Denied claims for Gulf of Mexico oil spill victims are rising dramatically because of a flood of new filings coming in without proper documentation or with no proof at all, the head of the $20 billion BP fund said Monday.
Some 20,000 people have been told they have no right to emergency compensation, compared to about 125 denials at the end of September. This is in addition to many others who say they are getting mere fractions of what they've lost, while others are receiving large checks and full payments.
In an interview with The Associated Press, claims administrator Kenneth Feinberg denied allegations the process is beset by chaos. He said the claims facility has sent about 30 potentially fraudulent claims to the Justice Department for investigation, and hundreds more are under review.
"I disagree about disarray," Feinberg said. "There are discrepancies in claims based on documentation and your ability to demonstrate a connection to the spill and your damage."
He said that since Oct. 1, the fund has received thousands of new claims for emergency six-month payments, bringing the total to about 315,000, in an apparent rush to meet a Nov. 23 deadline. After that, residents can only file a claim for a final payment, which would be granted only if they sign away their right to sue BP.
Thousands are suffering from a summer of lost revenue after BP PLC's April 20 well blowout off the Louisiana coast spewed more than 170 million gallons of oil into the sea. Fishermen who weren't working for BP's cleanup sat idle at the docks with no seafood to sell, while beachside restaurants found themselves with few patrons, and hotels were nearly empty during a time when many depend on high-season revenue to carry them through the slow winter months.
The well was permanently capped on Sept. 19.
"A true emergency claim one would have expected would have come in shortly after Aug. 23," Feinberg said, referring to the date he took over the process from BP. "But two-thirds of the claims have come in since Oct. 1, and (many of) those claims are undocumented."
He speculated that some who don't deserve a payment sense a gold rush and are inundating the facility with illegitimate requests.
The Justice Department last week announced the first criminal charges filed in an oil-spill related case against a Fayetteville, N.C., woman who pretended to be employed by a New Orleans oyster company, according to a federal complaint. Charlotte Johnson is charged with wire fraud and faces up to 20 years in prison after authorities say she sought $15,500 in fictional lost wages.
A telephone message left for her federal public defender wasn't immediately returned. A man who answered the phone at Johnson's home said she is in federal custody on the charges. He declined further comment.
About 92,000 claimants have been paid or approved for payment as of Oct. 30, amounting to roughly $1.7 billion. The claims facility declined to reveal the total amount requested by the nearly 315,000 people who have now filed.
For Gulf coast residents with apparently legitimate claims, the process can be maddening.
"Why can't they just explain why they denied me?" said Sheryl Lindsay, an Orange Beach, Ala. wedding planner whose business has plummeted. "Why are they so secretive?"
Lindsay sought about $240,000 for lost revenue because of beach wedding cancellations and received a check for just $7,700. She was told, like so many others, she could request additional money in her claim for a final payment, a check that likely won't arrive for months.
"I have three weddings booked for next year. That's it. Normally, by this time, I would have 50 on the books," Lindsay said. "I'm at my breaking point. I don't know what else to do except file bankruptcy."
President Barack Obama tapped Feinberg to oversee the BP claims fund, which the oil giant created under government pressure to ensure that it paid those hurt by the spill. Feinberg is paid by BP, but says he is operating the fund independently. He has declined to say how much he is getting for his services.