BP Payout Is Less Than 12% of Claims Filed, Government Report Says

BP's Houma Deepwater Horizon Unified Command center in Schriever, Louisiana
BP's Houma Deepwater Horizon Unified Command center in Schriever, Louisiana

Two months have passed since BP's (BP) horrific oil spill sent a wave of environmental damage and economic chaos along the Gulf Coast, but to date the oil company has paid out less than 12% of the claims filed, a House Judiciary Committee report released Friday stated.

As of Tuesday, BP had paid $71 million of the estimated $600 million in claims filed by individuals and businesses since the disaster began April 20. The Judiciary Committee is investigating BP's claims process and its effectiveness in issuing payouts to folks and business that have been damaged by the spill.

The Spillover Effect of the Oil Spill

According to the report, the oil giant failed to deliver a dime on any claims that came in during the first two weeks after the Deepwater Horizon oil rig blew up and began spewing barrels of oil into the Gulf. That oil has since washed ashore and into the marshes that house the region's lucrative oyster beds, which feed the local restaurants, which employ hordes of residents -- just one example of the spillover effect of the oil.

Four weeks into the spill, BP had paid only $11.7 million on claims filed. And in the past two weeks, the committee noted, BP has only begun making payments to individuals for their"full loss of income," with many people continuing to experience delays in getting compensation.

Congressman John Conyers, the committee chair, warned BP:

I remain concerned that BP is stiffing too many victims and short-changing others. The loss of the 11 men aboard the Deepwater Horizon and the tremendous environmental damage being caused by this oil spill are the most immediate and distressing components of this disaster, but we must also ensure that the men and women who lost their livelihood or suffered serious economic harm are made whole by this claims process.

I look forward to seeing a more transparent and efficient process for providing remedies to victims, as the newly established independent claims process begins. It is also important for BP to provide the requested data to Congress and the U.S. Coast Guard, so that federal and state governments can ensure that victims are being appropriately compensated now and as the claims process evolves.

Losing Patience With BP's Pace

Case-in-point: Zero payments have been made for bodily injury claims, even though 717 such claims were on file as of Friday. These claims range from respiratory problems to headaches to skin irritations.

The Judiciary Committee is also losing patience with BP's pace in providing information for the total number of claims paid based on category and the total amount of damages sought by individuals and businesses. For example, the Committee is frustrated in trying to assess the amount of damages requested by restaurants and the number of claims paid. Its best guess at this point is that BP has paid $169,371 in lost income claims from restaurants out of the 267 claims on file.

BP is banking on management of the oil spill improving, now that it has kicked CEO Tony Hayward out of the way of overseeing the project. And mediator Kenneth R. Feinberg -- who for three years was special master in charge of administering the 9/11 victims compensation fund -- has been named the new claims administrator of BP's $20 billion compensation fund for those harmed by the oil spill.

The public can check up on the claim payouts with a new Web page the Committee created, which provides daily BP reports to the U.S. Coast Guard on its claims process.