WILLIS: I wanted to come to New Orleans to work in some capacity for the spill. I am from New Orleans, and I was raised there. I lived through and saw the destruction from Katrina, so I wanted to help. When I got there I was doing back office types of things. I never expected to be cast to the forefront. I am here now in this position and I want to make certain that we make it right. In a sense, I volunteered for this job.

How “hands on” are you in the processes of claim handling?

I am out there. I walked the beach in Destin last night. I saw tar balls washed up on the shore. I will be out there again today walking the beaches. I want to see what is happening. I have made it my focus to make sure that people know how to file a claim. I remember during Katrina how difficult it was for people to know how to file a claim or where to go for help, so I have made this a priority. I have made the process known to people by making sure that we have enough offices to be available for people. We are continuing to open new offices and staff those offices as the need arises. I want to make sure the system is running smoothly and working for the people.

What is your biggest challenge?

For today? Each day presents new challenges. My most immediate challenge is the process of getting the claims in and paid. We need to make it work as efficiently and as quickly as possible.

There has been some talk among the adjusting community that BP has not hired enough adjusters, or experienced adjusters, or local adjusters. It has been said that some adjusters want to go to work on the spill but they are not being utilized. Do you think that you have enough people to handle the claims?

When we started on May 1st, we started with seven adjusters. We now have 1,700 adjusters, 36 offices, and 170 telephone operators. We have hired Worley Catastrophe to handle the claims for us, and they have done an amazing job. Of the adjusters now working, I would say that 80 percent of them are local, being from anywhere between Texas and Florida. They are quick to respond, and they are always in touch with me, offering me feedback and listening to my direction. When we request a new office, it is set up in three days. They are being quick to respond and sympathize with the people presenting claims. [Worley] has shown me proof that they can supply up to 5,000 adjusters, and I am confident that is the case.

This is the first time in history that a U.S. President has become involved in a catastrophic event, to the extent that President Obama actually made a statement ordering BP to make use of a third-party administrator to get claims paid. Do you think that BP is doing everything that it can do to utilize a TPA in getting the job done?

Like I said, we are confident in the Worley Group and they are doing everything that we ask them to do. We are going to continue to make changes as we see the need in order to do what it takes to make this thing right. The government is handling their own administration of the process. We make reports daily to the Coast Guard about how many checks have been written and how many claims have been filed.

What are your thoughts on Ken Feinberg, the man appointed by President Obama to oversee to oversee the payment of claims? How will you work together?

I met with Mr. Feinberg for the first time [June 24, 2010] and we had a very lengthy, all-day meeting about how we were doing and what we needed to do to improve as we discussed a future plan for handling claims.

He stated that he usually starts from scratch and has not previously become involved in a process that was already in place. While he feels like we have been very productive, he stated that we needed to focus on paying business claims. So we talked about how to make the business claims more transparent and efficient. He focused on a plan for the business claims since about 90 percent of the claims handled thus far are for individuals. While that may be correct, there is a reason for those numbers. When you are talking about businesses and financial reporting, you are going to be looking at quarters. The quarter that we would be looking at is the second quarter: April, May, and June. Businesses are just now getting those numbers in. We have paid out $90 million in claims so far and we will continue to pay individuals and businesses until we get everyone's claim handled. I will continue to work with Mr. Feinberg to improve the processes as long as necessary.

How long do you think it will take to pay all of the claims? How long do you think that you will have offices open and staffed with adjusters and claim handlers?

I cannot tell you a time period. I can tell you that we will be here as long as it takes. We at BP realize that this is an unprecedented spill; we are trying to get it right; and we have done some things wrong. We need to get it right and fix the problem; we need to be held accountable. We need to make it right, and everyone that I know is determined to do that.

NEXT:

ATTORNEY LELA HOLLABAUGH DISCUSSES THE LONG-TERM LITIGATION ASPECTS BP FACES

A Long Road Ahead for BP

While Darryl Willis has necessarily focused on present-day processing engineering issues such as setting up claim offices and disbursing payments to those directly affected by the oil spill, it's clear that there are going to be many long-term litigation aspects related to this catastrophe.

For some perspective about how these issues will emerge, Claims' Editor in Chief Eric Gilkey spoke with Lela Hollabaugh, insurance litigation expert and partner at Waller Lansden Dortch & Davis, to find out how well BP is paying claims, what the company can expect in terms of legal costs, and what—if anything—we can learn from other mass tort cases such as Valdez.

How do you think BP is doing so far in terms of paying claims?

BP instituted a claim-payment process shortly after the spill began, as it was required to do. However, the volume of claims and diversity of claims are unprecedented, and I suspect BP has done a better job than most companies would or could have done under similar circumstances. BP's web site provides detailed information about how to make a claim, and it has a claim center in the region to provide timely responses.

Reviewing and processing claims of this kind takes time. While many claims will be for legitimate losses, many people who have illegitimate claims will attempt to get money from BP. Those fraudulent claims must be weeded out so that those people with legitimate claims can be paid.

What do you think will be some of the major claim issues related to the spill?

One major issue related to claim payment is whether or not the more remote claims will be paid. For example, BP must determine if claims related to lost rental income for resort property will be paid. Ken Feinberg, who will administer the $20 billion claim fund, is making statements that indicate that some of these claims will be denied. Obviously, the specific circumstances of each claim will determine payment.

Litigation related to Hurricane Katrina is still playing out nearly five years later. Can we expect the same kind of timeframe for this disaster? What do you think will be the ultimate cost of legal fees for companies involved in the spill?

Litigation will continue well beyond five years after this spill ends. The litigation arising from the Exxon Valdez oil spill lasted 20 years. The legal activities associated with the Gulf oil spill will likely extend even longer than that. This spill involves five states and a much more populated area than the Alaskan coastline that was affected by the Exxon Valdez spill.

All of the companies involved in this spill will likely spend in excess of $8 billion in legal fees defending claims unless an early global resolution of all claims can be reached. The companies will defend direct claims against them by individuals, businesses, and the various state and federal governments involved. These claims could include those by citizens of other countries and their governments if the oil spreads beyond the United States. In addition, the companies are already involved in litigation with one another and with their insurance companies.

What, if any, comparisons can be drawn between the BP spill and other mass tort cases such as the Exxon Valdez?

This spill is larger and impacts more people and businesses than Valdez. The claims by fisherman will be similar, but more types of fishermen will be making claims in the current situation. The government's pursuit of civil and criminal penalties will likely follow a similar course as Valdez. I also expect categories of claims to be established and efforts made to resolve certain categories of claims similar to what we see in other mass tort cases.

You're providing legal advice to BP regarding its handling of the spill. Can you summarize your approach?

Any company in a position similar to BP should be focused on two things: Resolving legitimate claims quickly and defending the questionable claims while keeping the costs to defend these claims under control. Most companies in this position will work diligently to develop a legal team to efficiently and effectively manage the litigation toward a favorable resolution. Different legal teams may handle various areas of litigation but will work closely together to streamline work and present a consistent corporate message.