BP’s request to put emergency stop on claim process during fraud investigation denied

NEW ORLEANS – U.S. Federal Judge Carl Barbier has ruled against a temporary stop to claims payments stemming from the 2010 Gulf oil spill while an investigation is underway into potential wrongdoing in the office of Claims Administrator Patrick Juneau.

An internal investigation in Juneau’s office resulted in the termination of Lionel Sutton III and his wife Christine Reitano for allegedly giving preference to claims from which they or their associates might benefit financially.

Ex-FBI Director Louis Freeh was appointed by Barbier to investigate the matter on July 2 and BP earlier this week asked for the temporary emergency stop to the Court Supervised Settlement Program (CSSP) claims program until Freeh’s investigation is completed.

In BP’s request to the court, attorneys wrote, “BP will be irreparably harmed absent a preliminary injunction. Since BP and Mr. Juneau first learned of the allegations of potential fraud and misconduct in the facility, the CSSP has made more than $440 million in payments.” BP also argued that that it would be impossible to recover wrongfully paid claims if Freeh ultimately determines there was corruption in Juneau’s office.

In a brief ruling released Friday afternoon Barbier denied BP’s request for the emergency stop.

According to the Times-Picayune, although Barbier acknowledged serious problems within the claims administrator’s office he asked BP’s attorneys to provide direct evidence of the harm caused in the manner in which the payments were calculated that without that evidence he did not believe stopping the claims process temporarily would make a difference.

“BP is disappointed in the District Court's ruling, which we believe is wrong under the law,” BP Head of U.S. Communications Geoff Morrell said. “We continue to believe that a temporary pause of all Gulf claims payments is prudent & necessary during Judge Freeh's investigation.”

Morrell also said that BP will review all available legal options.

The denial of a temporary stop order to the claims process is the second this year for Barbier who in April also denied a preliminary injunction request by BP for an emergency stop due to what they alleged was Juneau’s misinterpretation of the claims administration agreement that allowed businesses with no recognizable harm to receive settlements and those with recognizable damages to receive inflated payouts.

The U.S. Court of Appeals for the Fifth Circuit held a hearing on Juneau’s interpretation of claim process last Monday, which is currently pending a decision.

On Monday BP also opened a fraud hotline (1-855-NO2-FRAUD) that will allow anonymous callers to turn in those pursuing false claims due to the 2010 Gulf Oil Spill. Callers to the BP fraud hotline could receive a reward if their information results in a claim denial, recovery of damages or an indictment.