An optometrist had to take out a loan to pay his employees.
A waitress had to find another job because the customers stopped coming.
A property manager had to give up the extras in her life the year “the whole summer got canceled.”
Four years after the Deepwater Horizon oil spill, they are among thousands of other Gulf Coast businesses and their employees awaiting reimbursement promised by BP.
Instead, the company has done an about-face and has challenged — through U.S. district and appeals courts in New Orleans — the terms of a multibillion-dollar class-action settlement negotiated in 2012. BP asserts a court-appointed claims office has misinterpreted the settlement, resulting in costly payouts to businesses whose losses had nothing to do with the oil spill.
“We were getting five to 10 settlements a week until the court basically stopped everything,” says Port Charlotte attorney Rob Berntsson of Berntsson, Ittersagen, whose firm has represented about 1,500 claimants:
Before the challenges, the claims administrator had paid nearly $5 billion to 64,612 claimants from five states.
The office continues to review claims. But since October, it has stopped payments to most businesses, leaving some 45,000 claimants with no idea when, or if, they will receive their money.
For an interactive map that allows readers to research counties along the
Michael Fregger’s optometry practice in Fort Walton Beach suffered the type of secondary loss common to the class-action suit.
For two years after the spill, the fishermen, restaurant and hotel workers who form his client base stopped making appointments. He had to borrow money to pay his employees.
Fregger’s accountant persuaded him to file a claim in March 2013. He’s still waiting for his check.
Fregger says BP owes Northwest Florida more than years of waiting.
“They hurt the economy quite a lot,” he says. “It’s come back, but there’s still a lot of hurt out there.”
In Florida, where 55,000 individuals and businesses filed claims, the claims administration had approved $662 million to 7,500 claimants by March. It has denied 19,000 claims. Another 36,500 remain uncompensated but still in play.
The picture in the Panhandle is no different. The oil conglomerate has paid 560 businesses nearly $109 million in Bay, Calhoun, Franklin, Gulf, Holmes, Jackson, Walton and Washington counties. But about 3,800 other claimaints have been denied or are still awaiting word or money.
Settled, for a while
Two years ago, BP agreed to terms with a phalanx of attorneys who represent businesses such as fishing charters, restaurants, hotels and seafood processors, as well as individuals.
BP figured the class-action settlement would ease the anxiety of shareholders by stabilizing those liabilities at an estimated $7.8 billion.
But the number of ensuing claims, particularly those that deal with secondary losses, underscores the magnitude of the spill, generally recognized as the greatest environmental disaster the Gulf has experienced.
The initial explosion killed 11 and injured 17 on April 20, 2010. Oil from BP’s mile-deep well, an estimated 4.4 million barrels, gushed into the Gulf for nearly five months.
Scientists continue to assess the environmental damage. The latest revelation came in late March, when a peer-reviewed study found oil contaminants had probably damaged embryos in tuna, herring and salmon populations.
BP hoped to avoid the experience of Exxon Mobil, which spent two decades fighting court claims one by one following the 1989 Exxon Valdez tanker disaster in Alaska. The company’s initial effort at restitution, through the Gulf Coast Claims Facility, handed out $6.2 billion in claims but drew criticism for its inconsistency. Applicants did not understand fully why they received payment or why they were denied.
The new rules for showing business losses employ a fairly straightforward mathematical formula. A company submits its earnings from 2007-2011. If it shows a drop in business in 2010, then a rebound in 2011, it qualifies for reimbursement from BP.
Businesses farther from the coast have to show a greater dip and a greater rebound.
For a while, the process ran smoothly.
Bill Brown, who owns a warehouse in Venice, says he received $40,000 in about 60 days. He hired Berntsson, Ittersagen.
“They just said, ‘Sign this, sign this,’ and before you know it I got a check,” Brown says.
A shift in tone
By mid-2013, BP realized the process was going to cost more than expected, at least $1.4 billion more to cover the business economic losses alone.
The company launched an aggressive public relations campaign, running full-page advertisements in the New York Times, Wall Street Journal and Washington Post portraying it as a victim of its own generosity.
The ads highlighted examples of payouts that BP considered illegitimate.
“A farm more than 200 miles from the Gulf that did not plant any crops in 2010 was awarded $266,730,” one ad stated.
Another recounted a $173,000 payment to an escort service that had provided incorrectly dated and unsigned tax returns.
Yet another lamented that two law firms had reaped awards of $3 million and $8 million even though their 2010 profits eclipsed those of 2009.
It’s difficult to validate or refute the examples in the ads, because the identities of claimants and the documents they file are not public record.
And BP representatives did not respond to requests for comment.
Plaintiff attorneys say that most of the examples in BP’s newspaper ads were pulled not from the class-action settlement payouts, but from the Gulf Coast Claims Facility, established by BP as the spill continued to make headlines.
“Unfortunately, those in the minority again have grabbed the headlines and are constantly paraded by BP as their ‘Exhibit A’ of the problems with the process,” says Bill Robertson, chief executive of Kirk, Pinkerton in Sarasota. “This has overshadowed the other 99 percent of claimants and people involved in the process who have legitimate claims.”
Robertson estimates BP and its shareholders are sitting on $20 million worth of claims by his clients.
“If you’re talking about $10 billion, and they delay for a year, how much have they saved themselves?” asks attorney Bob Turffs, who is handling about 125 business claims in conjunction with Motley Rice, a North Carolina firm that helped negotiate the class action settlement.
Settlement unsettled
In addition to the ads, BP filed federal court challenges.
One argued that court-appointed claims administrator Patrick Juneau, by relying on the mathematical formula, had awarded payouts to companies whose losses had nothing to do with the oil spill.
In March, a three-judge panel in the 5th Circuit U.S. Court of Appeals ruled against BP.
Writing for the majority, Judge Leslie Southwick alluded to an exchange among attorneys in fall 2012.
During the negotiations to establish the process for reviewing claims, Juneau’s representatives had offered a hypothetical situation: A partner in a three-member accounting firm takes a leave of absence after the oil spill, and the firm’s profits fall during that time. When the partner returns in 2011, profits rise. Following the settlement’s formula, the firm would be eligible for a payout, even though some, if not all, of its losses were attributable to the missing partner, not the oil spill.
Would the firm’s claim be valid, Juneau asked.
Yes, BP responded at the time.
The company is now asking the entire appeals court to consider its case.
The issue of who “deserves” compensation from BP and how to measure it hits home in Southwest Florida, where the oil never came close to shore as it did in the Panhandle and other areas, Louisiana being most prominent.
In 2010 and 2011, however, the spill took its toll on tourism all along the Gulf.
Ripples to waves
Night after night, TV news showed Gulf Coast birds, wetlands and beaches covered in crude oil.
Websites tracked the movement of the massive oil slick spreading from the underwater rupture.
To the rest of the world, it looked as if the Gulf’s beaches were the last place anyone would want to spend a vacation, or buy a home.
So the tourists, especially the Europeans, stayed away.
“It was quite depressing,” says Kordula Rieger, who manages a handful of rentals in Okaloosa County. “It was like the whole summer got canceled. I stopped traveling and going out. I scaled everything in my life down to necessities.
“I would like (BP) to live up to what they agreed to in court,” she says.
Debra Parish of Englewood, a waitress at Perkins when the oil slick formed, awaits word on her individual loss claim of $18,000.
“I did notice a difference in business,” she says. “There was a big drop off. People weren’t coming down because they thought the beaches were ruined. I got less hours, less tips, and I ended up changing jobs because of it.”
BP ads notwithstanding, the results of the claims process imply a discerning scrutiny by the reviewers. The administration has approved 64,612 payments as of March 25. It has denied 53,358.
Accountant Tom Suplee, who has represented nearly 200 claimants through his firm, Suplee & Shea in Sarasota, says he hears regularly from the CPAs who scrutinize claims.
“It’s not like they have eighth-graders looking at these claims,” Suplee says. “The reviewers are asking very good questions.”
He says the aggressiveness of attorneys and accountants in drumming up claimants may have surprised BP. Suplee developed software that can determine eligibility in minutes. Attorneys’ offices did the same, or enlisted partnerships with forensic accountants.
The money’s out there
According to published reports, BP has set aside $42.5 billion to pay for its part in the explosion, fire and spill.
The company says it already has paid $14 billion for cleanup and $12.7 billion in claims to individuals, businesses and governments. It also faces a Clean Water Act fine that could range from $3.5 billion to $18 billion, depending on the number of barrels deemed to have gushed from its ruptured well.
Naturally, BP wants to keep fraudulent claims to a minimum.
On its website, www.thestateofthegulf.com, BP keeps a tally of the dollar amount of reported fraud cases. The total: $9,368,528 through Friday. That represents less than one-tenth of 1 percent of the money BP has paid in claims.
Its critics say the company has misrepresented the scope of illegitimate payouts and engaged in a delay strategy designed to discourage valid claims.
Punta Gorda attorney George Williamson figures his firm has 300 claims pending.
“All BP’s doing is delaying the inevitable,” he says. But, he adds, “Look at the number of claims filed since the third quarter of last year. They’ve dropped off. The strategy’s working.”
Editor’s note: Halifax Media Group has no claims against British Petroleum. The reporting and editing for this story were done independent of any possible claims sought by