Set forth below is a white paper containing things for victims of the Gulf Oil Spill to consider before signing a final release. Everyone’s situation is different, but the legal claims arising from the Gulf Oil Spill are indeed complicated and I think it is a good idea for anyone considering a final settlement to at least consult with a Gulf Oil Spill lawyer. Read below for some additional thoughts and cautionary notes to consider before signing a final release with the Gulf Coast Claims Facility (GCCF.)

Reasons Not to Sign a GCCF Final Release

The GCCF and Ken Feinberg have moved into the next phase of their efforts to settle the claims of as many Gulf Oil Spill victims as possible. Feinberg, is capitalizing on the victims’ growing desperation in an attempt to settle claims as cheaply as he can, all while telling claimants that he is “more generous than any court.” This paper explains why claimants must question the statements and actions of Feinberg and the GCCF regarding the settlement and final release of claims, and explain why any final settlement through the claims process helps BP and diminishes the rights of those affected by the spill.

– Feinberg’s efforts are designed to save BP money. He is now stating publicly that he thinks that he can resolve all claims for only $10 billion, half of the $20 billion fund created by the White House and BP.

– While Feinberg has consistently stated that he will be more generous than any court, this statement has no basis in fact. His goal is to get claimants to settle for as little as possible, and his statements ignore the possibility of plaintiffs recovering punitive damages through litigation, and the fact that recovery could be made against a multitude of defendants.

– A person executing a final release of claims not only gives up any rights to recovery against BP, but also against ANY other possible defendant in the litigation. It is notable that the Final Release of Claims lists 120 potential defendants and responsible parties as being released from liability even though none are contributing to the settlement. Further, by executing the final release of claims, an individual gives BP the right to turn around and attempt to recover on his or her behalf for all the damages that person could have recovered in litigation from all of these responsible parties.

– By signing a final release of claims, a person not only releases his or her own claims, but also those of his family.

– Feinberg has used the fear of decades-long litigation to scare people away from filing suit. His comparisons to the Exxon-Valdez litigation are not accurate, and there is a significant possibility that the litigation will resolve before Feinberg’s GCCF completes its claims process.

– The payment of interim claims is mandated under the Oil Pollution Act of 1990 (OPA); it is not a magnanimous gift or favor from Feinberg on BP’s behalf. Further, OPA mandates that payment of these interim claims in no way affects or releases claimants’ right to sue the responsible parties – but the GCCF is nevertheless urging claimants to accept a final payment and insisting on a final release of claims to terminate future rights.

– Feinberg is making the interim payment process as unappealing and frustrating as possible to push people towards final settlements.

– Feinberg’s statements claiming an ability to calculate the long-term impact of the spill is not based upon any sound scientific understanding, but is another misleading statement designed to push people towards final settlement and release of claims.

– Feinberg simply cannot be trusted. Despite statements promising transparency in the settlement process, Feinberg’s GCCF has been anything but. In fact, Feinberg has ignored repeated requests for information relating to his compensation from an agreement with BP, his internal GCCF claims handling and calculation procedures, and the GCCF’s or BP’s relationship with the designated “pro bono” firms, amongst other things.

– His efforts have been the equivalent of smoke and mirrors, and his language relating to the having the best interests of the claimants at heart, is just another ploy to get people to settle quickly and cheaply.

I. Introduction

Ken Feinberg’s efforts to push people towards a final release of claims are designed to benefit BP at the expense of the claimants. While Feinberg has repeatedly made statements and representations to the public that the claims process and final release of claims are in the best interest of those impacted by the Gulf Oil Spill, these are little more than a sales pitch to convince people to settle quickly and cheaply, and are not in fact calculated to fully compensate anyone for their losses. This paper is intended to provide arguments against executing a full and final release of claims and to counter the statements made by Ken Feinberg.

II. Ken Feinberg will NOT be “more generous than any court”

From the beginning of his involvement in the claims process, Feinberg’s message has been consistent: utilize the claims process rather than litigation, because he would be more generous than any court. Unfortunately for those claimants who have already accepted a final payment and executed a final release, this statement has no grounding in fact. If the past is any indicator, filing suit is likely to prove much more lucrative than pursuing a claim with the GCCF.

In the litigation following the 9/11 disaster, many litigants received more than double what 9/11 Victims Fund participants received for compensation from Feinberg. In addition, Feinberg’s statements about generosity come without any clearly articulated scientific foundation or support for his ability to make a final determination as to what the long-term impact of this spill will be. He also neglects to address the fact that in litigation, plaintiffs will have the potential to recover punitive damages, not only against BP, but against a potentially large number of additional defendants.

Further, if Feinberg truly intended to award claimants more than they would receive in a lawsuit, he would not be claiming an ability to settle all of the claims for $10 billion (half of the $20 billion fund), particularly since BP itself has been working to raise $50 Billion to cover its potential liabilities relating to the spill. Feinberg’s goal is also BP’s goal – to settle with claimants for the smallest amount of money they will accept.

Feinberg has proven that he is not above capitalizing on the growing desperation of those who have turned to his claims process for help. Feinberg created an arbitrary cut-off date for emergency payment applications of November 23, 2010. However, when the deadline drew near, Feinberg’s GCCF simply denied everyone that submitted payments within the final days of the emergency claims period. There are numerous anecdotal stories of individuals who submitted well-documented claims at the end of this arbitrary emergency advance payment period being denied for lack of documentation.

After denying 173,000+ claims, Feinberg then turned around and offered the increasingly desperate claimants a “quick-pay” no questions asked, final settlement offer of $5,000 for individuals, and $25,000 for businesses, right in time for the holiday season.

At the same time, Feinberg announced other options available to claimants: they could submit paperwork in support of (1) a final lump-sum settlement payment, in exchange for a full and final release of all claims, or (2) quarterly interim payment requests that will not waive a claimant’s right to sue BP or the other parties. These will be discussed each in their own section below. According to the GCCF’s own website statistics, Feinberg only paid on 35% of claims applications. As of January 3, 2010, of the 469,226 GCCF claimants, Feinberg had only paid 167,923

All of this while Feinberg has been getting paid $850,000 per month, which, according to Feinberg, is “totally unrelated to whether [he] process[es] 1,000 claims or one claim.” these are hardly numbers that evoke an image of generosity.

III. The interim claims process is mandatory, and is not an accommodation by Feinberg

Feinberg has made a big deal about his decision to allow for an interim claims process wherein those claimants who submit periodic claims for interim relief will not waive their right to pursue litigation down the road. In an October 28, 2010, article in the Florida Tribune the following was reported:

Ken Feinberg, the independent administrator of the fund, had initially planned only to take so-called “final claims” after Nov. 23 which would require victims to waive liability in exchange for receiving a final compensation award. But Feinberg told Florida officials on Thursday that he was persuaded to change the policy after hearing from state officials who asked for a continuation of interim payments. He will allow interim payments for three more years.

This statement embodies much of what is wrong with Feinberg and the GCCF. Interim payments are not discretionary under the Oil Pollution Act of 1990 (OPA). They are mandatory, in fact, as Sec. 2705(a) clearly states:

The responsible party shall establish a procedure for the payment or settlement of claims for interim, short-term damages representing less than the full amount of damages. Payment or settlement of a claim for interim, short-term damages representing less than the full amount of damages to which the claimant ultimately may be entitled shall not preclude recovery by the claimant for damages not reflected in the paid or settled partial claim.

While an interim claims process is mandated by the OPA, and despite Feinberg’s statements that he will “allow” for an interim claims process moving forward, it is apparent that the interim claims process will be needlessly frustrating and is set up for failure. This is because Feinberg and the GCCF have set up an interim system that they hope will push people into accepting final settlements. There are two points discussed in the GCCF website’s Frequently Asked Questions section that underscore this troubling point.

The first is that the GCCF will not provide any notice of deficiency for lack of documentation on interim claims; rather, losses will be determined solely by what is submitted. Compare this with the final lump-sum claims submission process, wherein the GCCF will notify the claimants of deficiencies in their submissions. This is extremely problematic, as it is an acknowledgment that Feinberg and the GCCF will potentially under-compensate large numbers of interim claimants.

The second point is that interim claims, which can be submitted once quarterly for each claimant, may take as long as 90 days for the GCCF to process. This means that a claimant could be well into the next quarter before they see any relief. Compare this to the final quick-pay option, which will be handled, processed and paid within 14 days. Further, because of the GCCF is not providing notification of any deficient documentation, and there is likely to be substantial overlap of claims submission before payment, there is a danger of under-compensation for a period of six months or more. All of this is designed to push claimants towards a final settlement and release of claims.

IV. The dangers and pitfalls of the full and final release of claims

Feinberg has designed the GCCF claims process in such a manner as to encourage claimants to accept final settlement offers and execute the accompanying releases. His goal in doing so is to avoid litigation and settle claims against BP as quickly and cheaply as possible. However, claimants electing to pursue only interim claims need not waive their rights to pursue litigation, and it is important to communicate that there are numerous dangers in accepting a final lump-sum settlement in exchange for a full release of claims.

The acceptance of a final payment from the GCCF requires that the claimants sign a Release and Covenant Not to Sue. By signing this release, the claimant is not only giving up the right to seek legal remedy against BP, but against any and all parties connected in any way with the gulf oil spill. In fact, the release has an attached list of over 120 possible defendants, against all of whom a litigant could potentially recover. Not only does the claimant accepting final payment waive the right to pursue further legal action against any of these parties, but he waives the rights of his spouse, heirs, beneficiaries, and anybody else affiliated with him. The full and final release also precludes any future recovery for damages which are not now known, or which may only become knowable in the future. Additionally, the release subrogates the claimant’s rights of recovery to BP, allowing BP to turn around and sue the other defendants, not only for the amount of the final settlement, but for the total recovery the claimant was entitled to. There is clearly incentive for the GCCF and Feinberg to settle with claimants as cheaply as possible.

It is also important for the claimant to understand that litigation provides more vehicles for recovery than a final settlement with the GCCF would. Those choosing to litigate their claims may be entitled to an award of punitive damages, which could significantly increase recovery over anything that Feinberg will offer. Further, taking the litigation route allows a plaintiff to bring claims against a number of defendants, not just BP. Instead of submitting to an arbitrary, secret claims handling process, plaintiffs are able to articulate their damages claims in front of the court, and have the opportunity to provide testimony on the same. Finally, rather than an appeal process only available to those claimants in the GCCF with claims valued at over $250,000, all plaintiffs in the litigation track have the right of appeal, if necessary. Feinberg is attempting to dissuade claimants from pursuing litigation against BP and the other defendants. However, there is no need for claimants to give up the right to sue by accepting a final settlement offer, and they should remember that litigation provides the opportunity for more appropriate compensation and protection of their rights.

V. Feinberg’s fear tactics about litigation taking too long are untrue

Realizing that BP has much to lose in litigation, Feinberg has resorted to fear tactics concerning the length of time such litigation will take. On August 22, 2010, as he was set to take over the GCCF, Feinberg stated: “It’s not in your interest to tie up you and the courts in years of uncertain protracted litigation when there is an alternative that has been created…I take the position, if I don’t find you eligible, no court will find you eligible.”

On November 22, 2010, as he was preparing to begin the final lump-sum settlement period, Feinberg drew comparisons with the Exxon Valdez litigation as an example of what could happen should claimants choose to pursue litigation instead of settlement through the GCCF. Feinberg has implied that litigation will take many years, or even decades, unlike the claims process, which can offer final settlements (in exchange for a full release and subrogation rights for BP) quickly. This is not completely true, as there is a real possibility that the litigation will resolve before the three year window of the claims facility closes. There is a trial already scheduled for February 2012, with more to quickly follow. These early trials will provide significant guideposts for movement and resolution of the litigation in an efficient and expeditious manner.

It is misleading to compare the Exxon Valdez litigation to the gulf oil spill, despite the obvious fact that they both involve oil spilled by the wanton, reckless, and grossly negligent acts of large corporations in vulnerable coastal waters. There are several important points which must be made in cautioning against any comparison between the 20+ years of the Exxon Valdez litigation, on the one hand, and the Deepwater Horizon oil spill litigation on the other.

First and foremost, OPA was enacted as a direct result of the 1989 Exxon Valdez spill, because congress recognized the need for improved legal recourse for victims of oil spills. the litigants in the Exxon Valdez litigation were limited to pursuing causes of action stemming from draconian and antiquated maritime law. The OPA was designed to make the process more equitable and provide an adequate recovery vehicle for victims of future oil spills.

Second, a number of litigants in the Exxon Valdez litigation were able to quickly resolve their claims for a meaningful recovery.

Finally, most of the litigation that lasted beyond the first few years was solely related to determining the amount of punitive damages for which Exxon was liable, the compensatory damages issues having already been decided.

Comparisons between the Exxon Valdez litigation and this litigation are not appropriate, other than to point out how much has changed since 1989. However, because of the overt factual and logical relationship between the two disasters, it is important to educate claimants as to why they do not need to fear a decades-long court battle, as was the case for some in Exxon Valdez. Further, Feinberg’s claims that this litigation will take years can be countered by utilizing the interim claims process, which allows for payments of interim relief without waiving any rights of recovery in litigation. It is also possible that the litigation will resolve before the 3-year claims window closes at the GCCF.

VI. There can be no trust in Feinberg’s representations where there is no transparency

Feinberg’s repeated representations relating to his generosity, the superiority of the claims process over litigation, the rights of the claimants, the access of claimants to “pro bono” legal representation, and more are only effective if Feinberg has the trust of the public. To accomplish this, Feinberg has simply employed a strategy of repeating statements until they are accepted as true. Feinberg has provided little if any documentation to support the representations he has made regarding the claims process, his generosity, his relationship with BP, and a number of other issues that directly affect claimants’ compensation through the fund.

Despite repeated requests for transparency, and initial representations that the GCCF would be transparent, Feinberg has refused to produce this important information. Further, Feinberg has now identified a number of law firms in the Gulf States affected by the spill who will provide “pro bono” and “independent” legal services to claimants so requesting their help. It is believed that these firms are being paid either directly by BP or through the GCCF.

Regardless, there is an inherent conflict of interest, and, by definition, these firms are not “pro bono” as they are being paid for their services. This is obviously problematic when viewed by trained legal eyes, as there is real possibility these firms of taking advantage of the less sophisticated and desperate claimants who are requesting free legal help in their dealings with the GCCF.

Further, a simple look at the numbers does not lie. A rejection or denial of 65% of claims submitted to the GCCF, without any explanation as to the methodology employed in reaching these decisions, speaks volumes in and of itself. It must be stressed, repeatedly, that Feinberg is not telling claimants the truth – not about how their claims are processed or handled, not about his relationship and agreements with BP, not about the lack of certainty as to the long-term impacts of the spill, not about what a full release of claims really means, and certainly not about what is in the best interests of the claimants themselves.

Simply saying something is true doesn’t make it so, and until Feinberg shows significantly more transparency in the inner working of the GCCF and all that entails, every statement he makes must be called into question.