When appointed to oversee payouts of BP’s $20 billion compensation fund for victims of the Gulf of Mexico oil spill, Kenneth Feinberg promised coastal residents knew he would operate as an “independent” or “neutral” entity, dispensing funds quickly and objectively.
Louisiana District Judge Carl Barbier recently ruled that Feinberg is not independent and BP must refrain from referring to him as “neutral” as he dispenses compensation to victims of the Gulf of Mexico disaster, the worst oil spill in U.S. history (Reuters).
Exerpt from the full ruling (viewable here):
While BP may have delegated to Mr. Feinberg and the GCCF independence in the evaluation and payment of individual claims, many other facts support a finding that the GCCF and Mr. Feinberg are not completely “neutral”or independent from BP. For example, Mr. Feinberg was appointed by BP, without input from opposing claimants or the Plaintiffs’ Steering Committee (“PSC”), and without an order from the Court. Mr. Feinberg is not a true third-party neutral such as a mediator, arbitrator, or court- appointed special master.
Additionally, Barbier ruled that BP must disclose in all communications that the Gulf Coast Claims Facility (GCCF) run by Feinberg is acting on behalf of BP in fulfilling its legal obligations under the Oil Pollution Act (Reuters).
Since taking command of the compensation fund in June 2010, Feinberg has faced continual criticism about the speed and efficacy of the compensation process from Gulf Coast residents.
U.S. Sen. Bill Nelson (D-FL) has demanded a White House investigation into Feinberg’s process:
“Mr. President, last summer, while in my state at the U.S. Coast Guard station in Panama City, you said this fund would be run independent of those who caused the spill ‘so that people can trust that they’ll get a fair shake,’” Nelson wrote in a letter to Obama las week. “The claimants in Florida, and the rest of the Gulf coast, deserve no less.
“I respectfully request that your administration initiate a review of all administrative operations of the claims fund,” Nelson wrote. “Given the court ruling and other news accounts, there’s clearly a need to assure more accountability and transparency.”
In his recent post, Care2′s Scott James points out why neutrality is so important when it comes to dispensing claims money:
“Mr. Feinberg argues that those who agree to a settlement will receive more money and get it faster than those who join one of the claims pending in Federal court. On the other hand, those who agree to a settlement also agree to not take their claims to court in the future.
Around 87,000 people have accepted a settlement from Feinberg, rather than taking their claim to Federal court, and so far the fund has handed out $3.5 billion.
While this ruling does not say that all previous settlements should be revisited, it opens the door to question the integrity of how BP is dealing with their settlement fund.”
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