This article was corrected on July 29, 2010.
The BP oil spill has caused massive economic damage to people along the Gulf Coast. To compensate these losses, BP has set up a huge, multistate operation to handle the more than 100,000 claims that it has received. For people who have filed claims, or are thinking of doing so in the future, this complex system has raised a lot of questions. We answer some of the most important questions about the claims systems below. Got other questions? Send them to Sasha Chavkin. Share details of your experience with ProPublica’s reporters using this simple form – we’re beginning to examine the claims process.
Who is managing the claims system?
So far, the claims system has been managed by BP. The company has hired contractors to handle the claims, and its primary contractor is the claims management firm ESIS, Inc. ESIS has two principal subcontractors: Worley Catastrophe Response, which is in charge of adjusting, and Innovation First Notice, which handles claims intake.
In August, the claims system will be taken over by Kenneth Feinberg, an independent administrator appointed by President Barack Obama. BP will pay Feinberg’s salary, but he reports neither to BP nor to the government. Feinberg will have wide discretion in setting the rules to determine who is eligible for payments. The money for the new system, known as the Gulf Coast Claims Facility, will be drawn from the $20 billion escrow account that BP has agreed to set aside to cover claims and other expenses.
How do I file a claim?
There are three ways you can file a claim. You can call BP’s toll-free number (1-800-440-0858), you can file online through BP’s online submission form, or you can go in person to one of BP’s claims offices that are set up across the Gulf region. You can find the location of the closest office here.
What kinds of damages can I get compensation for?
Kenneth Feinberg said that he has written a draft protocol for determining eligibility for claims, but it has not yet been completed or published. He said that his baseline will be federal and state liability law: if you would win a lawsuit against BP at either level, then you’re eligible. Feinberg said that he would sometimes go beyond this legal baseline in the interests of justice and fairness, but did not specify in what areas.
Currently, as an individual or a business, you are eligible for compensation for a number of different types of damage: property damage, net loss of profits and earning capacity, natural resource damage, removal and cleanup costs, loss of subsistence for fishermen and others who catch their food in the Gulf, and bodily injury. If you have experienced more than one type of damage, you should file one claim that includes all of the areas where you are seeking compensation, in order to avoid confusion and bureaucratic delays.
Government entities, like counties or states, are also entitled to compensation for the cost of increased public services and loss of government revenue. Government claims will be handled by BP directly rather than by Feinberg.
To date, BP has not made any payments for bodily injury claims or government requests for additional mental health services. Compensation for most damages is defined by the Oil Pollution Act, a 1990 law that requires BP to pay for the "removal costs and damages resulting from an incident,” but the act does not cover health-related damages. Feinberg has said that he will pay personal injury claims but probably will not pay mental health claims. BP said that it is still determining its policy on government requests for mental health services.
It is also unclear how claims for indirect damages will be handled, such as loss of property value not directly caused by oil damage, or declines in rentals in beachfront hotels where oil never reached the beach. If you’ve filed a claim and haven’t gotten a clear answer on whether your damages will be covered, you call tell us about your experience here.
What will change when Kenneth Feinberg takes over the claims process from BP?
Feinberg has not yet provided official guidelines of how he will administer the claims fund, or set out any changes on policies such as requirements for documentation or types of damages that will be compensated. He has promised quicker and more substantial emergency payments, which he says will include six-month lump sum payments to ease economic hardship. Feinberg has also testified before a congressional committee that he will reduce the processing time to write checks for emergency payments to within two days of the approval of the claim. He will keep much of the same system – such as the claims offices and some of the contractors – that BP has used for responding to claims to date.
Has BP paid out all of the claims it has received?
As of July 29, BP’s claims statistics indicate that it has made payments on just over 37,000 of 135,000 claims, or 28 percent of the total. Here is the breakdown of the status of claims submitted to BP:
|Claims With at Least One Payment||37,200||28%|
|Awaiting Documentation for First Payment||57,300||42%|
|Having Contact Difficulty||12,200||9%|
|Withdrawn, Erroneous or Duplicate||4,700||3%|
|In Process, Evaluating for Payment||23,600||17%|
The largest single category is people who are “Awaiting Documentation for First Payment,” which means that BP found that their claims were inadequately documented and requested that they provide further proof of damages before sending a check. Experts tell us that this proportion (42 percent of total claims) is not unusual for the early stages of a massive claims process, but it shows that providing documentation that is acceptable to BP has been a significant challenge for claimants so far. Providing documents has been a particular challenge for informal workers like deckhands and day laborers who are often paid in cash. If you’ve had this problem, you can tell us about your experience by filling out this simple form.
What documentation will I need to provide for my claim to be approved?
Currently, BP’s website describes the types of documentation that it requires for claims to be approved.
Claims for loss of income or net profits can be documented with tax records, trip tickets, wage loss statements, deposit slips, boat registrations or copies of your current fishing license. Claims that may require additional documentation are property damage, loss of rental income, economic loss for businesses, and bodily injury. All claims require valid photo ID to be approved.
As of July 29, 42 percent of claims were determined by BP to have insufficient documentation, and the company sent letters to these claimants stating that they needed to provide further evidence of the damage before they could get paid. Kenneth Feinberg will also require claims to be documented, but he testified to a congressional committee that he will “bend over backward to help anybody who claims lost wages or lost business in an all-cash business.” In these cases, Feinberg said he would also accept alternate documents, such as letters from a boat captain, priest or town mayor.
Do I need a lawyer to file a claim?
No. Under both BP and Kenneth Feinberg, the claims process does not require an attorney. However, you are allowed to obtain legal representation if you wish, and BP says that it will treat claimants who are represented by an attorney the same as those who are not.
Feinberg said that he would also set up a pro bono program to provide free legal advice to people who are making claims, although this program has not yet started. There will also be staff in the claims offices set up by BP around the Gulf area who will be available to help prepare your claim.
How long will it take for my claim to be paid?
As of July 29, BP’s claims statistics showed an average wait of five days from “claim to paid” for individuals who have gotten checks, and nine days from claim to check for businesses.
However, this refers only to the people whose claims have been approved – only 28 percent of total claimants. BP has determined that about half of claimants (51 percent) need to provide either better documentation of their claim or additional contact information in order for their payment to be approved. Data from the claims process and statements on BP’s website indicate that requests for more documentation are the most common reason that claims payments are delayed..
Does filing a claim mean giving up my right to sue for damages?
That depends on the type of claim that you file.
The monthly emergency payments that BP has been making do not require claimants to give up their right to sue. If you’ve been getting monthly payments for lost income, you can still file a claim or a lawsuit for additional or future losses, although the payments you’ve received will be counted in considering how much BP owes you. Kenneth Feinberg has said that he will also distribute six-month emergency payments in advance, which will not affect your right to sue either.
However, claims for a long-term settlement – payments that include projected future damages caused by the spill and are meant to cover all of your losses – require that you give up your chance to sue if you accept the money. This type of claim will not be considered until three months after the well is capped, and will erase all of BP’s liability to you when it is paid. You can still file a lawsuit if you submit a long-term settlement claim but aren’t satisfied with the offer.
What can I do if I don’t think the payment that I’m offered is fair?
You have the right to appeal decisions made by administrator Kenneth Feinberg, or to seek alternative remedies to the claims process if you are dissatisfied with its results entirely.
Within the claims process, you can appeal Feinberg’s decisions to a three-member panel that will be available to review claims that are denied and payments that you consider insufficient.
Outside the claims process, people seeking damages that are covered under the Oil Pollution Act – property damage, economic losses and cleanup costs – may appeal decisions by Feinberg to the Oil Spill Liability Trust Fund. The Trust Fund contains $1 billion and is administered by the Coast Guard. If you’re dissatisfied with both Feinberg and the Trust Fund, you still retain the right to sue in court.
Claims in areas that aren’t covered by the Oil Pollution Act, such as bodily injury, cannot appeal to the Trust Fund for compensation. These claimants still can file a lawsuit and seek remedy in court if they aren’t satisfied with the offer from Feinberg.
Does the $20 billion fund cap the damages that BP will pay out?
No. The $20 billion fund does not put a cap on how much BP will pay out in damages. BP says that it will make payments from the fund as awarded by Kenneth Feinberg through the claims process, as ruled by the courts or as separately agreed upon by the company. BP has said that it will continue to make payments even if the $20 billion runs out.
This means that the fund will be used to pay for both the claims process and separate lawsuits and settlements – but that no one should lose the chance to get compensated if damages turn out to be worth more than $20 billion. The fund will operate for three years and you can file a claim at any point during that period.
Who is Kenneth Feinberg and what is his role as the fund’s administrator?
Kenneth Feinberg is the lawyer selected by President Obama to administer the Gulf Coast Claims Facility, which draws from the $20 billion fund created by BP to compensate damages from the oil spill. Feinberg will administer the fund independently of the government or BP, and he has broad authority to set the rules for who will be paid by the fund and how much they will receive.
Feinberg has a long record of administering funds for compensation of mass damages. He is best known for administering the 9/11 Fund, which compensated the survivors of those killed on 9/11 and those who were injured by the attacks. He has also supervised compensation funds for the Virginia Tech school massacre and Vietnam veterans exposed to Agent Orange, and served as Treasury Department’s overseer of executive pay in companies that received money from the bailout.
Correction (7/29/2010): This article originally said that the $20 billion compensation fund created by BP was established to cover claims and known as the Gulf Coast Claims Facility . The fund in fact covers both claims and other expenses such as court judgments, and the Gulf Coast Claims Facility draws from the compensation fund.