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BP’s Feinberg Can’t Call|Himself ‘Neutral,’ Judge Says

NEW ORLEANS (CN) - Kenneth Feinberg, the administrator of the $20 billion fund set up to compensate victims of the Gulf of Mexico oil spill, should not refer to himself or the entity for that fund as "neutral" or completely "independent" from BP, a federal judge overseeing the litigation ruled Wednesday.

"It should be clearly disclosed in all communications, whether written or oral, that said parties are acting for and on behalf of BP in fulfilling its statutory obligations as they are the 'responsible party' under the Oil Pollution Act of 1990," U.S. District Judge Carl J. Barbier wrote.

Barbier is overseeing the bulk of federal lawsuits related to the April 20 explosion of the Deepwater Horizon drilling unit, which killed 11 people and dumped millions of gallons of oil into the Gulf of Mexico.

In the wake of the spill, BP appointed Feinberg to head up a claims adjustment entity, called the Gulf Coast Claims Facility (GCCF). Feinberg and his firm Feinberg Rozen LLP are paid $850,000 a month by BP to handle oil spill claims.

Statements from Feinberg in recent months that he is a separate entity from BP and that oil spill victims will get more by settling their claims with him rather than litigating have stirred up controversy among attorneys for those seeking damages from BP.

Claiming that Feinberg has been misleading claimants by purporting to be independent, the lawyers asked the judge in December to supervise Feinberg's communications with claimants through the GCCF. Barbier asked BP attorneys about complaints related to the GCCF during a status conference last week.

The judge ruled Wednesday that Feinberg was selected to oversee the claims without input from the court or opposing claimants.

"BP has created a hybrid entity, rather than one that is fully independent of BP," Barbier wrote. "While BP may have delegated to Mr. Feinberg and the GCCF independence in the evaluation and payment of individual claims, many other facts support a finding that the GCCF and Mr. Feinberg are not completely 'neutral' or independent from BP."

"For example, Mr. Feinberg was appointed by BP, without input from opposing claimants or the plaintiffs' steering committee (PSC), and without an order from the court," the order states.

"Mr. Feinberg is not a true third-party neutral such as a mediator, arbitrator, or court-appointed special master," it continues.

Barbier noted that the GCCF is settling claims against BP under the Oil Pollution Act, as well as claims that fall outside of the act, such as personal injury and death claims."In their release of BP, the GCCF requires claimants to release and assign all rights or claims not only against BP, but against any other potentially liable party," the ruling states. "Whether or not seeking such a wide release is appropriate, the GCCF is clearly acting to benefit BP in doing so."

Barbier's order asks Feinberg, through the Gulf Coast Claims Facility, not to contact claimants who are currently represented by counsel, regardless of whether the claimant has filed a lawsuit or a formal claim yet.

The judge also directs Feinberg to "refrain from referring to the GCCF, Ken Feinberg, or Feinberg Rozen LLP (or their representatives), as 'neutral' or completely 'independent' from BP." (Parentheses in original)

Feinberg and representatives from the GCCF are directed to tell claimants of their right to an outside attorney before they sign settlement papers. They must also disclose that the GCCF's "pro bono" attorneys and "community representatives" are actually compensated by BP.

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