Kenneth Feinberg, the independent paymaster chosen by President Barack Obama to administer damage claims from the gulf oil spill, will drop the contractor that BP has been using to manage the claims process and hire two new companies to replace it.
Feinberg is expected to take over the claims system from BP In mid-August. He will replace BP's primary contractor for claims, ESIS Inc., with two other firms when he assumes control of the process, Feinberg's spokeswoman Amy Weiss said. She did not say why ESIS was being replaced.
BP's compensation system has been criticized by many applicants and so far made payments on only 28 percent of claims. Applicants have described delays, unreturned phone calls and bureaucratic obstacles. Roughly $300 million has been disbursed to date; BP has agreed to set aside $20 billion to cover claims and other expenses.
Earlier this week, BP confirmed a report from the investigative newsroom ProPublica that the company has deferred decisions on thousands of claims until Feinberg takes over the process. Many of those claimants had not been informed why their cases had been placed on hold.
A spokeswoman for ESIS's parent company, ACE Group, has not responded to a request for comment on Feinberg's decision.
Patricia Wright, a spokeswoman for BP, confirmed that ESIS would be replaced, and said that the decision was made by Feinberg without BP's involvement. She said that BP was continuing to pay claims and that ESIS would stay on the job while BP retained control of the process. "Our contractors will continue to work until we transition," Wright said.
The companies that will replace ESIS, Garden City Group and the law firm BrownGreer, both specialize in the resolution of mass claims. BrownGreer was previously hired by Feinberg as a fee and expense analyst during his tenure as the executive pay czar overseeing compensation at banks that were bailed out by the federal government.
Amanda Michel contributed reporting to this piece, and is coordinating our BP claims project.