Q&A: BP Gulf oil spill compensation fund
- 21 June 2010
- From the section US & Canada
US President Barack Obama has appointed Kenneth Feinberg to administer the $20bn (£13.5bn) fund that BP has set up to compensate victims of the Gulf of Mexico oil spill.
Mr Feinberg has experience in such matters: he ran the victims' claim fund set up in the wake of the 11 September 2001 attacks in New York and Washington.
He has said he is not aligned with the government or BP and will administer the fund independently.
Who will receive compensation from the fund?
The oil spill has caused disruption along the US Gulf Coast, affecting fishing and tourism and fouling some beaches and marshes.
Individuals and businesses affected by the spill can file a claim for compensation for lost wages or profits, personal injuries or even death, Mr Feinberg has said.
BP has repeatedly said it will pay all legitimate claims related to the spill.
The firm has set up a number of offices to handle claims and on its own has so far paid out $105m to 32,000 claimants.
How will Mr Feinberg avoid fraudulent claims?
He has said it will be a problem "making sure that this $20bn goes to pay legitimate substantiated claims and not fraudulent claims that we'll have to be very, very careful about".
However, he also said he does not expect bogus claims to be a big problem and that very few false claims were launched in relation to the 9/11 attacks.
Mr Feinberg has said he will "err on the side of the claimant" in making emergency payments to people in "desperate financial straits".
There will be a difference, he said, between such a payment and "a lump-sum payment that is the total compensation" to a business or individual.
"Long-term payments will require sufficient corroboration so we can validate the claim," he told CNN.
Some claims, such as that of a Boston seafood restaurant owner arguing his business has been hurt by the lack of shrimp from the Gulf, might have to be judged on whatever relevant state laws exist, Mr Feinberg said.
How long will it take payments to be made?
The fund has been set up for a four-year period to pay claims but Mr Feinberg said emergency payments should be made as quickly as possible.
"I think when an individual comes in and asks for emergency assistance, that person should not still have to keep coming back for additional emergency assistance. We ought to give them a lump sum cheque that will tide them over until we can set up an emergency plan," he told ABC News.
He said he hoped to have a transparent claims process set up in the next couple of weeks to distribute money more quickly.
Claims could be paid within 30-60 days of being filed, Mr Feinberg said, once a system for assessing them was in place.
How will the payments be made?
Mr Feinberg has said the method for handling claims was still being hammered out, but he promised a more transparent process "so that claimants understand what the status is of their claims".
He has also said people could file claims electronically and would not need to hire a lawyer.
He said accepting emergency payments would not mean a claimant giving up the right to litigate, but added that it could take years to resolve a claim that way.
What are the precedents for such a fund?
The main precedent is the compensation fund administered by Mr Feinberg for victims of the 9/11 attacks.
The fund was created by an act of Congress shortly after the attacks.
By the time the fund was wrapped up in 2005, $7bn had been awarded to 97% of the more than 7,000 claims.
The average award to relatives of those who died was $2m; and for those injured $390,000.
"Only 94 people decided to litigate rather than enter a voluntary fund," Mr Feinberg told CNBC. "That's exactly the kind of precedent that I hope to achieve here."
Claimants had to agree not to sue the airlines involved in the attacks and could not appeal once a compensation offer was accepted.