Restaurant workers cash in on oil spill despite steady dining business

Posted on: October 25 2010 | Posted in: Latest News
Owners speak out on restaurant workers receiving pay from BP.

Tuesday, October 19, 2010
BY: Richard A. Webster, Staff Writer



Shrimper Acy Cooper is enraged.

Last week he received a check from the Gulf Coast Claims Facility for $16,000.

Despite providing evidence proving that the Gulf of Mexico oil spill cost him more than $100,000 in losses, his reimbursement amounted to less than 20 percent of his damages.

It was like a knife in the gut, he said.

But when he heard that bartenders, waiters, cooks and dishwashers in New Orleans restaurants were collecting checks for as much as $25,000, he lost it.

“I’ve been fishing all my damn life, and here they’re going to send me something like this and give someone who’s never owned a boat in their life $20,000? It’s dirty and wrong. I’m angry right now.”

In the past month, word has spread throughout the New Orleans service industry that applying for oil spill payments is a sure thing, a guaranteed lottery paying out in the tens of thousands of dollars.

Many of those applying didn’t lose any money because of the oil spill. But if they produce a pay stub from the first quarter of the year when tourism typically is booming and one from the summer when business is historically slow, it appears as if their wages dropped significantly.

“Everyone is doing it,” said Kimble Donington-Smith, a bartender at The Balcony Bar on Magazine Street. “Fill out some paperwork and get a check. It seems like a fraud, but I understand that only a few people have been flagged.”

The average payout appears to be between $9,000 and $13,000, said Donington-Smith, who hasn’t applied himself.

To the fishermen and shrimpers directly impacted by the oil spill, it is an outrage, Cooper said.

It also sounds like an overblown rumor, said Kenneth Feinberg, administrator of the Gulf Coast Claims Facility.

Since taking over the payment system from BP on Aug. 23, the GCFC has received 160,000 claims and paid out more than 70,000 for a total of $1.5 billion. More than 43 percent of all claim applications have been filed since Oct. 1.

The sudden rush shows the system is working, Feinberg said.

“In the last month, people have finally figured out that this claims facility is fair and generous and that we are pouring money out the door. People were skeptical at the start, but now they see we’re working effectively so they’re all filing,” Feinberg said.

Given the overwhelming number of claims, it is possible that a small number of checks have been sent to undeserving individuals. If a bartender who never missed a day of work and never lost any money because of the oil spill received a check for $11,000, it is an aberration and a fraud that should be investigated by the U.S. Department of Justice, Feinberg said.

No one in the New Orleans service industry who benefited from the windfall was willing to talk on the record, but restaurant owners have confirmed the rumors.

Ralph Brennan knows people who have received payouts up to $30,000. It’s unusual because business is up compared with last year, Brennan said.

What’s even more unusual is that many people receiving checks aren’t required to provide any kind of proof.

“We were giving our employees their payroll records (to file claims), but now we’re hearing that they don’t even need to provide that. All they need is proof of employment and they’re getting these huge payouts. It appears as if they’re just passing the money out,” Brennan said.

Tommy Cvitanovich, owner of Drago’s Seafood Restaurant, said the majority of the 130 people who work at his Metairie location have either applied for or already received sizable payments.

“We’re even hearing that employees at McDonald’s are receiving money,” Cvitanovich said. “I hope they are as generous to the restaurant owners when our claims go in as they have been to our employees.”

They’re not, said Wendy Waren, director of communications for the Louisiana Restaurant Association.

“Businesses are getting pennies on the dollar, if anything,” she said. “They’re paying these huge individual claims expediently with limited documentation while our business claims are being rejected for a lack of documentation.”

To make things worse for restaurant owners, when workers receive their payments, they are requesting time off to enjoy their newly found largesse just as business is beginning to pick up.

“When restaurants with legitimate losses see employees getting a lot of money and then going on vacation, while they’re having to jump through hoops and getting nothing, it can cause problems,” Waren said.

Not every service industry claim is fraudulent.

Business at Drago’s dropped by as much as 34 percent after the oil spill, so Cvitanovich said his employees deserve some compensation, just not as much as they are receiving.

But there seems to be many more dubious claims.

Employees at Commander’s Palace have requested payroll information to file claims despite the fact that business over the summer increased compared with 2009, operations manager Steve Woodruff said.

“If our employees say they took a hit, I’d wonder why because their income is directly related to how the restaurant does. I’ve communicated to my staff that I’d like to think no one would apply for anything they’re not entitled to,” Woodruff said.

Despite testimony from industry leaders such as Brennan and Cvitanovich, Feinberg remains unconvinced that waiters and bartenders are hitting the BP lottery without cause.

But such complaints go to show that you’re damned if you do and damned if you don’t, Feinberg said. In the beginning people complained he wasn’t distributing enough money. Now they’re complaining he’s handing out too much.

In the end, he’s proud of the success of the GCFC.

“The critics who were yapping at me a month ago are praising me publicly now, and politicians are writing letters to the editor saying I’ve righted the ship.”•