Feinberg Says BP Claims Process Works Well With $1 Billion Paid

Kenneth Feinberg said the Gulf Coast Claims Facility drawing on BP Plc’s $20 billion oil fund is attracting as many as 8,000 applications a day and has paid out more than $1 billion.

The numbers show growing confidence in the facility after criticism by the U.S. Justice Department and residents and public officials along the Gulf Coast that checks weren’t going out quickly enough, Feinberg, the fund administrator, said today.

“People are recognizing that this program is working,” Feinberg said in an interview on Bloomberg Television. “They want to participate. They want to take advantage of the generosity of this program.”

The Gulf Coast Claims Facility had paid $349 million through Sept. 23, its first month of operation. Thomas Perrelli, the associate U.S. attorney general who led negotiations with BP to set up the fund, said on Sept. 17 that the pace of payments was unacceptable.

The facility had paid $1.08 billion in claims as of Oct. 6, according to statistics posted on its website. The money includes $34.5 million for lost real estate sales and commissions being distributed by state Realtor trade groups.

Some claims remain under review because of “woefully inadequate” documentation and some are likely cases of fraud, Feinberg said today. Of the almost 118,000 claims the facility has received, more than 43,500 remain to be paid.

“Frankly, we’re getting it out as fast as we can,” Feinberg said.

To speed payments, he clustered the handling of claims by industry. He has also widened the potential pool of victims who can seek compensation.

Reversal on Proximity

Initially, Feinberg had sought to draw a geographic line, using proximity to the spill as a standard. The goal was to help “those most in need” get compensation quickly and to limit questionable claims, according to Feinberg. He changed his mind on Oct. 4, deciding against a geographic test.

The reversal was welcomed in Florida, where individuals and companies along both coasts have said business and tourism plummeted on the misperception that the state’s beaches were awash in crude. Oil reached the state’s shoreline only in the Northwest panhandle.

Keith Overton, the chairman of the Florida Restaurant and Lodging Association and chief operating officer for TradeWinds Island Resorts in St. Petersburg, Florida, called the shift in policy “great news for Florida tourism.”

Overton’s hotel has filed a $1.1 million claim. Feinberg’s facility has received about 2,000 tourism claims from Florida, Feinberg said in a phone interview on Oct. 4.

Canceled Reservations

Claimants still have to prove their losses resulted from the spill, and not from a weak economy. Feinberg said letters and e-mails canceling reservations would be one way to document a loss in Florida.

“It is fair to at least allow the hotels and motels all along the Western Gulf to at least file a claim and attempt if they can, on a case-by-case basis, to demonstrate their damage,” Feinberg said in the phone interview.

Feinberg also told Bloomberg TV that the claims facility will issue partial payments beyond the Nov. 23 deadline to file for emergency checks.

In accepting such interim payments, claimants would retain the option to sue BP. They waive that right once they accept a final, permanent check from the facility.

“If somebody doesn’t want to take a lump-sum payment because they don’t know about the future, don’t take it,” Feinberg said. “I will agree to make interim payments.”

To contact the reporters on this story: Jim Snyder in Washington at jsnyder24@bloomberg.net; Lizzie O’Leary in Washington at loleary@bloomberg.net.

To contact the editor responsible for this story: Larry Liebert at lliebert@bloomberg.net.

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