At midnight, the Gulf Coast Claims Facility will stop accepting claims for emergency oil spill payments and begin the transition to a new process, which in some ways will require claimants to place a bet on the future recovery.

Claimants will be able to apply for interim payments that won’t require them to waive the right to seek additional payments or to sue BP, but as claims administrator Kenneth Feinberg recently told the Associated Press, payments will be adjusted as conditions change:

“If they decide a year from now, I’ll take the final payment, they’re going to have to show prospective damage,” Feinberg said in a recent interview. “But my offer may not be available to them a year from now if everything is back to normal.”

If victims want more time to think about it, they can opt for interim payments by submitting a new claim for damages every three months over the next three years. That would still leave them with the option to sue BP. But they’ll have to continue to prove their losses, and their final settlement offer may shrink with each passing day.

In other words, while the fund will offer claimants the chance to seek interim payments, Feinberg says it may still be in their best interest to take the final payment, and thus forgo the right to seek additional payments or sue the company.

In a letter sent on the eve of today’s deadline, Florida Department of Children and Families Secretary George Sheldon writes that the state’s oil spill task force is concerned that interim payments could only be available at three-month intervals, while many claimants are struggling to pay bills — such as credit cards, utilities, and mortgages — that come due each month.

Feinberg praised the state’s Oil Spill Economic Recovery Task Force, of which Sheldon is a member, for the substantive advice it offered during its meeting last month. Sheldon’s letter (available in full below) follows up on those discussions. Here are some of the key points:

* What are the demographics of oil spill victims who are struggling to provide documentation? This would help shed light on a question raised during the task force’s most recent meeting about how many of the undocumented claims are baseless, as opposed to legitimate claims filed by dockworkers and other claimants who may lack the legal or financial sophistication to document their claims.

* Will the GCCF compensate claimants for the costs associated with preparing their claims? This is required by the Federal Oil Pollution Act, Sheldon contends, and could affect businesses that have to hire accountants, lawyers, or other professional help to get their claims in order.

* Will the fund offer a panel to hear appeals from unsatisfied claimants? Sheldon points out that when the White House announced the creation of the facility, its fact sheet stated that ”a panel of three judges will be available to hear appeals of the administrator’s decisions,” a promise Feinberg himself has repeated.

But when Feinberg last met with the task force, he began backing away from the idea, suggesting that the existing recourse provided by an alternate fund run by the Coast Guard would be sufficient. Sheldon disagreed, noting that the Coast Guard’s funds are limited (to a total of $1 billion).

An appeals process, Sheldon writes, would be “integral to maintaining the public’s confidence.”Thus far, claimants persistent enough to complain to government officials have in some cases received the second evaluation of their claims and additional compensation from the GCCF, but other than this “squeaky wheel” phenomenon, claimants have been left with little recourse when they have objected to the amount of compensation they have received.

* While Feinberg has eliminated proximity to an oil-covered beach as a requirement for filing a claim, Sheldon writes, he appears intent on using it as a standard to evaluate the amount paid. Under the Oil Pollution Act, claimants are entitled to compensation if their losses are the result of the spill, he writes. “We strongly urge you to stop using proximity as a basis for reducing a payment.”

* Sheldon suggests that Feinberg structure final payments in a way that allows them to be spread out over several years, which will help ease the tax burden on claimants who will have to report their payments as income.

Sheldon 11.22 Letter to Ken Feinberg

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