Feinberg questions Barbier's authority over claims facility

Steve Korris Mar. 3, 2011, 5:19am


NEW ORLEANS – Some say BP hired Kenneth Feinberg as chief of the Gulf Coast Claims Facility, and some say President Barack Obama hired him, but Feinberg fears he works for the Department of Barbier.

On Feb. 23, Feinberg questioned the authority that U. S. District Judge Carl Barbier exercised over the claims facility.

Barbier on Feb. 2 ordered claim handlers to follow a script that plaintiff lawyers drafted.

He ruled that Feinberg acts as BP's agent, writing that any claim of his neutrality and independence was misleading and a threat to ongoing litigation.

He rejected an argument from dissident plaintiff lawyers that Feinberg serves as a presidential appointee, beyond the court's reach.

Barbier invited briefs on BP's compliance with the Oil Pollution Act.

For Feinberg, David Pitofsky of New York answered that no complaint before Barbier asserts any violation of the act.

He wrote, "If a court were to undertake to prescribe Oil Pollution Act procedures, methodology, and form of release, it would in all practical and legal respects be acting as though it were an administrative agency charged with fleshing out a statute through notice and comment rule making."

The facility's procedures have gone far beyond the act's requirements, he wrote, and the facility has conducted itself with unparalleled transparency.

Pitofsky wrote that the act creates no cause of action asserting that a party established improper claim procedures, evaluation methods, or release forms.

"Indeed, the act provides no cause of action even for the denial of a claim by a responsible party, regardless of how unfair or unjustified the denial is alleged to have been," Pitofsky wrote.

He wrote that after 90 days, a claimant can sue in court or seek recovery through an oil spill recovery fund at the U. S. Coast Guard.

He wrote that Congress clearly intended to minimize the involvement of the judiciary.

He wrote that Barbier would prescribe his own subjective preferences without reference to any standard Congress established.

Pitofsky disputed Barbier's conclusion that he could supervise the facility's communications under procedural Rule 23, governing class actions.

"No court in any case of which we are aware has ever cited Rule 23 as conferring authority to oversee and regulate a party's compliance with a federal statute," he wrote.

He wrote that committees of Congress, the Department of Justice, the Coast Guard, governors, and state attorney generals continue to monitor Feinberg's work.

He wrote that the Coast Guard, charged with implementing the Oil Pollution Act, has left procedures and decisions to the facility.

He wrote that the act requires a responsible party to establish a procedure for settling short term claims, adding that the act says nothing about the kind of procedure.

"Because OPA is silent, a responsible party is left to establish its own procedures," he wrote.

He wrote that the facility paid about 170,000 emergency claims, totaling $2.57 billion, with minimal documentation and no releases.

He wrote that anyone who received an emergency payment kept options to file interim or final claims.

He wrote that an interim claim may seek only past, substantiated damages.

He wrote, "The option to file multiple interim claims is available to claimants who prefer to see what actual damages they incur over the life of the GCCF program, as opposed to accepting in the near term a final lump sum payment based on an estimate of future damages."

He quoted a declaration from Feinberg that he may modify calculation of final payments as information becomes available about the future of the Gulf Coast economy.

He denied an allegation of plaintiff lawyers that this statement is coercive, writing that it assists claimants in understanding potential risks and benefits of their options.

He wrote that a final payment claim can seek past and future damages.

He wrote that a quick payment option for final claims provides $5,000 in 14 days to a recipient of emergency or interim payments, without further documentation.

He wrote that the facility has 52,271 interim claims and 89,860 full review final claims under review.

He wrote, "Some have suggested that the GCCF is purposefully delaying the processing of interim claims with the intent of coercing claimants into taking quick payments."

He wrote, "This speculation is false and is made without factual support of any kind."

Quick payment has proven enormously beneficial to tens of thousands, and claimants may choose the full review option until Aug. 20, 2013, when the facility will shut down, he wrote.

Claimants can appeal final awards greater than $250,000 to a panel of three judges, and BP can appeal those exceeding $500,000.

He wrote that decisions of the judges will bind BP, but claimants can appeal to the courts or the Coast Guard.

The facility operates 35 sites, with Spanish translators in 25, Vietnamese translators in 15, and a Khmer translator in one. Subcontractor Brown Greer employs 800 software staff, claim reviewers, senior analysts, and lawyers, in three shifts, seven days a week.

He wrote that Garden City Group employs about 1,500 persons in call centers, electronic intake, data management and payment processing. Worley Company employs about 800 persons in the 35 claim offices. Price Waterhouse Coopers employs 30 accountants, and Cowheard and Assurance employs about 70. Guidepost Partners employs about 230 persons investigating case fraudulent claims for referral to the Department of Justices.

"The process has proceeded with remarkable dispatch and has already alleviated some $3.5 billion in harm to affected individuals and businesses," he wrote.

He wrote that releases advise claimants not to sign unless they fully understand and that releases advise claimants represented by attorneys not to submit forms or sign releases until they confer with their attorneys.

He wrote that Feinberg determined that a broad release was essential to full and final resolution of claims.

Without a broad release, he wrote, a claimant could sue other parties who might seek recovery from BP.

"This would require BP to again litigate the matter it had previously settled," he wrote.

Because Feinberg and his facility aren't parties to any case before Barbier, Pitofsky filed his brief as friend of the court.

Pitofsky practices at Goodwin Procter in New York, N.Y.

William Sheehan and Christian Highsmith, both from the firm's Washington office, attached their names to the brief.

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