Oil Spill Compensation Czar: 110,000 Claims Have ‘Zero Documentation,’ ‘Nothing’

By Fred Lucas | October 27, 2010 | 5:00 PM EDT

Fire boats surround the blazing remnants of the offshore oil rig Deepwater Horizon on Wednesday, April 21, 2010, before the rig sank. (AP Photo/US Coast Guard)

(CNSNews.com) – Nearly two-thirds of the outstanding compensation claims from the BP oil spill have no documentation to back up their losses, according to the administrator in charge of distributing compensation money to victims. At least 50 claims are considered "very suspicious" and could be referred to the U.S. Department of Justice.

On terms largely dictated by the Obama administration, BP, a British multi-national corporation, agreed to set up a $20-billion escrow fund and have lawyer Kenneth Feinberg independently administer it.

The overwhelming number of compensation claims deal with economic loss or business interruption, said Feinberg, who was appointed by President Barack Obama to serve as the independent claims adjuster for the BP Deepwater Horizon Oil Spill Disaster Victim Compensation Fund.

“I have seen probably in the last eight weeks, 275,000 claims,” Feinberg told the U.S. Chamber of Commerce on Wednesday. “We’ve paid out already to 90,000 residents of the Gulf, individuals and businesses, $1.7 billion.”

“Now there are still thousands and thousands of claims that have not been paid. Why not?” he asked. “Well, I’ll tell you why not. Of the 175,000 claims, about 110,000 of them are claims with zero documentation. Not inadequate documentation. No documentation. Nothing.”

The BP oil spill in the Gulf of Mexico followed the explosion of the the Deepwater Horizon oil rig in April. Eleven workers were killed in that initial explosion. Oil flowed from the rig’s broken underwater oil pipe throughout the summer before it was capped. The Obama administration and BP agreed that the company would set up the $20-billion account to pay for damages in the Gulf states of Louisiana, Mississippi, Florida, Alabama and Texas.

Feinberg has previous compensation-relief experience, most notably overseeing the 9/11 Victims Compensation Fund and most recently as the so-called pay czar for corporations that received money from the federal government's $700-billion Troubled Assets Relief Program.

CNSNews.com asked Feinberg about safeguards to ensure that no one is taking advantage of the compensation fund.

“We are very concerned about fraud,” Feinberg told CNSNews.com. “We’ve already circulated names and a certain number of claims to the Department of Justice for further investigation. We have an internal fraud unit that is examining the claims, looking for patterns of fraud.”

“Nothing will undercut the credibility of this program more than fraud,” said Feinberg. “And we are ever vigilant of that. We’ve probably got, I’m guessing, 50-60 claims that are very suspicious. And, if we do our due diligence, decide that they are fraudulent, we’ll send their names to the Department of Justice.”

CNSNews.com reported last week that there is no evidence that any fish were killed as a result of the oil spill, according to the National Oceanic and Atmospheric Administration and various gulf state agencies. Further, all fish caught in the gulf have passed safety and health inspections from federal and state agencies.

Considering this, CNSNews.com asked Feinberg, “Should the president or should the administration try to reassure the public that fish there are healthy and abundant?”

Feinberg did not think the president or anyone else should step up because he said there is still conflicting information.

“On the one hand, I’m hearing a great deal of information the Gulf is safe, the oil isn’t there, the fish are safe, the price is right,” Feinberg told CNSNews.com. “I also hear from some scientists, ‘You know, it’s not that clear. We’re not exactly sure. We want to continue to study the tests. Make sure.’”

“I will gather together the best information I can. I think there’s scientific information out there. I’ll look at it,” he told CNSNews.com. “I’ll do the best I can in trying to convince claimants that one option they have is to take a lump sum payment. The other is to wait a year or two and see for themselves if there is any lasting damage. I think it’s not for the president or anybody else I think to promote this. I think science will speak for itself and we’ll see what the science says.”