Gulf Coast Claims Facility Extortion
Bob Riley calls oil spill claims process ‘extortion’
Alabama Gov. Bob Riley on Monday called the oil spill claims process “extortion” and said he awaits answers to questions raised in his Friday letter to claims czar Ken Feinberg about how fully businesses are being paid.
Riley said he is concerned that underpayments by Feinberg’s Gulf Coast Claims Facility will force businesses to prematurely sign away the right to sue BP PLC.
Area businesses have complained loudly about the size of payments, compared to claims, plus the lack of information about how those amounts were determined.
“If you have the capacity to turn them down with no explanation and make them sign away their right to sue, that’s extortion,” Riley said.
Amy Weiss, a spokeswoman for Feinberg, responded to questions about the letter and Riley’s criticisms by saying, “Mr. Feinberg just received Gov. Riley’s letter and will respond in due course.”
Feinberg has a two-tiered payment system:
- Emergency payments were originally designed to cover six months of lost income, and accepting them does not require people or companies to sign away the right to sue BP. Feinberg has expanded the emergency payments, allowing businesses to get quarterly checks for another 2½ years without forfeiting legal rights.
- Final payments are one-time, lump sums meant to cover all existing and future losses. To get that final payment, a person or business must agree not to sue BP.
The final claim deadline is not until 2013, but Riley said some businesses will be forced to go to the final option earlier than they would like because they only received a small percentage of the losses they claimed during the emergency payment phase.
Riley also said it’s time for President Barack Obama to say that Feinberg’s process “is not acceptable.”
“The way it’s set up right now, there’s not but one person who can fix this, and that’s the president,” Riley said.
Riley’s Friday letter to Feinberg asked for information including:
- The total number of claims filed and number paid in full.
- The number of claims asking more than $100,000 and paid in full.
- The number of claims asking more than $1 million and paid in full.
- The number of claims paid at less than 25 percent, 25-50 percent and 50-75 percent of the amount requested.
Riley asked whether people working for the claims facility are paid based on number of claims handled or amount of payments authorized.
Feinberg’s facility has paid out $1.71 billion to individuals and businesses since taking over the claims process on Aug. 23. More than 350,000 claims have been filed, and Feinberg has approved about 101,000 of them, according to information from the facility.