10 years after lead poisoning, Flint residents still haven't been paid from $626.25M fund

LANSING, Mich. — Residents of Flint, Michigan, still haven't seen a penny from a $626.25 million legal settlement almost a decade after revelations their drinking water was poisoned by lead touched off a national outcry.

And there are still months of additional delays in store even as others connected with the lawsuit have been paid millions from the settlement fund announced in 2020, according to an analysis of court records by the Detroit Free Press, part of the USA TODAY Network.

Officials overseeing the claims administration process first said it would likely be completed by March 2023. As that deadline passed, residents were told they might expect payments around last Christmas. On Feb. 28, the "special master" helping the federal judge manage the case, attorney Deborah Greenspan, said initial claims review is targeted for completion around the end of June – with completion of requests for reconsideration and appeals to follow that.

Lawyers in line to collect before victims blame the state of Michigan for structuring the settlement so that claimants get paid last. As defendant in the case, the state put up the bulk of the settlement fund — $600 million.

"We ... would have preferred a streamlined process that allowed claims to be processed and paid out as they were completed and ensured everyone impacted by the crisis was paid and as quickly as possible," said Ted Leopold, a Florida attorney who is co-lead class counsel in the Flint case. However, "the state insisted on a grid in which the amount of every claim was dependent on every other claim and fairly high levels of documentation were required for each claim."

Danny Wimmer, spokesman for Michigan Attorney General Dana Nessel, said Leopold should not be disclosing closed-door settlement discussions but the AG's Office "disagrees with many of Mr. Leopold's characterizations."

Under the terms of the settlement, no Flint claimant gets paid until all of the roughly 90,000 claims on behalf of about 46,000 Flint residents are fully resolved, including appeals. Meanwhile, lawyers say some residents who filed claims have already died; others have left the state.

That level of delay is not typical. In many class-action or mass tort cases, conservative payments are made to many claimants while the review process continues, with the understanding there could be supplemental payments later, after all claims are fully resolved.

Flint resident Carol Sewell, 68, blames the poisoned water for her brother's near death in 2016 and her painful rheumatoid arthritis. Her home still has a lead-tainted water heater she can't afford to replace, Sewell said in a February letter to U.S. District Judge Judith Levy.

"We still purchase bottled water with our food stamps," Sewell wrote. "Is there rightness or justice in the Flint Water Crisis, because I have yet to see it. It's left me with an anger I can't get rid of."

Flint's water crisis began in 2014 when a state-appointed emergency manager switched the city's drinking water supply from Lake Huron water treated in Detroit to Flint River water treated at the Flint Water Treatment Plant. It was intended as a temporary, cost-saving measure, but turned out to be a disastrous mistake. The Michigan Department of Environmental Quality has acknowledged it failed to require needed corrosion-control chemicals as part of the water treatment process. As a result, lead leached into the drinking water from pipes and fixtures.

Levy, who gave final approval to the settlement in 2021, described the delays as "frustrating" at a status conference held in Ann Arbor last Wednesday.

"But I think in the end the quality of the work matters more than the speed, because if it were done in a sloppy, careless way, money would just be lost and would go to the wrong people," Levy said. "That's the last thing I would want to see happen."

Levy made those remarks after Greenspan observed that lawyers "don't get paid in advance," and will receive their money at the same time Flint residents do.

Though lawyers will have to wait in line with residents for most of the more than $200 million in fees they receive, it's not true to say they haven't been paid in advance. Top lawyers in the case, who worked on a contingency basis for as long as eight years, got tired of waiting for a share of their money. They asked Levy for preliminary payments, and she agreed.

Greenspan and contractors working on the claims review process and other settlement issues also bill the fund regularly and get paid. And lawyers have rung up millions more in expenses after the settlement was approved.

In addition to pre-paid attorney fees and expenses, just over $17 million in claims administration and related fees have now been paid from the fund, more than double the roughly $8 million that had been paid at this time last year, records show.

Here are the biggest total payments that have been made from the settlement fund so far:

• Partial attorney fees of $40.8 million, plus attorney expenses of $7.1 million.
• $4.7 million to Archer Systems, the Houston-based company initially hired to set up the claims verification system and perform other duties.
• $5.5 million to Wolf Garretson LLC of Ohio, one of two main firms that were unexpectedly brought in to help after significant problems were identified with the system set up by Archer. A share of that money has also gone to Pattern Data, a North Carolina company.
• $3.8 million to Greenspan's law firm, Blank Rome of Washington, D.C.
• $1.9 million to Alvarez & Marsal Disputes and Investigations, a Washington, D.C. firm brought on board along with Wolf Garretson.
• Just under $600,000 to Miriam Wolock, a Michigan attorney who serves as "master guardian," working to protect the interests of children in the case.

Greenspan cited the complexity of the claims process in accounting for the delays, noting there are 30 different compensation categories, many residents have had difficulty producing required documents, and there have been challenges identifying qualified representatives for many minors in the case.

Also, after compiling mountains of data, processing it, and loading it into a claims review program in January and February of 2023, the claims administrator essentially had to restart that work in March 2023 after officials discovered major accuracy problems with the initial system, Greenspan said. Those unexpected problems resulted in not just delays, but added costs.

Greenspan said her office has since tried to ease the process by obtaining 2.6 million water customer billing records, 77,000 school enrollment records, 40,000 blood lead testing results, and 8,300 birth certificates, while also taking steps to ease verification of property ownership.

The Flint case has some class-action components, but it is also a "mass tort" case in which plaintiffs who were minors at the time of the lead poisoning are considered somewhat more on an individual basis than they are in a class-action lawsuit.

Flint water crisis settlement fund growing

There is some good news. The overall pot of money is growing.

Interest earned on the settlement fund is expected to reach $45 million by mid-April, Greenspan told the status conference. And other settlements are pending – $8 million from engineering firm LAN in a deal awaiting final approval, and a tentative $25 million settlement reached with Veolia North America, a Boston-based engineering firm that was hired by Flint to work on drinking water issues.

But lawyers also want a substantial cut of the earned interest, and with the proposed settlements come additional costs and expenses.

Attorneys already have asked for $7.9 million in a motion connected to the $8 million LAN payout. That motion, up for consideration by Levy on March 14, would leave only $100,000 for Flint residents.

Leopold said the requested expenses relate not just to the LAN litigation but "include amounts incurred in litigating the entire case and administering the settlements." He said fees and expenses requested for the proposed Veolia settlement would be lower as a result.

The motion filed in connection with the LAN case expenses recommends paying them from the interest earned on the settlement fund. Top attorneys have also asked for a similar share of the interest as what was approved off the top of the settlement fund itself — a "common benefit fee" of 6.33% that would amount to about $2.8 million of $45 million in earned interest.

Michigan AG: Delays 'understandably a frustration for victims'

That's controversial. After lawyers first asked for a cut of the earned interest, back in June, the Michigan Attorney General's Office protested, saying earned interest can be used to pay the cost of claims administration. Any interest left over should benefit Flint residents, not attorneys already awarded handsome fees, Assistant Attorney General Margaret Bettenhausen said in a court filing.

The Michigan Attorney General's Office has since gone quiet on the issue, after lawyers reminded the court that when the AG's Office signed off on the settlement agreement, it promised to take no position on attorney fees and expenses unless asked to do so by the judge.

Levy has not asked, so no party in the case has commented on the fees and expenses requested in connection with the LAN settlement. Details on the claimed expenses are available for closed-door scrutiny by the special master and judge but are not placed on the public record.

Levy has referred the dispute over earned interest to Greenspan. The lawyers say case law is on their side. In the meantime, when Levy in September approved a payment to attorneys of $1.2 million in common benefit fees related to a fund set aside for programming, she allowed lawyers a proportional cut of the interest earned.

Wimmer, the spokesman for the Michigan Attorney General, said Nessel's office is not involved in the claims administration process and the delay in payments is "understandably a frustration to the victims."

Paul Egan can be reached at [email protected] or on X @paulegan4.