Gulf residents to get extra $64M for spill claims

Apr 20, 2012, 12:51 AM

Associated Press

NEW ORLEANS (AP) – Roughly 7,300 residents and businesses harmed by the 2010 oil spill in the Gulf of Mexico will get more than $64 million in additional payments because their claims with BP’s $20 billion compensation fund were shortchanged or wrongfully denied, the Justice Department announced Thursday.

An independent audit of the Gulf Coast Claims Facility found “significant errors” in its processing of claims that led to applicants receiving less than what they were entitled to under GCCF procedures, the federal agency said.

Claimants eligible for the additional payments should be receiving them in the next week to 10 days, a Justice Department spokesman said.

The auditor also identified claimants who were erroneously overpaid, but the department says the GCCF isn’t trying to recover those overpayments.

Fund administrator Ken Feinberg said Thursday that the $64 million amount was modest for a program that paid out more than $6 billion in 18 months. He had absorbed much of the blame for what some affected individuals and businesses said was a slow payment process.

“The independent auditor’s report puts to rest any criticism that the GCCF failed to be consistent and generous in its payouts,” he said Thursday.

Although the audit identified errors, it found that the GCCF claims process “constituted a significant advance” in disaster response.

“While our independent evaluation did uncover instances in which errors were made in the claims evaluation process, in general, the GCCF appeared to have consistently applied its protocols and methodologies in processing claims,” the auditor’s report said.

More than 2,600 others whose claims were erroneously denied won’t be getting checks because their claims files did not contain information needed to determine whether they sustained a financial loss, according to the auditor’s report.

BP spokesman Scott Dean said the audit shows the GCCF “delivered significant achievements” during its 18-month tenure.

“BP supported the audit throughout the process, and the GCCF played a critical role in helping us to expeditiously meet our commitments under time-sensitive and challenging circumstances,” Dean said in a statement.

BP created its compensation fund after the April 20, 2010 blowout of its Macondo well triggered a deadly explosion on the Deepwater Horizon rig and spawned the nation’s worst offshore oil spill.

The GCCF processed more than 1 million claims and paid out more than $6 billion from the fund to more than 220,000 businesses and individuals, including commercial fishermen, property owners, hotels and other tourism-driven businesses that blamed the spill for economic damages.

After BP and a team of plaintiffs’ attorneys agreed to a class-action settlement of economic damage claims last month, a court-supervised administrator took over the claims process from the GCCF on March 8.

Attorney General Eric Holder directed an independent auditor to evaluate the GCCF after he visited the Gulf Coast last summer.

“While there’s no question that the independent GCCF labored under extremely challenging circumstances to get a huge number of payments processed successfully, the fact that this audit has resulted in tens of millions of dollars being made available to claimants who were wrongfully denied or shortchanged underscores the importance of the audit,” Acting Associate Attorney General Tony West said in a statement.

The audit was performed by BDO Consulting. The Justice Department released an executive summary of the auditor’s findings on Thursday. The department said BDO is preparing a full report that will be published later this spring.

Byron Encalade, president of the Louisiana Oystermen Association, said he was not surprised by the audit’s findings.

“They weren’t paying the claims, and still today we got people with interim claims that are six months old now,” he said. “It’s always the same thing: `It’s under review.'”

Encalade said the GCCF methodology “was all over the place.”

“Deckhands working on the same boats getting paid different. The methodology seemed to change by whoever worked your claim,” he said.

Clint Guidry, head of the Louisiana Shrimp Association, echoed those concerns.

“Perfectly documented fishermen not get a penny and lots of money go to people who hadn’t fished in 10 years,” he said.

(Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)

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Gulf residents to get extra $64M for spill claims