Administrator of Gulf spill fund talks about final payments, lessons learned

By Andrew Restuccia - 12/17/10 11:26 AM ET

Kenneth Feinberg, the administrator of BP’s $20 billion Gulf oil spill compensation fund, on Thursday said spill victims will have to clear a higher bar to qualify for final compensation payments.

Feinberg’s Gulf Coast Claims Facility stopped doling out emergency interim payments at the end of November and is now preparing to provide final payments to hundreds of thousands of spill victims. In a wide-ranging interview with The Hill on Thursday, Feinberg detailed his plans for the remainder of the program, which runs through 2013.

Now that the well has been capped and many in the Gulf have gone back to work, Feinberg said he plans to look more closely at documentation before approving final claims. He said he was less strict when determining whether to approve emergency payments “because of the very nature of the emergency.”

“Yes, I think the bar will be higher for a final, lump-sum payment as opposed to an emergency payment,” Feinberg said. “For a final payment, we’ll want to make sure — especially since the well has been capped and the fishing is back and people are working — we’ll want to make sure that the documentation is adequate.”

But Feinberg still encouraged spill victims to apply through the claims facility rather than enter into litigation with BP that could take years to resolve. “I still think it will be less than what is required in court, but it will be higher than what’s required for the emergency payment,” he said.

The Gulf Coast Claims Facility (GCCF) has received about half a million claims since it opened in August. The facility has paid out or approved for payment more than 167,000 of those claims, for a total of nearly $2.5 billion. More than 290,000 claims have been denied.

Feinberg this week laid out three final payment options under the fund. Spill victims who are able to prove their losses and have already received emergency interim payments can opt for a one-time “quick pay” payment of $5,000 for individuals and $25,000 for businesses. Feinberg said that option is meant as a quick way for Gulf residents who are working again or don’t believe they can document further losses to receive a small additional payment.

If they choose the quick-pay option, claimants will have to waive their right to sue BP or the other defendants involved in the oil spill. “If they received an emergency payment in September or October and they’re back fishing now and things are improving, but they still need to get some more cash from the GCCF, all they have to do is check off the box that they’ve signed the release, and they will be paid,” Feinberg said, adding that no additional paperwork is necessary.

In an attempt to address concerns among some in the Gulf that they will be forced to accept a final payment before they know the true extent of the spill’s damage to the region, Feinberg has also set up an interim payment option. Under this option, claimants will receive quarterly interim payments through 2013. If claimants choose this option, they will not have to waive their right to sue BP.

Lastly, claimants can choose to accept a one-time lump-sum final payment based on their need.

Feinberg was criticized by some Gulf residents and officials for taking too long to process emergency payments. He originally promised that individual payments would be processed within 48 hours and business payments would be processed within seven days.

But Feinberg had to walk back that timeline after thousands of people began applying for relief. When asked by The Hill whether he took any lessons away from the initial emergency claims process, Feinberg said, “I think the lesson is, when you set up a program like this, which is so pervasive in the Gulf, you have to anticipate a huge volume of claims.”

Final claims will be processed within 90 days, with the exception of quick-pay payments, which will be turned around in two weeks, Feinberg said.

Still, Feinberg said, the facility was unable to process thousands of claims because they lacked adequate documentation. “It’s been a constant problem,” he said. Claimants must provide “something that shows your wages before the spill and what they were after the spill.”

As the final payment process progresses, Feinberg said he will be on the lookout for fraudulent claims. He said fraudulent claims were a “substantial problem” during the emergency claims process, even though there weren’t large numbers of them. “We have to spend the time and the cost and the energy of going through these and referring suspicious claims to the Department of Justice,” he said.

Feinberg also downplayed the impact of a civil lawsuit filed by the Justice Department this week on the claims process. “I think the [Gulf facility] stands independent and separate from the judicial system. I think it’s a parallel track and an option for people to consider,” he said.