BP Wants Oil Spill Plaintiffs to File with Compensation Fund First

BP has asked a federal judge to force all oil spill lawsuit plaintiffs to first submit their damage claims to the Gulf Coast Claims Facility, the $20 billion compensation fund being administered by Kenneth Feinberg. If US District Judge Carl Barbier agrees, the litigation could be delayed for months.

More than 300 oil spill damage lawsuits have been consolidated before Judge Barbier in U.S. District Court, Eastern District of Louisiana. The suits have been filed on behalf of thousands of fishing, tourism and real estate interests that suffered economic losses because of the BP spill. In court papers, BP and its partners in the Deepwater Horizon oil rig, including Transocean Ltd and Halliburton Co, argued that cases should be delayed until the “bedrock issue of whether a large number of the plaintiffs should even be before the court’’ is resolved.

The fund would then have 90 days to pay the claim or reject it. The claimant could only proceed to the courts if their claim was rejected, according to the defendants

Plaintiffs oppose the move, and urged the court to begin expanded discovery next month. Their court papers also proposed that by March they would identify test cases that would proceed to trial.

The BP oil spill compensation fund, which the oil company agreed to pay for this summer, has come under a great deal of criticism in recent days. Yesterday, we reported that Feinberg had backed off his promise to cut down response times. When he initially took over the processing of claims from BP, Feinberg promised that decisions on emergency payments to individuals would be made within two days of submission, while similar payments to businesses would be available within seven days.

But last week, Feinberg told the New Orleans Times-Picayune that many claims could not be processed because people hadn’t submitted required documentation, but acknowledged that his staff was having trouble keeping up with fully documented claims. He said that he has 25 people working in shifts around the clock to review the claims, and they are able to get through an average of about 1,000 a day.

According to information released by the Gulf Coast Claims Facility, it has so far approved 13,462 claims and denied one. It has sent 3,420 back to the claimants with a request for more paperwork. The remaining 38,481 are waiting to be reviewed.

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