BP Not Denying, Just Not Paying Nearly 40,000 Oil Spill Claims
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ORANGE BEACH, Ala. — Sheryl Lindsay's wedding planner business is on the brink, crumbling with each cancellation over concerns about oil. Brides-to-be are walking away from plans for beachside vows, leaving Lindsay waiting to see whether she'll be part of BP's promise to make whole everyone who's suffered from its spill.
BP said Monday it had received 145,000 claims from residents and business owners like Lindsay citing lost income because of the massive spill in the Gulf of Mexico, and had paid out $324 million without denying a single claim.
That sounds pretty good, until frustrated residents and officials point out that 39,000 claims are in limbo – some of them, including Lindsay's, have been there for months. Some that have been paid are only partial payments, and many of those people are still fighting for more money.
"Therein lies the problem," Mississippi Attorney General Jim Hood said recently. "They don't deny them. They just hold them open forever."
Hood speculated that BP PLC would rather wait for Kenneth Feinberg, the federally appointed administrator of the $20 billion compensation fund BP established at the behest of the White House, to take over the claims process this month. That way, if a claim is denied, "he's the bad guy" instead of BP, Hood said.
BP claims director Darryl Willis said the company isn't deliberately delaying. Rather, 26,000 pending claims are still being evaluated and thousands of others need more documentation, the company said.
"Our intent is to continue paying claims until this process is handed over to Ken Feinberg," Willis said. "There's no intent to slow this thing down."
However, BP does defer "questionable" claims to Feinberg, including "restaurants and tourist claims from areas that haven't been impacted by an oiled beach," company spokeswoman Pat Wright said.
"We believe there are some tough decisions out there that need to be made on a variety of these claims because many of these are claims are not squarely within the guidelines of the Oil Pollution Act," she added.
The act was enacted in 1990 after the Exxon Valdez spill in Alaska. Under the law, BP is responsible for cleanup costs, but the act caps the company's liability for other economic damage, such as lost wages, at $75 million.
BP officials said early on that the company would not limit itself to that cap. But the company is using the guidelines for who should be compensated.
Wright said BP decided to defer some claims because Feinberg "has said that he's going to look at this, maybe, a bit differently than we are looking at it."
Feinberg, who oversaw payouts for victims of the Sept. 11 attacks, did not respond to e-mailed questions from The Associated Press. He has said that claims without a direct tie to the oiled water will have a harder time making it through the process.
In Washington, the Justice Department and BP announced Monday that the company had deposited the initial $3 billion into the $20 billion fund.
Louisianians have been hardest hit by the oil and have reaped the most through BP's claims process, getting 34,000 checks totaling $139 million as of Monday, according to BP. Alabama was next with $75 million, Florida residents took in $61 million, Mississippians $26 million and Texans had received $9 million since the April 20 explosion of the Deepwater Horizon rig killed 11 and started a spill that lasted more than three months.
BP said it has paid out $58 million in just the first eight days of August, in part by eliminating some paperwork requirements for business claims.
"I'll be the first to admit that this process has not been perfect," Willis said. "We're going to continue to look for ways to get this money out and do it more efficiently."
Who is eligible and how much compensation they deserve are open questions.
Lindsay said she was pointedly told by a claims adjuster that she wouldn't get money from BP to keep afloat the beach wedding business she owns with her sister, which she said was on pace to make $500,000 this year until the spill.
"Last week we were told they were not paying wedding planners," she said with a huff of frustration. "We're having to close our offices. We're not closing the business – yet – but we've just got to get out from under the rent. We can't afford it anymore."
Orange Beach Weddings has had 30 cancellations, owes on loans to the bank and must refund deposits while hoping for new clients.
"The phones just don't ring anymore," Lindsay said.
A few days after being told her claim was denied by one BP claims adjuster, another said it was merely on hold.
On Thursday, yet another adjuster, who identified himself as Buddy, said Lindsay's claim was denied, that wedding planners were ineligible.
"Nobody can make a decision," Lindsay said. "We're just stuck."
Wright said the adjusters in Lindsay's case made a mistake, and that the 1,650 people on the claims team aren't always on the same page. She said BP adjustors shouldn't be denying any claims.
"I'll be working to address this with the adjusters to make sure they fully understand," she said.
Another lingering question is whether folks hurt by the federal moratorium on oil drilling will get help, specifically those who didn't work directly on the 33 rigs that were shut down.
BP gave $100 million to a charity to give grants to rig workers affected by the moratorium, but that money isn't for businesses such as supply boats that support the rigs.
Brett Broussard, who pilots offshore oil service boats, called it laughable for BP to say the company hasn't denied claims. Broussard said BP told him he was ineligible because the moratorium put him out of work, not the oil spill.
"They're parsing words. I am not eligible because of the moratorium, but their spill caused the moratorium," Broussard said. "I find it repulsive and repugnant."
Mitch Jurisich, a Plaquemines Parish, La., oyster farmer, compared the claims process to dealing with the Federal Emergency Management Agency after Hurricane Katrina in 2005 – "so similar it's pitiful," he said.
"I'm still sitting here sending paperwork after paperwork trying to get my first paycheck," Jurisich said of his spill claim. "I feel I've had to give more paperwork for this than I would have to give the IRS in an audit. I'm losing confidence on a daily basis."
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Mohr reported from Jackson, Miss. Associated Press writer Pete Yost in Washington contributed to this report.
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BRIAN SKOLOFF and HOLBROOK MOHR 08/ 9/10 07:19 PM ET Associated Press