Feinberg’s Gulf Coast Claims Facility Replaces BP

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BP finally transferred the administration of their $20 billion escrow fund to independent mediator Kenneth Feinberg on August 23rd. The oil company created the fund to compensate those whose health and livelihoods have been damaged by the leak in the Gulf. The Obama administration and BP agreed months ago to set up an independent claims commission as a neutral way of distributing damages, and named Feinberg to head the commission, but until Monday BP had still been handling incoming claims. Feinberg, who is best known for handling the 9-11 compensation claims, created the Gulf Coast Claims Facility, which opened this week, as well as the rules for handling claims.

Much like with the 9-11 claims commission, the rules are set up to encourage victims to settle their claims rather than go to court, since suits could lead to protracted, costly battles for both sides. However, not everyone is happy with the rules of Feinberg’s claims facility. For example, victims can opt to receive a lump-sum settlement from the fund, but would then give up their right to later sue BP and any other major party responsible for the Deepwater Horizon disaster. For some this may create an impossible situation, as they need money now but don’t know the long-term effects of the oil spill.

Another aspect of the rules that many in the Gulf states are contesting is the geographic limitation on claims. According to the internal documents released by the fund’s lawyers, proximity to affected water will influence claimants’ eligibility for compensation. Beachfront communities will likely get the most aid. Companies that supply these businesses, or depend on Gulf-bound traffic, are less likely to have their claims accepted, though Feinberg has said claims will be examined on a case-by-case basis.

The fund will not deal with claims from those affected by the proposed moratorium on oil-drilling in the Gulf, nor will it handle the claims of BP stockholders. In fact, BP stockholders are taking their case to a Houston court accusing the oil company of hiding the severity of the leak and thereby selling over-priced stock. The stock has dropped by half since the initial blowout.

A separate fund, administered by the National Association of Realtors, will distribute money to Gulf state realtors affected by the drop in Gulf real estate value. Feinberg is expected to review the NAR’s proposed eligibility requirements.

While the rules of the Feinberg-BP fund may be disappointing to some, at least Feinberg has vowed to speed up the recovery process: “it will now take two days for fishermen to receive their money after their claims are processed, and seven days for businessmen.”

For now, businesses and individuals affected by the spill can apply to Feinberg until November 23 to see if they are eligible for emergency payments (which could waive their right to sue BP). From this date on until August 23 2013, Feinberg will only accept final settlement claims.

If you are unsure whether or not to file a claim, or how you qualify, visit rocketlawyer.com to find a lawyer who’s right for you.