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CFO Sink and Ag McCollum Send Strong Letter to Feinberg on “Inefficient” Claims Process

12/16/2010

CONTACT: Jerri Franz, 850-413-2842
 
TALLAHASSEE – Florida CFO Alex Sink and Attorney General Bill McCollum today called again on Claims Administrator Kenneth Feinberg to improve the claims process for Floridians impacted by the BP oil spill. The Florida Cabinet members noted that of the over 150,000 claims filed by Floridians, only 40 percent have been paid, and that the recently released Protocols for Interim and Final Claims could potentially make it even more difficult for impacted Floridians to be compensated for their losses.
 
CFO Sink expressed her concerns with the “inefficient and unresponsive” claims process during last week’s Cabinet meeting.  At the meeting, she asked her fellow Cabinet Members to join her in sending a letter to Mr. Feinberg about the challenges Florida’s citizens are still facing and the need for immediate action in implementing an improved process.
 
“It is essential that the damage already done to Florida’s economy and environment not be compounded by an inefficient claims process for individuals and businesses that have lost income,” CFO Sink and Attorney General McCollum wrote. “We appreciate the opportunity to share our concerns and implore you to take immediate action to create a claims process that will provide a fairer, more rapid and more effective recovery for losses suffered by individual Floridians and Florida businesses.”
 
A copy of the letter is printed below. For additional information regarding CFO Sink’s efforts to assist Floridians impacted by the oil spill, visit: www.MyFloridaCFO.com/oilspill.
 
December 15, 2010

Mr. Kenneth R. Feinberg
Feinberg Rozen LLP
The Willard Office Building
1455 Pennsylvania Avenue, NW
Suite 390
Washington, DC 20004-1008
 
Re: Gulf Coast Claims Facility (GCCF) process
 
Dear Mr. Feinberg:
 
As the Gulf Coast Claims Facility winds down the Emergency Claims process for oil spill damages and claimants move on to the new procedures for filing Interim and Final Claims, we believe it is incumbent upon us to again express our concerns with the claims process over the past three months and with the new protocols for future claims.  We do so on behalf of the 25,000 plus Floridians who are still waiting for an emergency claim to be paid and the 56,000 plus Floridians whose claims have been denied.  Staff members from our offices have served on the Governor’s Gulf Oil Spill Economic Recovery Task Force, which has heard testimony from claimants, trade associations, local governments and others regarding economic damages to individuals and businesses caused by the oil spill.
 
Our offices have all received requests for assistance in the oil claim process and have tried to get the GCCF to provide meaningful responses to people whose claims were not paid months after filing.  We have especially tried to get help for people who no longer had enough income to pay bills for their businesses, including employee payroll, or to pay personal expenses for their families, including mortgage or rental payments.  The overwhelming evidence that has been presented in the Task Force and in the contact our own staffs have had with claimants and with the GCCF reveals a claim process that is not operating in an efficient manner.  It is a process carried out without meaningful communication between claimants and the GCCF.
 
We are appreciative that you have taken the time to appear before the Task Force and listen to the concerns of its members as well as members of the public.  However, GCCF employees in the claims facilities located in Gulf regions cannot tell a claimant any more about the status of their claim than the claimant can get from the GCCF’s website, which is next to nothing.  In a meeting with the Governor’s Gulf Oil Spill Economic Recovery Task Force on October 28, 2010, you stated that the GCCF would hire more local people to work in the GCCF claim offices in Florida and that these people would be given greater authority to help claimants.  To our knowledge, this has still not happened.
 
Many Floridians who have submitted claims remain frustrated with a lack of responsiveness from the GCCF.  When you were appointed, one of your stated protocols was that documented individual claims would be paid within 48 hours and business claims within 7 days.  That never materialized and it appears that very few claims were actually paid within those timeframes.  Even worse, as of today’s date, over 25,000 emergency claims have not been dealt with by the GCCF.  This number includes many that were filed several weeks, if not months, ago.
 
Of the 150,000 plus claims that have been filed by Floridians, only 40 percent have been paid.  Over 33 percent have been denied.  Over 20 percent are either under review or awaiting the filing of additional information.  These are the results after over 90 days of activity in the Emergency Claim process, which was supposed to be quick and relatively easy to navigate.  Now that the final phase of the claims process has begun, we expect to see significant improvements in efficiency and operational results.
 
We have also heard from many claimants who say they do not receive any reasonable explanation for denial of an emergency claim or for partial payment of a claim.  Therefore, claimants have no way of knowing what they could possibly do to correct a deficiency or provide better proof.   You have publicly committed to increasing the transparency of the claims process but the results have not matched the statements so far.  We hope for improvements in this regard going forward.
 
The GCCF has now released the new Protocols for Interim and Final Claims.  These Protocols replace the Protocols and claims process for “Emergency Claims” which concluded on November 23, 2010.  The new Protocols for Interim and Final Claims contain many troublesome provisions, including the following:
 
• The GCCF shall determine within 90 days of filing a claim whether to make a payment to the claimant and if so, the amount of such payment.  While we recognize that the Oil Pollution Act of 1990 provides for up to 90 days, many claimants are going to suffer further financial hardships and more businesses will fail if the GCCF does indeed take three months to review claims before making a payment.
 
• Claimants may file an Interim Claim or a Final Claim.  Interim claims are for losses already incurred and may be submitted one time for each calendar quarter, absent exigent circumstances, through August 23, 2013.  The Interim Claims process assures that you will always be in arrears.  You have to wait until the end of the quarter to determine actual losses for that quarter, then submit a claim and wait up to 90 days for payment.  This may enable a claimant to pay past due bills, but the cycle will just be repeated each quarter.  This inability of people to pay their bills is having a huge compounding affect, contributing to increased mortgage foreclosures and worsening credit ratings.
 
• Final Claims will be based on both past and future losses (even if unknown) and can be filed on or before August 23, 2013.  A claimant who accepts GCCF’s offer on a Final Claim must sign a waiver of liability that applies to all companies that could be held liable for any losses arising out of the blowout of the well, the sinking of the oil rig and the subsequent oil spill, not just BP. 
 
• If a claimant does not want to accept the amount offered for a Final Claim, the claimant can appeal to a three-member panel of judges who have been approved by a “distinguished member of the legal profession” appointed by you.  However, the appeals process is only available to claimants whose total monetary award for emergency, interim and final claims made by BP and GCCF exceeds $250,000.  This structure is tantamount to having no appeals process at all. While claimants can file a claim with the National Pollution Funds Center (NPFC) or pursue litigation, the NPFC has limited resources and filing a lawsuit is not a viable option for businesses and individuals that have been struggling to make a living and pay their bills for over seven months.
 
The Deepwater Horizon oil spill has already had a huge impact on the well-being of many Floridians and may well have long-lasting impacts for all Floridians.  It is essential that the damage already done to Florida’s economy and environment not be compounded by an inefficient claims process for individuals and businesses that have lost income. 
 
This letter is intended to address only the claims process, given its critical and time-sensitive nature, and does not supersede the input already provided to you on this or other issues by individual Cabinet officers.  We appreciate the opportunity to share our concerns and implore you to take immediate action to create a claims process that will provide a fairer, more rapid and more effective recovery for losses suffered by individual Floridians and Florida businesses.

Sincerely,

Alex Sink, Chief Financial Officer

Bill McCollum, Attorney General
 
As a statewide elected officer of the Florida Cabinet, CFO Alex Sink oversees the Department of Financial Services and serves as the State Fire Marshal.  A successful businesswoman with nearly three decades of experience in the private sector, Sink is serving her first term as Florida's CFO.  As CFO, Sink's priorities include using her business experience to cut wasteful government spending, cracking down on financial and insurance fraud and reforming the state government's contracting practices.