BP oil spill: Oil giant challenges Gulf payments
BP oil spill settlement payments are being aggressively contested by London-based BP. The company may seek to recover what BP calls 'overpayments' that businesses received from the court-supervised settlement program for the BP oil spill in the Gulf of Mexico.
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Barbier appointed Lafayette-based attorney Patrick Juneau to administer the settlement program. BP PLC has accused Juneau of trying to rewrite the terms of the settlement and claims he has made decisions that expose the company to what could be billions of dollars in fictitious claims.Skip to next paragraph
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But the judge upheld the claims administrator's interpretation of settlement terms that govern how businesses' pre- and post-spill revenue and expenses — and the time periods for those dollar amounts — are used to calculate their awards.
In the letter to plaintiffs' attorneys, BP says it expects Juneau will "fulfill his fiduciary duties by seeking to recover all excessive claims payments" if the company prevails in its appeal.
"BP further notifies you that it also reserves any rights it may have to recover funds from the attorneys of claimants in the event of reversal, if those attorneys have a contingent-fee interest in the payment of the Claim," the letter says.
Plaintiffs' attorneys have said the payments to businesses were clearly spelled out in the agreement. They claim BP simply undervalued the settlement and underestimated how many claimants would qualify for payments.
They also asserted in a filing last month that BP had pointed to "four examples out of more than 40,000 filed claims that it hopes will shock this Court," and then relied on its own experts to claim "mistakes" or "overpayments."
The judge's ruling has not deterred BP.
Last week, BP called for an independent investigation of alleged misconduct by an attorney who worked on Juneau's staff. The lawyer, Lionel H. Sutton III, resigned last Friday — a day after Juneau delivered a report to Barbier that outlined the allegations.
A law firm allegedly paid Sutton a portion of settlement proceeds from claims he referred to the firm before he went to work for Juneau. In a statement, BP said only a "comprehensive and independent investigation" of the allegations involving Sutton will ensure the "integrity" of the claims process.
BP estimated more than a year ago that it would spend roughly $7.8 billion to resolve tens of thousands of claims by businesses and individuals covered by the settlement. The company now says it can't give a reliable estimate for the total value of the deal.
Barbier also heard testimony earlier this year for a first phase of a trial designed to identify the causes of BP's April 2010 well blowout and assign percentages of fault to the companies involved.
Billions more hinge on the outcome of the trial, which includes claims by the federal government and Gulf states. It's unclear whether Barbier will issue any substantive rulings before the trial's second phase, which is scheduled to start in the fall.
The spill began in April 2010 after the BP-leased drilling rig Deepwater Horizon exploded off the Louisiana coast, killing 11 rig workers. Roughly 200 million gallons of crude oil were released from the Macondo well a mile under the Gulf surface. Marshes, fisheries and beaches from Louisiana to Florida were fouled by the oil until a cap was placed over the blown-out well in July 2010.
BP set up a compensation fund for individuals and businesses affected by the spill and committed $20 billion. The claims fund initially was handled by lawyer Kenneth Feinberg but Juneau took over the processing of claims after the settlement was reached last year.
Juneau's office announced in May that it has determined more than $3 billion in claims are eligible for payment through the settlement agreement. More than 162,000 claims were filed and more than $2 billion had been paid to claimants as of May 6.