ACE Subsidiary and BP named as Defendants in RICO Class Action Over Oil Spill Claims

The ACE Insurance Group company ESIS has come under scrutiny for its handling of claims made by victims of the BP oil spill in the Gulf of Mexico. Earlier this year, BP engaged ESIS to help process claims made by oil spill victims.

ESIS has recently been named as a defendant with BP in a RICO class action lawsuit filed in in Alabama. The complaint challenges the manner in which BP has hired third parties, such as ESIS, to process claims and alleges that certain conduct by ESIS is tantamount to the unlicensed practice of law.

On June 8, Admiral Allen, the National Incident Commander, sent BP a letter calling for greater transparency with respect to “ongoing concerns related to delayed processing time for large loss claims” among other issues. In a June 9 letter to Admiral Allen, Advocates for Environmental Human Rights (AEHR), a Gulf State advocacy group, pointed to ESIS marketing material touting the firm’s expertise in “reducing our client’s loss dollar pay-outs” as an indicator to suggest that BP turned to ACE to help the oil company limit its liability for the oil spill damage.

In late August, ESIS was dismissed as the primary oil spill claims administrator by Kenneth Feinberg, the "claims czar" appointed by President Obama to oversee the $20 billion fund established for victims of the oil spill. One of Feinberg's first actions was to transfer the claims process out of ESIS control and to set up an independent claims process. As reported by ProPublica, this move was made amidst criticism of ESIS and BP for creating a claims process under which less than 30% of claims had been paid as of early august.

This is certainly not the first time that concerns have been voiced over claims settlement practices and procedures utilized by the ACE Insurance Group. Some of the issues possibly encountered in the Gulf, such as delayed payments and misrepresentation of coverage, are comparable to many of the allegations made by the various plaintiffs in cases compiled by theACE Litigation Index.

"In Shakeup, Incoming Spill Claims Czar Will Drop BP's Contractor" www.propublica.org

"Class Claims BP Has Corrupted Claims Process with Bogus Lawyers" www.courthousenews.com

"BP hires company to handle oil spill claims whose goal is "reducing payouts" for clients" www.southernstudies.org

"Advocates for Environmental Human RightsESIS Recovery Services Marketing Material" www.ehumanrights.org

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