Man With $20 Billion to Disburse Finds No Shortage of Claims or Critics

New York Times
By John Schwartz

From the numbers alone, you might think Kenneth R. Feinberg would be a popular guy.

Since taking over the $20 billion fund to compensate victims of the Gulf Coast oil spill in July, he has handed out $3.8 billion, with $2.6 billion in no-strings-attached emergency payments and $1.2 billion in final and interim payments. More than a half-million people and businesses have filed claims with the fund, and nearly 70 percent of the claims have been resolved through payment, request for more information or rejection.

But Mr. Feinberg has become the man the Gulf Coast loves to hate. Residents yell at him in meetings, coastal politicians and the news media accuse him of acting in bad faith, and plaintiffs’ lawyers say he is working for BP.

A federal judge has ruled that while Mr. Feinberg’s work may benefit BP, his claims decisions are independent. Still, many who have dealt with the claims process complain that it is opaque at best, low-balls their compensation and varies payouts capriciously for neighbors in like circumstances.

“People are having any number of kinds of issues with the claims process,” said Martha Bergmark, the president of the Mississippi Center for Justice, a nonprofit law firm that receives money from the fund to provide legal aid. “It’s getting invented on the fly here.”

Politicians and plaintiffs’ lawyers decry as extortion Mr. Feinberg’s quick-pay option, which provides thousands of dollars to those willing to sign away their right to sue without having to prove economic loss. The critics say the difficulties of the claims process all but force claimants into the quick-pay system.

Senator David Vitter, Republican of Louisiana, sent a scorching letter to Mr. Feinberg last month saying he was “making empty promises to Louisianians” citing the complaints of seven constituents who said they had not been paid, or paid enough.

Opposition to Mr. Feinberg in Alabama has flared, and The Press-Register of Mobile called last year for him to be fired, though the paper no longer pushes the point. “When it became clear he wasn’t going to be fired, we just continued to hold his feet to the fire,” said Ricky R. Mathews, the paper’s publisher, who calls the fund a “very clumsy process.”

He added, “I believe from the very beginning he completely underestimated how big this was going to be.”

Mr. Feinberg says the attacks are misguided, and in many cases, flat wrong. In response to Mr. Vitter, he wrote that the examples did not stand up to scrutiny. One, he wrote, submitted claims for emergency payments “in an amount 2 1/2 times the business’s total gross sales” from its 2009 tax return; another submitted documentation “consisting solely of a letter from her mother as the business owner,” and several had filed multiple claims or offered little or no documentation. Yet another, he wrote, had submitted a business claim that included his wife’s losses, though his submitted tax returns reported her occupation as “housewife,” and did not show “any reference to her role, if any, in the business.” That claim was for more than twice the man’s previously reported fishing income.

In an interview, Mr. Feinberg was undaunted. “I will not pay claims that can’t be proven, that lack proof, that are not substantiated,” he said. “I won’t do it!” He admitted that “there may be inconsistencies” in a system of this size. “But I think those inconsistencies are relatively rare,” he added.

“One of the reasons your neighbor gets paid and you didn’t might have something to do with human nature,” he said. People in similar situations might approach the claims process with more proof or less, and higher or lower evaluations of their losses.

He said, “Don’t always believe everything you’ve heard from your next-door neighbor.”

Campbell Robertson contributed reporting.