Environmental Law

Navigating the BP Spill and the Claims Process


BP has put out signs that funding for relief in Gulf could be compromised if Congress puts limits on the company's ability to obtain new drilling permits for Gulf wells.

Gulf drilling is a significant source of BP revenue, and BP claims Gulf oil production is needed so it can fund relief and claims efforts, whether required by law or voluntary.

While BP isn't denying the obligation to fund the $20 billion claims fund, it has made it clear to Congress it is trying to go further, such as funding foundations for unemployed rig workers to research and economic recovery projects. The company claims those efforts can't be funded without ongoing oil production. Others say the company can raise needed funds by selling assets, if need be.

Original Article

The depth and spread of the BP oil spill grows broader every day, leading President Obama to address the nation from the Oval Office. BP has a claims process in place, and has made payments on claims caused by the spill. However, be on the watch for changes as the federal government steps up and takes on managing funds for Deepwater Horizon Spill claims.

Whether an individual or business owner, be familiar with how claims for disasters are handled. The source of claim payment may differ - government, insurer or a third party - but the same proof is likely needed. Knowing what to do is an important part of having a disaster or emergency response plan.

Ramping Up Federal Action

Typically, an Oval Office address is reserved for the most serious matters, such as the September 11 attacks. Many noted the choice of an Oval Office address, and the implication of how serious the spill is. A major step is the creation of the Independent Claims Facility (ICF) to take over the damage claim process, removing BP from claims decisions. BP is to pay $20 billion into a claims fund. The ICF will decide Oil Pollution Act (OPA) and tort claims. Federal and state claims are excluded.

Kenneth Feinberg, theĀ arbitration attorney who managed claims funds for 9/11 victims and bank bailout payouts, leads the ICF. Strong and effective leadership is needed in running the ICF; success is a must to calm an angry and frustrated public.

ICF set up and claims procedures should be in place as soon as possible. An administrator decides on claims; if you don't agree on your claim, a three-judge panel reviews the claim. The extent and impact of claims won't be fully known for years; those affected might have multiple claims. The government and BP have stated all legitimate claims will be paid. BP funding will come in quarterly payments, until the $20 billion level is reached. US assets are pledged by BP to secure the fund until all payments are made.

Proving Your Claim

While ICF claims procedures aren't yet firm,BP has set up a claims process for spill victims, and has paid claims. Full details and requirements are found on BP's web site, and give guidance on what you'd need to do and prove to make a claim. In part, the process is similar whether the party paying for your loss is your insurance carrier, the government or a third party, such as a corporation. Some have complained BP's process is too slow, and look to the ICF for improvements.

Covered Losses

There are loss types BP must cover as required by the OPA. For individuals and businesses, losses could include property damage, lost income and profits, earning capacity, subsistence loss and clean up costs. The oil spill has to be the legal cause of your loss, and you have the duty to minimize or mitigate your loss. Payment is made only once for a specific loss, so there aren't double payments possible. Payments are based on a net loss.

Other losses BP covers include costs you incur to minimize your loss, and bodily injury. The OPA doesn't mandate payment for bodily injuries, and claims adjusters look at these claim types individually.

Starting the Claims Process

You can file a BP claim by phone, online or by a paper form. Claims adjusters take your calls, and you're assigned a claim number, which is important to know as your claim goes through processing. If you want or need to visit a field claim office, BP suggests obtaining a claim number first to avoid delays or other problems.

Different damage types and claims can be reported under one claim number. Exceptions are: 1. Separate claims are needed for damage to multiple real property parcels; 2. Very large or complex claims are handled by special adjusters.

Have Records and Documentation Ready

You'll be asked to provide proof supporting your claim. Know what to expect and keep your claim moving. Information and documents could include:

  • Loss of income. Proof includes tax records, wage loss statements, bank records showing deposits and boating industry licenses and vessel registrations
  • Property damage claims. Photos, receipts for repair/replacement or cleaning may be sent following a phone claim. On-site adjusters may do an inspection for larger claims
  • Bodily injury. If you're injured, you may need to provide medical records, bills and pharmacy/supply receipts

Business losses can require more detailed and complex documentation.

Claim Workflows

If your claim is handled via the phone, the adjuster tells you what to fax or deliver to support your claim, and reviews documentation. If it supports your claim, the adjuster contacts you and tells you an advance payment will be made, and sets up payment delivery. The BP Claims Authorization Team makes decisions if further claim evaluation is needed.

You can ask to bring your documents to a field office. You sign in at the field office, meet with your adjuster, your identity is checked and your claim is reviewed. Adjusters ask if you have an attorney. If you do, there are added releases and authorizations to complete; the adjuster won't deal with you directly until he confirms it's acceptable to you and your attorney. Once again, the adjuster decides if the proof supports the claim and can direct an advance payment. Receiving an advance payment on a claim isn't a binding precedent affecting any future claims.

Questions for Your Attorney

  • Can I submit a claim to BP directly, and later file a lawsuit for the same claim or related claims?
  • If I have a loss, do I have to join a class action lawsuit covering similar claims? Is an individual lawsuit or a class action better for me?
  • How long do I have to file a claim(s) with BP, the ICF or a lawsuit?
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