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As spill claims back up, BP defers to feds

Tue., Aug. 10, 2010

ORANGE BEACH, Ala. – Sheryl Lindsay’s wedding planner business is on the brink, crumbling with each cancellation over concerns about oil. Couples 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 not squarely within the guidelines of the Oil Pollution Act,” she added.

Under the law, enacted in 1990 after the Exxon Valdez spill in Alaska, 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. But it is using the guidelines for who should be compensated.

In Washington, the Justice Department and BP announced Monday that the company had deposited the initial $3 billion into the $20 billion fund.

Louisianans 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 track to make $500,000 this year until the spill.

“Last week we were told they were not paying wedding planners,” she said. “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.”

Orange Beach Weddings has had 30 cancellations, owes on loans to the bank and must refund deposits.

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 adjusters shouldn’t be denying any claims.

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 on drilling 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.”


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