TALLAHASSEE — In fewer than 24 hours, Kenneth Feinberg took heat from Florida's governor, attorney general and state House members over concerns that his Gulf Coast Claims Facility is mired by a lack of transparency.
"This is the No. 1 issue," Feinberg said Friday before the House Economic Affairs Committee. "This is my Achilles' heel."
Feinberg is the administrator of the $20 billion fund set up by BP to compensate for losses from the Gulf of Mexico oil spill caused by the April 20 Deepwater Horizon explosion. He announced Friday that he has developed new rules for awarding final payments that should quell widespread frustration and lawmakers' concerns.
The new rules include detailing expectations of claims and their outcomes, beefing up staff in coastal claims centers for face-to-face answers and providing an additional appeal option for claims exceeding $250,000.
Under federal law, the Coast Guard hears all appeals. The latest count, Feinberg said, shows that the agency heard more than 200 appeals and agreed with the facility's decision in every instance.
Feinberg blamed the program's blunders on the fact that 500,000 claims have been filed since its August start. "I never in my wildest dreams thought there would be 500,000 claims," he said.
In too many cases, final payment and interim payment claims lack basic documentation, he said. The FBI is investigating several thousand claims suspected of fraud.
So far, the facility has cut checks totaling $3.5 billion, with $1.3 billion going to Florida — more money than any other state. Of 165,800 Floridian claimants, 68,400 have been paid. "We are doing something right," he said.
Rep. Gary Aubuchon, R-Cape Coral, said, "the perception is that the current process is broken." In testimony over recent weeks, the Legislature has heard frequent reports about inconsistencies and delays.
Some lawmakers remained skeptical after grilling Feinberg for two hours.
Rep. Doug Broxson, R-Gulf Breeze, who made headlines this week for his scathing review of a claims facility he visited in Ohio, said Feinberg should bring all of the claims centers and their jobs to the coast.
Several members, including Rep. Peter Nehr, R-Palm Harbor, questioned the quick-pay option, a one-time payment of $5,000 to individuals or $25,000 to businesses if claimants promise not to sue or seek more money. Nehr worried people signed up for that option out of financial desperation and would need more relief.
Feinberg doubted he would revisit the quick-pay option, especially if checks were already cashed. "I would be in the middle of a horrible legal conundrum."
Chairwoman Rep. Dorothy Hukill, R-Port Orange, told Feinberg he should reconsider the appeals process and waiver policy.
Midway through Friday's hearing, a dozen or so Asian-American hotel owners stormed out of the meeting, saying Feinberg has neglected his obligations to the Gulf Coast and lied about the program's success. The group is urging hotel guests to boycott BP products, said group spokesman and Pensacola hotelier Nash Patel.
In the meeting, Feinberg defended criticism that he is not independent of BP because the oil company funds the effort. Feinberg questioned who else should pay for the offices and staff. Government? Claimants?
"BP, obviously to me, is the only entity that can pay all 100 percent of the costs of administering this program," he said.
Feinberg is used to being railed against for not writing checks fast enough or in amounts large enough. But BP feels his payment system is really giving too much money to claimants, based on a Feinberg-commissioned study that found the gulf should recover by the end of 2012.
"I disagree," with BP, Feinberg told the committee. "I'm getting hit both ways."
Feinberg met with Gov. Rick Scott late Thursday afternoon and Attorney General Pam Bondi on Friday morning.
Bondi announced later Friday that she had filed a statement of interest with U.S. District Judge Carl Barbier in New Orleans, who is overseeing lawsuits against BP, with suggestions to improve the claims process.
Among her ideas: giving claims adjusters the authority to resolve claims on site, naming an independent auditor to review the facility's decisions, paying off pending interim claims received since November and, as Feinberg said he planned to do, making claims procedures public and providing explanations for unsatisfactory claims.
Katie Sanders can be reached at (850)224-7263 or [email protected]