The Gulf Oil Spill of April 20, 2010, was an unprecedentedcatastrophic event caused by man. It has taken a toll on theenvironment, the previously ravaged Gulf Coast, and the livelihoodof its people. The enormity of the impact is still being determinedas the claim process continues, which begs the question: What ishappening now with the key players involved in paying claims?

Darryl Willis

This event was the first time in history that aU.S. President became involved in a catastrophic event in thatPresident Obama actually made a statement ordering BP to make useof a third-party administrator in order to expedite the payment ofclaims. BP named Daryl Willis to manage the claims, who previously spoke candidly about his role in the claimsprocess.

Mr. Willis advised that BP had hired the Worley Group to handleclaims. He had confidence in their abilities and their resources tomeet the growing needs of those affected by the spill. Mr. Willisalso said that he and BP would be around “as long as it takes tomake things right.” Mr. Willis was contacted for a follow-upinterview but could not be reached. He still works out of theHouston, Texas office for BP.

NEXT: WORLEY CATASTROPHE'S CEO DISCUSSES HIS COMPANY'SCONTINUING ROLE

Worley Catastrophe

Shortly after the spill in 2010, WorleyCatastrophe's CEO Mike Worley said he was positive about hiscompany's ability to get the job done after having been selected tohandle claims stemming from the oil spill. He also said that if anatural disaster struck during the 2010 storm season that hiscompany would be adequately staffed in order to service existingclients. As we know, this would not become an issue, since the 2010hurricane season had very few land-falling hurricanes.

When contacted recently, Worley advised that his companycurrently has 800 adjusters staffing the Gulf Coast Claims Facility(GCCF). When asked what he had learned from handling an event ofthis magnitude and nature, his said:

“Every assignment requires adjustments that yield greaterefficiency, and this event was not an exception,” said Worley. “Themagnitude and nature of this event have required rapid deploymentalong with establishing a physical and technological infrastructureon a scale that this industry has never before attempted. I expectthat the adjustments made in facilitating this event will yieldgreater capacity and capabilities, which will be more evident infuture catastrophe responses.”

Worley advised that since the event and the assumption of dutiesby Mr. Ken Feinberg, who created and oversees the GCCF, BP's rolein the claims handling process has been removed. However, WorleyCatastrophe Response remains in constant contact with theadministrators of the GCCF. They work closely with GCCF to maintaincommunication with state and local government entities.

Mr. Worley also said his company's involvement in the DeepwaterHorizon incident and the GCCF claims process “increased ourexposure within the industry in a positive manner and contributedto the additional growth of our adjuster base and management team.This, in turn, will likely increase our capacity and capabilitiesfor servicing future clients and events.”

NEXT: PAY CZAR KEN FEINBERG PROVIDES AN UPDATE ON CLAIMPROCESS

Ken Feinberg

When I first spoke to Ken Feinberg, the pay czar appointed byPresident Obama to handle the Gulf oil spill claims paymentprocess, he struck me as someone who willing to take on a seeminglyinsurmountable task with knowledge, past experiences, and a realdetermination to get the job done. He was unfaltering in hisanswers as to what was going to take place with the processes hehas since put into action.

Back in 2010, Feinberg estimated that it would take three years to handle all of the claims stemming from thedisaster. He also stated that his plan was to make the process more“transparent.” He was complimentary of the job that had been doneat that point by Worley Catastrophe but said, “They deserve creditfor what they have done, but it is not efficient enough. Theprocess needs to be quicker.” He had criticism for the handling ofthe business claims at that point, and he was in the early days ofputting his plan into place.

When revisited, Mr. Feinberg discussed the developments sincethen, including his release of the “finalpayment instructions,” for which he came under harsh scrutiny.He carefully explained the process and how he arrived at thepayment options he set forth.

A payment of $5,000 to individuals or $25,000 to businesses isbeing offered to the 168,000 claimants who were previously approvedfor an emergency claim that was submitted. If the quick settlementof $5,000 or $25,000 is accepted, there will be no requirement forfurther documentation. Turnaround time for payment of the claims istwo weeks. GCG — formerly known as Garden City Group — isresponsible for issuing checks to claimants.

If a quick payment settlement is made, a will-not-sue waiver isrequired to be signed. The 232,000 claims that have been previouslydenied are not eligible for the quick settlement; only those thatwere previously paid claims.

Mr. Feinberg further explained that if the quick settlementoption is not accepted, claimants may ask to receive quarterlyinterim payments. This option does not require a waiver to besigned. The interim payments will run through August 2013.

Mr. Feinberg states that the claims operation has paid out about$2.5 billion to claimants since Aug. 23, 2010, when he took over.He stated that he is also going to offer free legal advice to thosewho may need assistance. When asked how he would go about offeringaid, he said that he is interviewing and negotiating with local andstate level pro bono legal assistance in order to offer this optionto claimants.

Mr. Feinberg stated that Worley Catastrophe is still maintainingthe Gulf Coast Claim Facility's offices. He is also assisted inthis process by GCG (a subsidiary of Crawford & Company), BrownGreer, PLC, and PricewaterhouseCoopers. The fees for thesecompanies and their services are paid by BP and are not paid out ofthe $20 billion fund previously established by the company.

Mr. Feinberg maintains that he is “cautiously optimistic thatthe fund will cover all of the losses presented.” He said he is inconstant contact with BP as to the status of the claims and paymentprocess. He still believes that the claims will be concluded withinthree years of the spill. At the time of this article, according toclaims facility data, 70,000 quick pay claims have been filed.

Here is the current information supplied by BP:

About 300 lawsuits have been filed over the spill; more than 150of them in federal court and many of them class actions. Plaintiffsinclude the families of the 11 rig workers who were killed when therig exploded, injured workers, landowners, fishers, hotel owners,shareholders, and environmental groups. Their claims range fromwrongful death and personal injury to property and environmentaldamage.

It will likely take years to determine fault for damages.Defendants now include, but are not limited to: British PetroleumPLC, which leased the rig; Transocean Ltd., the owner of the rig;Cameron International Corp., which made the blowout preventer thatwas supposed to avert a spill; and Halliburton Energy Services,which performed cementing operations, among others.

NEXT: THE LEGAL REACTION

Legal Reaction

“It's probably the largest economic disaster ourcountry has ever faced,” said Brent Coon of Beaumont, Texas, whoselaw firm is handling several hundred cases related to the oilspill.

Mr. Coon has been critical of the process implemented to handlethe claims that have arisen from the oil spill. He believes that“the issues involved in these claims are complicated scenarios,”and that there are going to be many frustrating issues.

He believes that Mr. Feinberg is a “hired gun” that thegovernment, large corporations, and other entities rely on to comein when they do not have the infrastructure set up to handleclaims.

“They rely on him to develop and set up a claims handlingprocess and infrastructure,” said Coon. “[Feinberg] grosslyunderestimated the complexity of setting the system into play thatyou would need to evaluate cases. The fact that there is no cap onit creates more problems and issues with the tort system, and thefact that the damages are ongoing adds to the complications.”

On a positive note he states that “at least [BP and the GCCF]have gotten some money in the hands of some people inacknowledgement that there would be other issues to evaluate. “ Healso believes that the will-not-sue waiver will stand up but hedoes not believe that the $20 billion fund will be sufficient.

For the insurance, claims, and legal industry this event hasbrought new challenges, including but not limited to: riskassessment, environmental issues, coverages, licensing, processes,claims handling, bad faith, damages, jurisdictions, litigation, andpolicy.

On the national level, the spill has prompted the government topush for regulation of off shore drilling to make oil companiesmore financially responsible for the spills that they cause. TheNational Oil Spill Commission unanimously endorsed 15recommendations to the oil industry, Congress, and the Obamaadministration for preventing another large-scale oil spill. Mostrequire action by Congress, but some could be done independently bythe Obama administration.

Congress “must take action this year to prevent anothercatastrophic spill through smart regulation, and by givingregulators the tools and resources they need to do their jobseffectively,” said Senate Majority Leader Harry Reid. He hasendorsed the raising of liability caps on oil companies, which BPwaived after the Gulf disaster. He stated that it was “to ensurethat taxpayers are never again on the hook for the damages causedby BP or any other oil company's missteps.”