BP’s Claims Reporting Leaves a Fuzzy Picture
How well claimants are being compensated for oil spill damages is impossible to tell from BP’s numbers. Those who have been paid are all counted the same, regardless of the details.
BP is providing only a limited picture of its progress in paying damage claims from the Gulf oil spill, making it impossible to tell how fully it is compensating the losses that have been claimed to date.
The company places all claims for which it has issued a check into a single category: "Claims With at Least One Payment." As of Aug. 17, the 44,400 claims in this category represent less than a third of total claims, and the company has disbursed $368 million in payments, according to BP's website. Yet in spite of complaints about the transparency of the company's data, BP does not disclose how the money spent on these claims compares with the amount requested by applicants, or whether the company has continued to make monthly payments after sending out an initial check.
"It doesn't tell that much that there has been one payment," said Robert Rabin, a Stanford law professor and an expert on mass compensation programs. "It could be a trivial amount of the total claim."
So far, BP has been making emergency payments meant to compensate for most types of losses that have been sustained to date rather than fully settling claims. Most of these cover one month of losses at a time. But the payments are supposed to cover these losses in full, and some applicants say they are falling short.
For example, Gil Heroux, the owner of a towing company in Pensacola, Fla., said he filed a claim in June for lost income after calls from tourists dropped off almost entirely. He said his company's revenues are down about $5,000 per month from last year, but he has received only a single check for $1,200 from BP.
"They just sent me one initial payment, and I haven't seen a penny since," Heroux said. "We fell behind a month on our bills because we had a lot of overhead and no income."
Other applicants who shared their experiences with ProPublica's BP claims project also reported receiving a single payment for a sum they considered insufficient.
BP's data does disclose how many checks it has written in total, so it's possible to calculate that claims with at least one payment have received an average of slightly over two and half checks. The average overall payment on these claims is $2,944. But BP's figures do not show how much these claimants say they have lost so far, and the data doesn't provide a way to track whether the company is keeping up with monthly payments. For privacy reasons, BP does not provide data on individual claims.
Mike Dekema, a claims management consultant with more than 30 years of experience, said the amount that applicants request is by no means equivalent to the actual value of claims. The best data on overall liability, he said, comes from internal company reports known as loss runs which often estimate the value of pending claims. Dekema said that loss runs are closely guarded secrets that companies seek to protect from both potential litigants and business competitors.
Nonetheless, Rabin, the Stanford law professor, said there are a number of additional statistics that BP could provide to increase the transparency of the process. These include how many requests are being honored in full, the proportion of the amount requested that is being paid, and how many claims have received follow-up payments beyond the first check.
Patricia Wright, a spokeswoman for BP, said the company would keep its system in place until Kenneth Feinberg, the independent paymaster appointed by President Barack Obama to oversee the compensation process, takes over the claims program on Aug. 23. (As we've reported before, the company has also been holding off on paying some types of claims until it hands the job off to Feinberg.)
"This information reporting system was established as an internal reporting tool," Wright said in an e-mail. "Undoubtedly there are different ways this could have been set up, but BP made its best efforts to address the unprecedented event as expeditiously as possible."
For Heroux, the towing company owner, good news may be on the way. He said that a BP adjuster told him last Saturday that a second check was in the mail, this one for $3,057, meant to cover two more months of losses.
After the payment, BP's claims data will show overall that more money has been spent and that one more check has been written, but Heroux's claim will remain in the same category: "Claims With at Least One Payment."
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