As businesses collapse, claimants still waiting for checks from BP

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.

“They keep saying they’re working on it. They brought in an adjuster from Arizona to Grand Isle, and he keeps leaving on some family emergency. Two days ago another guy took my case and they said he’d call me, and he never did. Finally I sent a fax, a big piece of paper with black marker on it, said: ‘Will the manager of BP claims please call me?’ Well, he called me. And then he gave me the runaround.”

Nicholas acknowledged that the processing of large business claims needed to become “more efficient and more responsive,” but said there were already “enhancements to the process” that should speed things up soon. He said the early kinks in handling fishermen’s claims had been worked out, and that they were getting paid more smoothly. A lot of boat owners have gone to work for BP cleaning up oil.

“They would much rather be working and out there helping the situation and getting paid for it than just receiving a check,” said Curtis Thomas, a BP spokesman in Grand Isle.

Terry Vegas, who is preparing to join the cleanup effort with his 56-foot shrimp boat, said it was better than staying home and fuming. “Believe me, there ain’t no fishermen want to do this. None of them. But they got to,” Vegas said. “I’m 60 years old, and I’ve been shrimping for 46 years. What else am I going to do?”

His wife, Rosemary, who suffers from emphysema and congestive heart failure, said she was not told that her husband’s new employment would offset a second claims payment, as BP officials have said publicly.

“We keep getting letters from lawyers. But we’re not going to hire no lawyer. We’re going to wait and see what they’re going to offer to settle,” she said.

Many of those waiting find their way to Frank Besson’s Pirate Island Daiquiri Bar on the narrow finger of road that winds its way up the island. It’s a good thing, Besson said, because tourist business is down so far he’s already had to cash his first BP claim check.

“It took me 15 minutes to do what I needed to do, and I got the whole $5,000,” he said.

The competition down the road, in a nod to the times, is selling tar ball daiquiris, but Besson hasn’t reached the point where he thinks that’s funny.