BP settlements: A gamble for Gulf Coast victims

[Robbien]

Source: Fortune

FORTUNE -- "We're interested in total peace," says Ken Feinberg, the administrator of the $20 billion Gulf Coast Escrow Fund that is being set up to provide a fast, fair claims processing facility for most oil spill victims. "We're not interested in any halfway measures," Feinberg adds.

What he means is that the fund he'll be administering won't be dispensing any relief for losses already incurred unless the victim also consents to accept an estimate of his future damages, too, and then releases BP from future claims. "My goal is to settle then and there," Feinberg says. "Why bother coming back? Let's resolve it right now."

This is how Feinberg's fund, set up by a White House-brokered agreement between the U.S. Justice Department and BP, will differ from the alternative statutory remedies that victims were originally -- and still are -- entitled to under the Oil Pollution Act of 1990 (OPA). Feinberg explained the difference to Fortune in an interview on Sunday. Of course, the alternative remedies provided by OPA (pronounced to rhyme with Oprah) carry far greater risks, so Feinberg believes his fund will be the more attractive route for most claimants to follow. They'll grab his bird in the hand, rather than holding out for two in the bush.

Here's Feinberg's for-instance: "Suppose someone comes to me and says, 'How much will you give me for the last three months, because I can't work.' I might say, '$30,000. But wait, sir. I'll give you an additional $90,000, because I estimate that you won't be able to work for another six months. So you not only get the certain sum, I'll throw in another $90,000 that OPA won't touch."

Read more: http://money.cnn.com/2010/07/12/news/companies/feinberg_BP_claims.fortune/

---

So basically accept settlement for short defined period of expected loss or sue.

[metapunditedgy]

1. People should NOT have to gamble with their livelihoods.

I thought I heard previously that the settlements did NOT prevent further legal action against BP?

Why can't BP just pay for what it has done? Is that so difficult?

This part of the story also makes Feinberg sound like scum, if it's accurately reported:
What he means is that the fund he'll be administering won't be dispensing any relief for losses already incurred unless the victim also consents to accept an estimate of his future damages, too, and then releases BP from future claims. "My goal is to settle then and there," Feinberg says. "Why bother coming back? Let's resolve it right now."

Why do rich/powerful people always pretend that common folks have access to an army of lawyers and accountants, and if they don't, it's their own fault?

[Robbien]

3. Feinberg asks Panhandle politicians and business owners to hold off on suing BP

The man charged with doling out billions to people affected by the BP oil spill encouraged Florida residents and businesses Monday to give the claims process a try before taking their cases to court.

Feinberg said a new Gulf Coast Claims Facility soon will take over responsibility for all claims payments for private businesses and residents in the region.

"BP is out of the claims business in two to three weeks," he said.

Feinberg said individuals filing claims will soon receive six-month emergency checks instead of monthly payments.

The claims process is funded from a $20 billion escrow account, which was set aside by BP and is designed to provide a fair alternative to filing lawsuits, which are expensive and could be tied up for years in the legal system.

http://www.pnj.com/article/20100713/NEWS01/7130315/Oil-spill-Feinberg-asks-Panhandle-politicians-and-business-owners-to-hold-off-on-sueing-BP

The guy is going to politicians in the Gulf trying to get them to convince citizens to settle with him instead of suing. The guy is also downplaying the fact that the people are absolving BP of all future damage beyond the settlement check.

The articles states politicians are saying, "good. We trust you."

[Angry Dragon]

5. When is this bullshit going to end??

When is someone with guts in the government going to really step in and protect these people??

What is going to happen is that the American people are going to pick up this tab for the murderous acts of bp.
And bp will then set their sights on their next victim.

[Robbien]

8. Exxon Valdez victims were promised to be made whole

in the exact same way that the Gulf of Mexico victims have been promised.

Exxon Valdez victims were paid pittances for the cleanup and loss of livelihood and those who wouldn't immediately settle are still waiting for the court settlement.

And they are still dealing with oil lapping their shores and loss of fish.

[dipsydoodle]

9. I heard previously..............

The problem with so many conflicting reports becomes getting to the actual truth. If all links to a specific subject go back to one original source only then its worth pondering the motive for publishing it in the first place.

[wordpix]

13. there are lots of people on the coast---they could file a joint suit against BP

of course, that is a lot riskier than taking the bird in the hand money

[metapunditedgy]

17. In my experience, corporations really fear two things.

1) government lawsuits (I've seen them work on the state level), and

2) class-action suits. They bypass all the "My contract prohibits me from suing" crap and take the risk out of hiring lawyers for common people. Unfortunately, they also funnel all the winnings to the lawyers...

[Angry Dragon]

2. Shaking my head and wondering what is this crap

So he wants to have the people that are suffering to take a gamble.

No work for years...too bad.....you lose
health problems latter.....too bad....you lose

[Robbien]

4. Article also states BP is going to be out of the business of paying claims

in two weeks.

So soon the people only have two choices: settle with this man or sue.

[JDPriestly]

7. If I lived in the Gulf Coast and were considering whether

to accept this deal, I would first want to hear from all those people who lost their homes in New Orleans a few years ago. Have they regained what they lost? Are they working? Have they bought or rented new homes? How are they doing?

That might help give me an idea about what to expect in my future.

[JDPriestly]

6. People are going to lose their livelihood for much longer than 9 months.

It is going to be more like 25 years or so.

[wordpix]

14. you're right but no one is going to pay out for a 25 yr. loss

good luck with that one. You SHOULD be able to include the market price of your home or a portion, if you have to move.

[metapunditedgy]

18. Right... the real choice here is whether you want to compromise with bp.

If you wait and go to court, you can help bring bp down (as it deserves), but you probably won't get much money.

Chose between seeing justice done and protecting your livelihood. You can only have one.

I hate bp, and the system that enables it.

[JDPriestly]

19. The victims should try to get as much as they can.

In general, when negotiating settlements, corporations offer very little at first and then, if they meet resistance and are presented with strong evidence of losses and damages and see themselves as threatened with the likelihood of losing in court, they offer a more realistic settlement. Unfortunately, if you can't hold out for a better settlement, you will be cheated. That is the name of the game. I know it well.

[quaker bill]

10. The point is

to offer an immediate alternative to litigation. Litigation beyond small claims is virtually always a long and expensive path. According to an interview with Feinberg on NPR, the initial payments do not foreclose on litigation, but the final settlement payment does. There is no third process in civil matters, you take a mediated settlement or you litigate, there is nothing exotic going on here. Feinberg and his staff will serve basically as mediators. The only thing a bit unusual is that they already have the cash to make payments. Normally in mediation, the mediator puts the proposed settlement in front of a judge, and the judge then orders payment. Sometimes the defendant does not pay, then there is contempt of Court, or appeals.

In this case, the mediator just cuts a check.

Feinberg has experience at this and a good reputation for fairness. I would not pre-judge the process. If people do not like the offer, they can still sue. The whole purpose of the program fails if the bulk of people don't like the offer and choose to sue. I expect the settlement offers will leave most folks feeling well compensated. Defense of a modest case in court can quickly run up a bill of 50K in legal fees. If litigation is avoided, there is room to be what most folks will find quite generous with the settlement. I expect that most folks who choose to sue will find that they can perhaps get a bit more at trial, but all the extra is consumed by the lawyers, and a bit more. Further, they will not see a dime for years.

Litigation is a long, ugly, and painful process that will consume your life in decade sized chunks. A settlement is cash, right now, to put your life back together, and go on to other things. If the offers are reasonable, most folks will choose settlement, and I would not question their choice.

[Iowa]

12. Nonsense...

This process reminds me of the worker's comp system. If you dangle a check in front of a desperate family, they're likely to snap it up - even if it is not in their long-term interest to do so. That's the foundation of this program - prey on peoples' desperation. There's absolutely no reason to force them to sign away future losses. To use the example in the article... give them the 9 months, and if it ends up being 39 months, they should be able to come back for another 30.

You're operating under a false premise. You're saying, "If the offers are reasonable, most folks will choose settlement...". The problem with your premise is twofold: 1) the injured parties are bargaining from a position of desperation, and 2) they have no way of knowing whether the offer is reasonable.

This is a corporate-centric program by design.

[wordpix]

16. when you hire a lawyer the fees quickly add up & they don't accept chickens for payment

So if a family wants to hold out and end up coughing up $10's of thousands, they might be kicking themselves for not settling earlier.

OTOH, a class action suit would spread the costs around to possibly thousands of people who would benefit (but possibly, decades later).

[wordpix]

15. +1 and you forgot to mention to the purists: no human system is perfect

This one isn't but it's pretty good as long as the mediation and payments are fair, considering the alternative of going to court.

Remember how long it took for Exxon Mobil to pay out in the AK spill? Do Gulf victims really want to wait 30 yrs. if that were to happen again?

[obxhead]

11. BP will dodge millions, possibly billions in payouts by the

most needy signing for whatever relief they can get now. In doing so they may lose the right at future relief needs from this spill.


Well I'm just shocked. :sarcasm:

Anyone still believe 20 Billion in escrow over 5 years was ever anything more than a dog and pony show still?