining eligibility for payment. The problem with this categorizing method, Perelli further explained, was that a decision about a particular industry operating inland may not apply to that same industry when it operates on shores that were affected by oil.
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Feinberg’s method of evaluating claims has also been criticized by employees of the claims agency itself, many of whom have known about the situation for several months. One former GCCF claims adjuster, Olga Souders, said she and her colleagues were ordered to assign "scores" to different industry groups when they processed claims. Some industries and jobs were given scores of 0 automatically, Souders said, making them ineligible for payments regardless of their location or the context in which they operated. "Auto repair, financial services, accountants, bail bonds, tax office CPAs, doctors and attorneys were some of the ones that qualified as 0 scores," she explained.
Souders was one of about 500 claims evaluators who were laid off in November 2010 by GCCF subcontractor Worley Catastrophe Services. She claims that she was so disturbed by the way the claims were being processed that she started her own consulting company, Gulf Coast Claims Assistance, using her inside experience to help claimants through the complex GCCF claims process. Souders said that five of the 13 claimants she represents have been miscategorized by GCCF, more than likely yielding an incorrectly low industry score on their emergency claims.
The worst case involved a company that provides rock beds laid by oyster farmers, Louisiana Rock Oyster Resources. In this situation Souders said that GCCF management told her the company was categorized as a construction business, but when the company’s owner contacted the claims facility, he was informed by a representative that his claims was filed under the “retail sales and service” category.
Durham contested, and argued that his business should be categorized as part of the oyster harvesting industry, an industry that Feinberg classified as being entitled to receive final payments based on four times the financial losses of 2010. Every time Durham contacted the GCCF he got a different answer until the beginning of February. At that point he was told that the claim period was closed and his company would not receive an emergency compensation payment.
Now the Louisiana Rock Oyster Resources company may have to shut down. Durham claims he lost $2.8 million in revenue in the six months after the oil spill. His business can no longer afford to pay its leases and has thousands of tons of rocks sitting unused at the docks in the fishing community of Hopedale, LA.
Durham’s case remains open for review by another GCCF subcontractor, Guidepost Investigations. In the meantime however he is unable to receive any further information about his claim.
"This was going to be our best season ever and then they canceled the oyster season," said Durham. "We had to close the office on Gause Boulevard and now I'm operating out of my house. We've got three job sites we had to evacuate from because we don't have the money to pay the leases. I give GCCF all our bank statements, all our taxes, all our financial records and we're still waiting."
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