There has been a very big change in how claimants will be paid due to the massive settlement that took place in the PSC. New offices opened in five states in early June that will help businesses and residents still waiting to settle claims for financial losses two years after the BP Deepwater Horizon oil spill. The 18 offices are located along the Gulf Coast and include Mobile and Gulf Shores in Alabama. There are still a good number of residents and businesses whose claims were either denied or who did not file a claim.

The Court-Supervised Settlement Program, which is administered by Louisiana lawyer Pat Juneau, is already receiving positive marks for its efficient process and transparency. The Settlement Program has officially taken over from Ken Feinberg’s Gulf Coast Claims Facility (GCCF). While it is still too early to pinpoint the legacy of the most recent oil spill claim center, one thing is for certain – the new settlement program is showing that it will be a major improvement over the GCCF, and that’s good news.

The new Settlement Program, as well as the administrator, will be overseen by a truly neutral third party– Federal Judge Carl Barbier of the Eastern District of Louisiana. Whether fair or not, the GCCF often suffered from the perception that BP controlled the GCCF’s purse strings when claims were paid. The Settlement Program has also been quick to listen to and resolve filing procedure issues in the claims process. While no one can dispute the difficult job Feinberg faced as administrator of the GCCF, the GCCF was notoriously slow in responding to even the most severe filing concerns.

Instead of reviewing claims in a BP-friendly manner as the GCCF did, the new Settlement Program will review claims in the light most favorable to the claimant. In addition, the new Settlement Program is designed to eliminate the disparate treatment Gulf Coast residents received in the GCCF, where a difference in geographic location or GCCF accounting group could mean the difference in whether a claim was paid.

Transparency is a major improvement in the new Settlement Program. For much of the GCCF’s tenure, the real formulas and economic zones for compensation were kept secret from claimants. Frustration ran rampant because, aside from a boilerplate letter that didn’t really describe a deficiency, claimants were often left in the dark as to how their claim was calculated and why it was denied for payment. In the new Settlement Program, claimants will instantly know whether their claim falls into a zone for compensation. In addition, based on the zone of compensation, a claimant will know the precise method for calculating his or her claim. In effect, the Settlement Program’s rigorous attention to detail will eliminate the vast number of negative surprises folks received in the GCCF.

Economic claims in the new Settlement Program can expect to receive more favorable treatment than they did in the GCCF. For instance, a claimant can focus in on “loss” months while ignoring “gain” months in many instances. The impact of business expenses on damage claims is significantly improved in the new Settlement Program as compared to the GCCF’s – where a claimant could see a sizeable, legitimate claim cut in half due to the GCCF’s aggressive method of offsetting profits with certain expenses.

Aside from some seafood harvesting-related claims, the GCCF failed to take into account the threat of future risk. In the new Settlement Program, almost all economic claims are assigned a “risk transfer premium,” whereby base damages are multiplied by a number to account for future risk. Even the application of the risk transfer premium is improved over the GCCF’s risk multiplier. Instead of simply multiplying the base damage by a multiple, as the GCCF would do, the new Settlement Program also adds the base amount back on top of the based damage times the multiple.

A host of claims are compensable in the new Settlement Program that were rarely, if ever, compensated in the GCCF. For example, most Gulf-front property owners will be entitled to a “loss of use and enjoyment” of the property. Subsistence and property damage claimants will finally have a true system for compensation. Many businesses that suffered damage that the GCCF would not find “related” to the tourism or fishing industry can be compensated if they meet the economic tests set out in the Settlement Program. This means that title companies, car dealerships, boating companies, golf courses, gas stations, and many other businesses that suffered a decrease in profits from the oil spill in Louisiana, Mississippi, Alabama, the eastern-most counties of Texas, or the western-most counties of Florida will now be compensated.

Many observers believe Mr. Feinberg performed as best he could, given the difficult job he had with the GCCF. However, we believe the new Settlement Program will be a major improvement for Gulf Coast claimants over the GCCF. Thus far, that has been true. Hopefully, things will continue to get better. If you have any questions about the new program, contact Parker Miller at 800-898-2034 or by email at Parker.Miller@beasleyallen.com.