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Feinberg: BP ‘Trying to Do the Right Thing’ But Claims Need Expedited

June 18, 2010 at 12:00 AM EST
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Kenneth Feinberg, who was named by President Obama to independently manage the $20 billion Gulf disaster compensation fund, tells Jeffrey Brown that "time is the enemy" for people who need their claims processed. He also said his independence cannot be challenged and that's it's too early to tell whether the fund is big enough.
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JEFFREY BROWN: The newly appointed overseer of that $20 billion compensation fund made his first visit to the Gulf region today. Ken Feinberg previously served as special master of the September 11th Victim Compensation Fund and more recently as the so-called compensation czar monitoring executive pay at companies that received government bailouts during the financial crisis.

I talked to him a short time ago from Baton Rouge, Louisiana.

Ken Feinberg, welcome to you.

What’s your first move to put a viable claim system in place?

KENNETH FEINBERG, independent administrator, Gulf Spill Independent Claims Fund: Just what the president said we have to do. We have got to make the existing system that’s been set up by BP much more efficient, quicker, to help people down here in the Gulf, where I am today.

JEFFREY BROWN: Well, how do you speed up that process? You know there have been a lot of complaints from people in the Gulf about BP being too bureaucratic, not paying enough of the claims.

That was backed up by a report today from the House Judiciary Committee. You said today you could get things out between 30 to 60 days. How do you do that? How do you speed up the process?

KENNETH FEINBERG: Well, first of all, we have got to accelerate the process by which we pay emergency claims on an interim basis, just like we did in the 9/11 Fund.

We have got to get quick money out to eligible claimants much quicker, with a minimum amount of bureaucracy and corroboration. BP started to do that. I give them credit. We have got to do it quicker. And then we have got to develop over the next couple of week, not months, a claim form and a system to come up with a comprehensive amount, a certain amount, that will be paid promptly to all eligible claimants.

As — as Governor Barbour told me today in Mississippi, time is the enemy.

JEFFREY BROWN: Now, what constitutes a legitimate claim? Or is that still something to be determined?

KENNETH FEINBERG: Oh, I will say.

First of all, fraudulent claims are illegitimate. They have to be valid claims. Secondly, we have got to decide how we’re going to make decisions on attenuated claims, the ripple effect.

“You know, Mr. Feinberg, I have a restaurant in Las Vegas. I can’t get shrimp from the Gulf. It’s hurting my business. I want to file a claim.”

We have got to come up with a formula that decides what claims are causally connected to the spill and what claims are simply too far removed to be eligible for compensation.

JEFFREY BROWN: Well, you have a lot of experience in these matters. Is there a system for that? How do you do the equation to — especially to look at the kind of indirect claims that you’re talking about, which I would expect you will get by the thousands?

KENNETH FEINBERG: That may be.

Now, in the 9/11 Fund, you will recall how we dealt with those claims.

“Mr. Feinberg , I broke my leg in Omaha, Nebraska, when I saw the planes hit the building at the World Trade Center. Pay me.”

What we decided, what Congress decided in those cases is, look to the state tort law that governs such claims. So, if somebody in Louisiana has a claim which is, as you say, Jeff, indirect, one way we may do this is look and see, what would the state courts of Louisiana say about the legitimacy of that claim?

But I don’t want to get hung up on just those claims. They may be in the thousands. Much more importantly right away is the president’s admonition to me, prompt payment on an emergency basis to individuals and small businesses that have legitimate claims.

JEFFREY BROWN: And can those people, that latter group that you just talked about, you want them to come forward right now. And can they come back again later and come back and come back?

KENNETH FEINBERG: Absolutely. They can come back later.

Now, you raise a good question, as usual. How many times they can come back and come back is something I have got to deal with. But, absolutely, get into this program. I can’t help you if you don’t file a claim.

To BP’s credit — in Louisiana, Governor Jindal pointed out that he gives BP credit. They have set up 14 different offices in Louisiana. Governor Barbour told me there are three different offices right on the Gulf in Mississippi. So, BP is trying to do the right thing. They’re well-intentioned. We have just got to improve that system based on experience.

JEFFREY BROWN: Now, to be clear here, people will still retain the right to sue BP themselves. So, part of what you’re doing, I guess, is to convince them to join in to this fund, to go through the process that you set up. What — what’s the — what’s the argument what — that you make to people?

KENNETH FEINBERG: I make the same argument I do with all of these claims facilities: You will get money quicker. You will get money with a certainty. You don’t have to give 40 percent to your lawyer. Come in and get a check.

And you’re absolutely right. Right now, these emergency payments for small businesses, individuals, you don’t have to relinquish your right to sue. Take this money, and, later on, file a claim with the fund that will give you a choice. Take the liquidated amount or litigate.

And you will make that choice only after you know how much you will receive from the fund.

JEFFREY BROWN: And does BP, the company itself, have any involvement in this process? And is the company’s continuing financial situation or financial health any part of your concern, something that you have to keep in mind?

KENNETH FEINBERG: As the president made very clear, I am running an independent facility at the request of the president of the United States and BP. My independence cannot be challenged, that is, my independence in terms of how this program ought to be established.

I am concerned that we not get flooded with so many ineligible, specious claims that no fund in the world could handle them. I mean, there are going to have to be some decisions made here. The president made very, very clear the $20 billion that’s been set aside is not a final amount. There can be additional monies as needed.

But any talk about BP going out of business or being bankrupt, that would be a horror. That would mean that eligible claimants would now have to wait. That — that is simply not an alternative that I find acceptable.

JEFFREY BROWN: But that — to the extent that the president did say that, that the $20 billion is not a — a final cap, that may come to your decision, right? If you realize that’s not enough, what happens then?

KENNETH FEINBERG: Then, as I understand it, from the president of the United States and BP, there will be additional funds available. But that’s very conjectural.

Until we know how much — how many claims there are that are legitimate, that are eligible, what those claims are worth, how soon they should be paid, it is way premature to be saying that $20 billion is enough or it’s not enough. That remains to be seen.

But it certainly is good news that I know that the $20 billion need not be a final accounting.

JEFFREY BROWN: And let me ask you, finally, Ken Feinberg, you have talked about the comparison to the 9/11 situation. There, of course, you were dealing with the deaths of several thousand people. Here, you have got a kind of longer-term, indeterminate impact.

So, how do you compare the two?

KENNETH FEINBERG: Well, don’t forget about the indeterminate impact in the 9/11 Fund.

We had 2,300 respiratory injury claims, where people said, “I can’t breathe because I was cleaning up the dust and the debris at the World Trade Center,” and we had to deal with those long-term latent claims in 9/11.

There are similar claims here. I must say, here, you can’t really deal with that problem until the oil stops. We have got to get a final spill end point, from which we then can decide how to deal with latent claims, where people come to me with an injury now, but they’re concerned that it will get worse. And we will have to deal with how we strike that balance.

JEFFREY BROWN: But this is — well, this is something that will play — like that one, this will play out for years, right?

KENNETH FEINBERG: I — just as 9/11. We just settled the 9/11 cases last week, some of the injury cases, seven years later. So, there are long-term health effects. There are long-term economic effects. This is here for a while, yes.

JEFFREY BROWN: All right, Ken Feinberg, speaking to us from Baton Rouge, you thank you very much.

KENNETH FEINBERG: Thank you.