Former Deepwater Horizon claims administrator asks Supreme Court to review case

NEW ORLEANS – The former Deepwater Horizon claims chief has filed a brief asking the nation’s highest court to weigh in on the question of whether oil spill claimants should be required to show proof of damage from the Gulf oil spill before collecting settlements from oil giant BP PLC.

In an amicus brief filed with U.S. Supreme Court, Kenneth Feinberg, the former special master of the Gulf Coast Claims Facility (GCCF), said not only should claimants be able to show proof they were directly affected by the 2010 oil spill, but that requiring them to do so is vital to maintaining the integrity of the settlement process.

“[R]equiring claimants to establish causation…is crucial to ensuring the integrity of the claims programs and to encouraging defendant companies to design and implement them,” Feinberg wrote.

Feinberg added in comments later that the idea of not requiring a strict causation factor in proving claimants rights to damages does not make sense.

“If a program is going to pay claims absent a showing of causation, well then these programs will never work. No one is going to set up a program that allows just anybody and everybody to file a claim,” he said.

Feinberg is a veteran special master who has been appointed to handle many high profile cases, including providing settlements to victims’ families through the September 11th Victim Compensation Fund, the current General Motors car recall case, as well as victims’ relief funds for mass shootings in Aurora, Colo. and Newtown, Conn.

Feinberg said he filed the brief because he feels rightful claimants can be better served in some cases through an alternative compensation program that bypasses the court system.

“I decided to file that brief because I want the Supreme Court to appreciate that these [alternative] programs can work. The Gulf Coast Claims Facility worked. I just wanted the Supreme Court to consider taking the appeal of BP because I don’t want the current situation in the Gulf to poison the atmosphere for using these alternative programs, designing and implementing them,” he said.

In the brief, Feinberg compared his experience as a special master in the September 11th Victim Compensation Fund with that of the Deepwater Horizon incident to point out why such large-scale claims are better handled without litigation.

“[B]oth programs worked precisely as intended. If a claimant could demonstrate causation—i.e., that the death, physical injury, or business loss was caused, respectively, by the terrorist attacks or the oil rig explosion—payment was authorized without having to resort to litigation. Instead of waiting years for an uncertain litigation outcome, hundreds of thousands of claimants received prompt, certain, and fair compensation with relatively minimal delay and cost,” the brief reads.

In the immediate aftermath of the oil spill, Feinberg was tasked with managing the enormous settlement effort, in which BP would provide $20 billion to oil spill victims through the Gulf Coast Claims Facility (GCCF), the entity that preceded the Court Supervised Settlement Program (CSSP) headed up by the current and embattled Claims Administrator Patrick Juneau. Over the course of 16 months, Feinberg paid out over $6.2 billion to over 220,000 individual and business claimants.

Two years later, when a group of plaintiffs’ attorneys, known as the Plaintiffs’ Steering Committee (PSC) settled the Deepwater Horizon class action with BP, Feinberg was released from his duties and Juneau took over the claims process.

Feinberg said he feels the schism that resulted in the PSC filing suit and ultimately settling was not personal.  Rather he attributed it to a difference of ideology.

“They have a different view. These alternative programs, I think they are very skeptical of them…this isn’t the way they were taught in law school how to litigate cases,” he said.

Two and half years later, Feinberg said he feels a lot of the plaintiffs attorneys were happy with him as head of claims with the GCCF, but there were those within the ranks of the PSC who were determined to go through the court system.

“I think if you canvass most of the plaintiffs attorneys that aren’t part of the class action lawyers, I think most of the plaintiffs attorneys lament the fact that the Gulf Coast Claims Facility is no longer processing claims,” he said. “I think that’s because when the Gulf Coast Claims Facility was processing claims they knew we would promptly, fairly, consistently apply rules they understood. And [they] were comfortable they were getting a fair shake. Now, they are concerned about whether they are getting a fair shake.”

Shortly after taking over as head of the claims program, BP began challenging Juneau’s interpretation of the settlement agreement in court for not requiring claimants to show proof that their damages were caused by the spill.

U.S. District Judge Carl Barbier, who is overseeing the case, dismissed the challenge, ruling that under the settlement, all parties agreed that requiring direct proof of damage from the spill would prove to be too burdensome. The U.S Court of Appeals for the Fifth Circuit, in a divided ruling, upheld the lower court.

In his brief Feinberg said if the appellate court’s decisions are allowed to stand, it is much more likely that claimants in future large-scale cases will go the route of litigation.

“Under the Fifth Circuit’s decisions, potential claimants have a lower burden of proof in federal court than they would resolving their claims through a fund such as the Gulf Coast Claims Facility. So long as the funds maintain the causation standards they have up to now, it is unclear why claimants would forego litigation in favor of the alternative claims process. The result undoubtedly would be more litigation, with its attendant costs and delays,” the brief reads.

The outcome of the pending U.S. Supreme Court challenge will likely bring an end to the dispute between BP, Juneau and the PSC on how claimants are paid for alleged losses after the spill.