The administrator of a $20 billion fund set up to pay for damages from the Gulf oil spill said Wednesday he received a flood of last-minute emergency claims before a key deadline ended.
Kenneth Feinberg said about 450,000 emergency claims were filed by Tuesday's deadline. Of those, about 30,000 were filed Monday or later. "That is about four times what I thought there would be," he said.
Many will likely be denied, he said, because they lack documentation. He estimated about 325,000 claims had no or "woefully inadequate" documentation. About 1,000 claims are suspected of being fraudulent.
"A fisherman will apply and say: 'I lost $30,000 during the spill because I couldn't fish, pay me' and he attaches his fishing license with no further documentation," he said.
In the next phase of the claims process, people and businesses will be able to ask for a lump sum payment, so long as they agree not to sue BP PLC or other companies involved in the spill. They can also ask for smaller payments every three months, which leaves open the possibility of suing the oil giant for damages. The incremental payments would be based on past damages claimants can verify.
The claim process was set up after an offshore oil rig leased by BP exploded on April 20 in the Gulf and released more than 170 millions of gallons of oil into the sea. Fishermen, businesses and the tourism industry were hurt by the massive spill.
Feinberg gave no estimate on how many claimants might opt to settle with BP rather than seek short-term payments. Final and short-term claims can be filed until August 2013.
"I hope my lump-sum payment will be sufficiently generous to take into account the unknown future that many claimants will see the wisdom of taking the lump-sum payment and move on with life," he said.
He said there was no guarantee that someone holding out would end up getting more than an upfront lump sum because the damage to the Gulf may turn out to be less than previously thought.
Plaintiffs lawyers blasted Feinberg's claims protocol.
James P. Roy, a member of a lawyers' steering committee for lawsuits against BP, said it appeared Feinberg was attempting to get as many people as possible to settle prematurely with BP as he announced nuances for future claims on the day before Thanksgiving.
"We feel that Mr. Feinberg is preying on the victims at the height of the holidays in an effort to settle this case and absolve his client — BP," Roy said. "These claims of being generous are ridiculous."
Roy said he would urge his clients not to settle with BP and keep their legal options open. "We are all in favor of the interim payments."
Feinberg said he was independent. "BP has no check on the way I am doing this."
Tom Costanza, the director of the Office of Peace and Justice at Catholic Charities in New Orleans, said the emergency claims process was unfair to fishermen. He said on average fishermen received about $17,000 in compensation for the past six months, which was about half of what they would normally make. He added that thousands of fishermen have not been paid for their losses.
"I would say that this claims process, if I am a fisherman, has not made me whole so far," he said. His office has worked closely with fishermen.
Feinberg said he built in an appeals process for claimants who received $250,000 or more. A three-judge panel will hear those appeals. All claimants, regardless of their award amount, can appeal their cases to the Coast Guard and federal courts. BP also has the right to appeal awards larger than $500,000.