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Judge blocks BP request to suspend Gulf oil spill payments

22 July 2013

On July 19, US District Judge Carl Barbier said 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.

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 claims administrator Patrick Juneau announced that he was conducting an internal investigation based on rumours an attorney at the claims office was taking kickbacks for ensuring certain claims were processed.

Lionel H. Sutton, the target of Freeh's probe, allegedly received a portion of settlement proceeds for claims he referred to a law firm before joining Juneau's staff. Sutton, who resigned on June 21, has denied the allegations. Sutton's wife, Christine Reitano, who also worked as a lawyer for the settlement program, had her contract terminated June 26.

Barbier held a 90-minute hearing on the matter 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.

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.

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."

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.

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 resulted in the worst offshore oil spill in US history.




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