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As businesses collapse, claimants still waiting for checks from BP

The oil giant says 20,000 of the 42,000 claims filed have been paid. But many affected financially by the oil spill report no responses, answers or relief.

June 14, 2010|By Kim Murphy, Los Angeles Times

Reporting from Gulf Shores, Ala. — Real estate agent Mike Reynolds had two desirable beachfront condos in escrow when the tide of crude from the Deepwater Horizon spill washed over his business and left it looking about as appetizing as an oiled crab.

"I lost $20,000 in commission," Reynolds said. "The guy called and said he'd never be able to make any money off of them. He walked away from a $10,000 earnest-money check."

Just a few miles east of Reynolds' Gulf Shores condos, restaurant owner Matt Shipp has seen his Orange Beach business plummet by 90%, even before thick masses of oily seaweed painted the white sand beach Saturday. He put in a claim for $35,000 in lost business for May, and after more than 40 days of phone calls and faxes, got approved for $18,000. When will he get the money, he asked BP's adjuster, the fourth one to whom he had been passed.

"He said, 'I don't know,' " Shipp said. "I said, 'Who will send it to me?' He said, 'I don't know.' I said, 'Is it a check? A bank transfer?' He said, 'I don't know.' As of today, I still don't have the funds. And that's only May. What about June? It's been even worse in June."

Across the gulf, residents already shell-shocked by the tar balls, oil soup and dead sea life washing up on their beaches are getting hit with a second wave: the sudden collapse of their livelihoods, and the equally intimidating challenge of getting BP to pay for it.

President Obama, who on Monday makes his fourth visit to the gulf in six weeks, will try to compel BP to set aside a "substantial" sum in an escrow fund for economic damage claims. Senate Democrats on Sunday requested that BP set aside $20 billion that would be overseen by an independent party, a contingency that could put further stress on the oil giant, which has lost about half its market value since the April 20 explosion on the Deepwater Horizon drilling rig started the worst spill in U.S. history.

The 42,000 claims filed with the oil company so far go well beyond the shrimpers, oystermen and seafood processers who have been the spill's most visible victims. Hotels, restaurants, machine shops, bars and tour companies all became collateral damage when the Gulf of Mexico, one of the nation's most important fisheries and tourist destinations, became an industrial cleanup site.

The people whose lives depend on those businesses complain about ignored claims, unanswered phone calls and lost paperwork. One man said his BP claims adjuster didn't even know where Grand Isle, La., was.

"What the future will hold, I have no idea," said Emma Chighizola, owner of the Blue Water Souvenirs shop on Grand Isle, a barrier island full of colorful beach cabins at the southern tip of Louisiana that is normally flush with pink, sweaty tourists this time of year. "We've never been through anything like this. We've been through a lot of hurricanes and we always came back. We knew what to expect. This, we don't."

For now, cleanup workers have booked all the local rooms, but the shop's shelves remain tightly stocked with porpoise paperweights, shell necklaces, crab potholders and swimsuits.

"Clearance on all fishing supplies," says a sign in the window.

Chighizola and her husband filed a claim several weeks ago for lost revenue, but have not received any response. "They keep saying, 'Not yet. It takes time for the paperwork,' " Chighizola said. "But I have to pay these bills. All this merchandise, it was all ordered back in December, and I'm having a hard time paying for it."

About the only business that's doing well is short-term rentals to contractors flooding into town to clean up the beach and the bay. But selling real estate? Forget it, agents say.

"My phone quit ringing a month ago," said Grand Isle real estate agent Karl Thayer, who has received a small initial payment from BP and is still waiting for the next. "I've had one closing since the blowout, and that was a vacant property. Everything else is dead in the water."

BP says it has paid out $53 million in economic damage claims so far, mainly the initial checks of $2,500 or $5,000 that are going to fishermen and others who can document immediate, direct losses. Those payments will be repeated in June, but after that, claimants may have to supply additional documentation, BP said.

More than 20,000 of the 42,000 claims submitted have been paid, and no documented claims have been denied, said BP spokesman David Nicholas.

The payment process has been complicated and cumbersome in the initial weeks. Fishermen frequently have complained about filing claims, only to find that their processing number was lost or the adjuster on their case had disappeared. Others who work on a cash basis have had a hard time documenting their income.

"It's ridiculous. I filed an application out of Grand Isle, and it's been six weeks and I got nothing," said Tommy Malbrough, a commercial fisherman from Bourg, La.

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