Newsroom

State of Louisiana Brings Critical Oil Spill Claims Issues to GCCF

November 05, 2010

The state of Louisiana, with input from the 10 technical assistance providers who have been assisting impacted individuals and businesses in communities across South Louisiana to navigate the claims process for months, today said that payment of emergency oil claims are being bogged down in red tape and lack transparency. The state and its partners called on independent Claims Administrator Kenneth Feinberg to make critical changes immediately to speed the process.

"There continue to be obvious deficiencies with the claims system," said Louisiana Department of Children and Family Services Secretary Ruth Johnson, who, along with the Division of Administration, is overseeing the state's role in the oil spill claims process. "An emergency payment should not take six months to process. For people waiting on those payments, the six month delay has moved from an emergency status, to one of survival. Although the Gulf Coast Claims Facility's (GCCF) claims system is an improvement over BP's, the state believes that claims need to be processed faster, a priority scale be implemented and baseline compensation models used for claimants who can prove their profession but not their income."

Since Feinberg took over from BP processing oil spill claims, the GCCF has paid out more than $1.6 billion, $612 million of that in Louisiana. However, despite that large figure, only 23 percent of claims filed in Louisiana have been approved for payment.

According to the latest summary report by the GCCF, 378,169 claims have been filed; Louisiana makes up nearly 50 percent of those claims with 156,783 filed. Florida residents have submitted 109,521 claims, the second largest among states. Florida, however, continues to have more claims paid than Louisiana -- 34,421 to 31,895. For months, Louisiana state officials have requested meetings with Feinberg's team to determine the reasons for this trend, present plans and processes that Louisiana believes could lead to quicker and more appropriate emergency payments and help the GCCF understand the industry sectors in Louisiana so it can reduce the backlog of claims that lack "adequate documentation."

Along with speed of payment, the state and its non-profit partners are also concerned with the lack of a GCCF appeals process, inaction on or denial of Loss of Subsistence claims, as well as administrative processes that could make the claims process easier on claimants.

"Because of the time it's taking the GCCF to process claims and provide adequate emergency claim awards, many individuals and businesses are slipping closer to poverty status as they approach the upcoming holidays," Johnson said. "Without aggressive modifications, the economic impact and uncertainty has the potential to further increase the long-term health and social service needs in these areas."

Johnson continued that the financial strain is being seen in communities and impacts everyone in a family.

"The lack of consistency in payments and clear process is further increasing emotional strain between families as award amounts can vary greatly between persons that have worked and lived next to each other for years," Johnson said. "Across south Louisiana technical assistance providers are reporting that families are struggling to pay utility, housing and credit card bills and provide food for their children. In some areas there are concerns that families may have to remove children from rural parochial school systems because of a lack of payments."

The state, along with claimants and the non-profit organizations assisting them, have identified several areas of serious concern:

Delays in emergency claim payments - In Louisiana, just 21 percent of claims for emergency payments, designed to fill the gap left by lost income or profits for six months, have been paid. More than 120,000 remain outstanding as of November 3. The state recommends that "Baseline Compensation Models" be utilized for claimants who lack documentation but are able to prove their professions. Currently, more than half of Louisiana's claims are being held up due to missing documents that prove past income, among other things.

Prioritization - The GCCF has no clear order of priority for claims. Some claimants have received payments after just two weeks in the system, while others have waited three months. Additionally, the GCCF has made no formal statement to prioritize claims based on need, for example, expediting medical claims. We recommend that the GCCF prioritize claims in the following order: medical claims, claims that, if unpaid, threaten the claimant's livelihood and then business claims, beginning with small, family-owned businesses.

Subsistence claims - As of November 3, more than 13,000 claims for Loss of Subsistence: Use of National Resources have been submitted to the GCCF from Louisiana, but only one has been paid. This category emphasizes the importance of seafood, wildlife and nature to Gulf Coast communities. The state suggests that the GCCF give careful consideration to all claims in this category, including conducting one-on-one interviews with claimants that utilize regional knowledge to determine the validity of a claim.

Appeals process - The GCCF has not instigated an appeals process. If an emergency claim is denied for any reason, a claimant's only recourse is to file a final claim. To date, 13,722 claims have been denied by the GCCF. The state encourages the GCCF to implement and publicize an appeals process for emergency and final claims.

Deposit explanations - There is currently no written or verbal statement that accompanies direct deposits of emergency payments to claimants' bank accounts. Claimants do not know how the payment was calculated or that it was even made. We recommend that the GCCF mail a paper statement to claimants upon payment that explains that the deposit was made and how it was calculated. Additionally, the GCCF should call claimants when claims are approved to let them know that a deposit is forthcoming.

Claims hotline - Initially, after the GCCF took over the claims process, the facility's hotline functioned with short waiting times and returned calls. However, the option to be placed on hold has since been removed from the hotline; callers are directed immediately to voicemail. Claimants have reported no return phone calls or waits of up to two weeks. We recommend increased staffing of the GCCF hotline and return of the hold option.

Emergency v. final settlements - Many claimants report being confused about process of filing a final payment and the documentation required. The state recommends that the GCCF establish a protocol for final claims.