BP Must Pay $130 Million by Monday

     NEW ORLEANS (CN) – BP has until Monday to pay $130 million from its oil spill claims program despite its complaints of the program’s “poor productivity and excessive costs,” a magistrate judge ruled.
     U.S. Magistrate Judge Sally Shushan on Wednesday gave BP until Monday to hand over the money, finding that BP’s approval of the Court Supervised Settlement Program’s third quarter budget had “been unreasonably withheld,”
     Shushan added that “going forward, the Claims Administrator shall submit its proposed quarterly budgets to the parties 60 (sixty) days prior to the quarter.”
     Last Monday, Aug. 5, BP asked the court for a second time to suspend settlement program payments, claiming it had found new evidence of fraud in the claims program. BP that day sent a letter to the claims program , denying the program’s request for third-quarter funding.
     “It would be unreasonable to approve a budget that validates and incentivizes the various claims administration vendors to perpetuate their track record of poor productivity and excessive costs,” BP claims director Maria T. Travis wrote.
     The letter states that vendor fees in the claims program increased in April and May by 7 percent, and vendor expenses increased by 41 percent in April.
     Before issuing her order Wednesday, Judge Shushan held a hearing for BP to show cause why the claims administration’s third quarter budget should not be funded.
     Shushan’s four-page order denying BP’s request begins: “On June 18, 2013, I attended a meeting at the request of the Claims Administrator. The meeting involved representatives of BP, Class Counsel, and the major vendors for the Court Supervised Settlement Program (‘CSSP’). The meeting lasted all day and BP was given the opportunity to question the Claims Administrator and the vendors regarding the administration of the CSSP and the expenses incurred in running the program for which BP provides the funding.
     Shushan’s order states that four days later, on June 21, an attorney for BP sent a letter to U.S. District Judge Carl Barbier, who is overseeing the multidistrict oil spill litigation, and asked for an “examination of the CSSP for four reasons, one of which is applicable here: ‘Significantly higher than expected administrative costs and expenses.'”
     On July 1, Patrick Juneau, the claims administrator sent a letter to BP.
     “As an initial matter, the Claims Administrator pointed out that BP had not followed the provisions of the Settlement Agreement, specifically Section 4.3.4 whereby a three person Claims Administration Panel is convened to address and attempt to resolve unanimously any issues or disagreements that arise regarding the Claims Administrator’s oversight responsibilities, settlement administration, or any other issues involving the settlement program. Only then will a dispute be brought to the Court for resolution,” Shushan’s order states.
     The claims center sent its third quarter budget to BP on July 17 and said the fund would be out of money within 10 days.
     “It was not until August 5, 2013 that BP responded … through its Director of Claims, Maria Travis. In her response, Ms. Travis states that the Claim’s Administrator’s budget is subject to BP’s reasonable approval. She states that ‘we continue to have significant concerns about CSSP’s poor productivity and excessive costs,’ and ‘we request that the CSSP re-submit its 3rd quarter 2013 budget with appropriate documentation, analysis, metrics and explanatory notes to support each item in the budget request.’ Ms. Travis goes on to state that BP is not approving the budget request,” Shushan’s order states.
     The order continues: “Of course, Ms. Travis’ communication was sent after the date that the CSSP projected it would be out of money.
     “As pointed out by Mr. Juneau in his August 6, 2013 response to Ms. Travis, ‘[f]rom the start of the CSSP through the last quarter, BP has routinely granted these requests without delay.’
     “It is with this backdrop that yesterday I ordered BP to show cause why the Claims Administrator’s proposed third quarter budget should not be funded.”
     Shushan gave BP until 2 p.m. Wednesday, Aug. 7, to appeal.
     Judge Barbier held a 3 p.m. hearing that day to address BP’s appeal, which he denied.
     Barbier has appointed former FBI Director Louis Freeh as special master to look into BP’s allegations of fraud in the claims process. Juneau is investigating allegations that an attorney at the claims office was taking kickbacks for ensuring that certain claims were processed.
     The alleged kickback scheme prompted BP’s initial request to freeze claims payments. Barbier denied the request during a July 22 hearing , saying he had “no intention of letting any kind of media frenzy … shut down the entire claims process without evidence of some systemic problem within the court settlement program.”
     The claims program was put in place to compensate people and businesses harmed by the April 20, 2010 explosion of the Deepwater Horizon rig, which killed 11 people and set off the worst offshore oil spill in U.S. history.
     BP is awaiting a ruling from the 5th Circuit on its challenge to the claims payment process after Barbier ruled against it.
     In March, after alerting investors that claims payments paid by BP could be “much higher” than the $7.8 billion BP originally estimated, BP filed a lawsuit against Juneau, alleging the claims process is paying “hundreds of millions of dollars” in false business claims that bear no “rational connection to the oil spill,” and that could cost BP “billions of dollars” for “fictitious losses.”
     Barbier ruled in April that BP must pay claims according to the terms of the far-reaching settlement agreement BP spent the better part of 2011 hammering out with plaintiffs’ attorneys.
     The New Orleans Times Picayune on June 14 published a letter Juneau wrote in response to a New York Times editorial criticizing him and the claims process.
     Juneau wrote in the letter: “As I have stated numerous times, as the Deepwater Horizon claims administrator, I will not and should not comment on issues that are pending before the court. With that said, let me clearly state that several of the comments and implications of Joe Nocera, a New York Times columnist whose column ran in your paper on July 10, are personal, inaccurate and offensive.
     “I don’t know Mr. Nocera, and he has never contacted me regarding any comments or statements he made in his column. If he had, I would have given him the facts.
     “First, I am not now and have never been a ‘good-ole boy plaintiff’s lawyer.’
     As a matter of fact, if he had contacted me, he would have known that I have been a defense attorney for more than 48 years, and I am a member and a past president of the Louisiana Association of Defense Counsel.”
     Juneau told the Times columnist that BP itself had recommended him to Barbier, who appointed him, and that he, Juneau, found it “incredibly offensive for Mr. Nocera to attack Judge Barbier’s character with unfounded and obviously false statements and innuendos.”
     Juneau wrote that Nocera did not even speak to him or try to reach him by email before writing the column.
     BP says it is paying more than $73 million in new claims each week.
     It still faces potentially billions of dollars in environmental fines for the oil spill.
     The first phase of the civil trial ended in April.
     Barring a settlement with the Department of Justice, BP is headed back to court for the second phase on Sept. 30.

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