NEW ORLEANS (CN) – BP must keep making oil spill claims payments while its allegations of fraud in the process are investigated, the judge overseeing the multibillion-dollar litigation ruled.
After ruling Friday, U.S. District Judge Carl Barbier said he has “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.”
Barbier emphasized that the claims administrator, Patrick Juneau, was chosen jointly by BP and plaintiffs’ attorneys, who jointly worked out the claims process itself.
BP last week sought an emergency injunction asking Barbier to “temporarily suspend all payments from the Court Supervised Settlement Program (CSSP) while Special Master Louis Freeh investigates the extent of any fraud, corruption or other improprieties involving the CSSP.”
Barbier appointed former FBI Director Freeh as special master to look into BP’s allegations of fraud in the claims process after Juneau announced that he was conducting an internal investigation based on rumors an attorney at the claims office was taking kickbacks for ensuring certain claims were processed.
Lionel H. Sutton, the attorney in question, resigned after an internal investigation, and his wife, Christine Reitano, was fired after she refused to resign, according to the Times Picayune and other publications. Sutton denied claims of wrongdoing and said he was merely communicating by email with claimants.
Barbier held a 90-minute hearing on the matter Friday, during which he repeatedly asked BP attorney Jeff Clark whether BP has evidence the two fired attorneys had any influence over calculation of claims.
Clark said that BP has not alleged there is evidence the two attorneys influenced claims.
“That’s the purpose of the Freeh investigation,” Clark said. “To see if there is something more than kickbacks.”
During the hearing, Barbier said BP has “made a lot of accusations and put out a lot of innuendo,” but he wanted evidence.
While acknowledging there is a “serious problem” at the settlement program, Barbier said he needs evidence the problems influence claims payment amounts before he freezes payments for the time being.
“Frankly, I’m not seeing evidence that it could have affected how these claims are calculated and paid,” Barbier said.
Barbier said that because there is no evidence that the attorneys in question had any influence over how claims were calculated and paid, BP’s motion for injunction must fail.
After ruling, Barbier praised Juneau and reminded BP that it helped to choose him.
Citing an instance in which a BP executive allegedly accused Juneau on TV of “hijacking” the claims process, Barbier called BP’s “recent attacks on Juneau’s character highly offensive and inappropriate.”
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 in April ruled that BP must pay claims according to the terms of the far-reaching settlement agreement BP spent the better part of 2011 forging with plaintiffs’ attorneys.
The Times Picayune newspaper last week 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 reminded Nocera that BP itself recommended him to Judge 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 offensive column, which Nocera could have done “with very little effort,” as other reporters have done so, from across the United States and in Europe.
BP says it is paying more than $73 million in new claims each week.
The company still faces potentially billions of dollars in environmental fines for the oil that contaminated the Gulf of Mexico after the April 20, 2010 explosion of the Deepwater Horizon rig, which killed 11 and set off the worst offshore oil spill in U.S. history.
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 at the end of September.
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