A new “standard” is needed for claims

Twice in recent months, I’ve read about companies getting into hot water over their handling of damage claims in the wake of accidental events.

First, BP was taken to task for using waivers and spill settlement agreements that limited the right of volunteer oil-spill responders and coastal residents to sue the company (BP told to stop distributing oil spill settlement agreements, CBS News, May 3 2010).  Then, in August, similar complaints were leveled against Enbridge, following its pipeline spill in Michigan, alleging residents who were filing for damages were required to sign a “full and final settlement release form” that discharged liability against the company (Enbridge denies allegations of coercion, Globe and Mail, September 1 2010).

In both cases, the companies argued the forms they were using were “standard” forms (BP admits “misstep” over oil spill claims waivers, Reuters, May 3 2010).

I understand the need for the companies to establish a robust claims process and to protect themselves from illegitimate and unreasonable claims.  However, in these cases, the “standard” of care was inappropriate and unfair.

In both the BP and Enbridge cases described above, the extent of the damages was not yet known or fully understood at the time the waiver and settlement forms were being used, but the public was already incurring damages or expenses related to the spill(s), in respect of which they were entitled to compensation.

It is not appropriate or fair to expect the public to wait for compensation until the full extent of damages is known (which could be weeks, months, or even years) or to give up future compensation for yet-unknown damages in exchange for redress of the immediate burden of known damages.

Clearly, the “standard” forms in use by the companies in question were ill-suited for use in the midst of an accidental event.  These examples illustrate the need for companies to develop a new “standard”, one that can redress the pressing burden of immediate damages without constraining the ability of affected persons to claim additional damages, once the full extent of damages is understood.  Companies engaging in potentially hazardous activity should take the opportunity to review their emergency preparedness and response planning and integrate appropriate, fair, and reasonable claims processes and forms to address both interim and final claims resolution.

    • Phil Hazelton – Canada
    • September 16th, 2010

    Good stuff, Celesa! Really good stuff!!

    Prepared at any time to share/discuss non-Canadian events and issues which relate to the aims and style and content of your very clear, precise and concise blog on responsability.



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