NEW ORLEANS - BP Plc on Friday lost a bid to persuade a judge to temporarily halt payments from the court-supervised program administering its settlement of claims tied to the 2010 Gulf of Mexico oil spill.
U.S. District Judge Carl Barbier in New Orleans rejected the company’s request to stop the payments while Louis Freeh, former director of the FBI, investigates allegations of misconduct in the claims program.
BP contends two lawyers working for the settlement administrator, Patrick Juneau, improperly took fees from law firms while processing their clients’ claims.The staff attorneys were ousted after the purported improper payments came to light.
“BP has not produced any evidence to take the drastic step of shutting down the entire” claims process, Barbier said at a hearing.
Officials of the London based oil company said they were disappointed with Barbier’s decision.
“There is a material risk that payments going out the door have been and continue to be tainted by possibly fraudulent or corrupt activity, and BP should not be forced to bear the risks of improper payments,” Geoff Morrell, a BP spokesman,said in a statement.
The dispute is the latest complaint from BP over the claims process set up by last year’s settlement of suits filed by private-party victims. BP set up a hotline July 15 seeking reports of fraud or corruption in the claims process.
The oil company has also accused Juneau of approving hundreds of millions of dollars in claims for “fictitious” economic losses under a liberal interpretation of the accord.
The company contends Juneau misinterpreted the settlement’s terms and allowed Gulf Coast claimants to recover millions of dollars for economic losses that aren’t directly tied to the spill.
The company has been forced to add hundreds of millions of dollars to the estimated $7.8 billion cost of the settlement and might have to pay billions more than expected, BP said.
Barbier has repeatedly rejected BP’s requests to force Juneau to adopt a more restrictive interpretation of the accord. A U.S. appeals court heard arguments in the dispute earlier this month.
BP asked Barbier on Friday for the “temporary pause” in settlement payments to give Freeh time to finish his corruption investigation, Jeffrey Clark,one of BP’s lawyers, said at the hearing.
“This has placed a black mark on the program,” Clark said. He said Juneau violated his legal duties to BP and the claimants by failing to properly oversee the attorneys.
The company’s request is “unnecessary” and “based on premature speculation,” lawyers representing Juneau said Thursday in a court filing. “There is no proof to support BP’s contention that each and every claim must be presumed to have some imputed taint,” they wrote.
Information for this article was contributed by Allen Johnson Jr., Jef Feeley and Laurel Brubaker Calkins of Bloomberg News.
Business, Pages 27 on 07/20/2013