New data published by BP shows that payments have been made on only 28 percent of claims for damages from the Gulf oil spill, while the company has determined that more than half lack enough information to be approved. The data, released last Friday afternoon, presents a clearer but more discouraging picture of how claimants are faring than the statistics previously provided by the company.
Out of 114,000 total claims submitted to BP, the company has determined that 61,000 either require more documentation for a first payment to be made or have inadequate contact information for the claimant. BP said in a press release that it is sending letters to these claimants to help them move the process forward.
Here is the breakdown of the status of claims against BP (as of July 16):
|Claims with at least one payment||32,000||28%|
|Awaiting Documentation for First Payment||48,000||42%|
|Having Contact Difficulty||13,000||11%|
|Withdrawn, Erroneous or Duplicate||4,000||4%|
|In Process, Evaluating for Payment||17,000||15%|
Although BP had already been posting daily statistics on the claims process, there is an important difference in the way the new data is presented.
Before Friday, BP had provided figures that suggested a brighter picture of the claims process but did not reveal how many claims had actually been approved. Instead of listing the number of claims approved, BP had published only the total number of checks written. Since many claims have resulted in multiple payments, there are about twice as many checks written (64,600) as claims approved (32,000).
BP's new data offers a much clearer view of how the claims process is progressing, but shows that many more claims have been sent back for more information than have been approved. The company provided a similar breakdown of claims data to The New York Times on July 4, but did not publicly post claims statistics in this way until last Friday.
To date, BP has been processing claims and has paid out slightly over $200 million in compensation. Independent administrator Kenneth Feinberg is expected to take over the claims process in early August, and he will be in charge of distributing the $20 billion fund that the company has created to repay damages from the spill.
Kristy Nichols, Louisiana children's services secretary, recently wrote in a letter to Feinberg that on July 1, BP started reducing payments on claims it found to have inadequate paperwork. The letter said that a BP official had estimated that more than 40,000 claimants might see similar decreases. Nichols denounced the reductions as "irresponsible and in complete contrast to BP's repeated promise that they will 'make things right.'"
BP spokeswoman Patricia Wright wrote in an e-mail that the company was reaching out to claimants who had not provided enough information. She stated that on July 1, BP began to award monthly claims based on documented income rather than estimated income, which it had used in May and June. “The assumption in that letter that this will result in a reduction of monthly loss of income payments to 40,000 claimants is not correct,” Wright wrote. "The total potential pool that will receive higher or lower payments is estimated to be less than 20,000 claimants.”
Robert Rabin, a law professor at Stanford University, told us that he is not surprised by the high proportion of claims that have been found to be lacking needed information. “One can surmise that many of these claims come from desperate individuals, who are seeking recompense for the first time and proceeding without a lawyer and without clear guidelines," Rabin wrote in an e-mail.
He added that such claims also affected the timeliness of payments by putting stress on BP's compensation system and raising suspicions about the quality of claims coming in.