BP’s attempt to withhold third quarter funding from claims administrator shot down

By Kyle Barnett | Aug 8, 2013

NEW ORLEANS – U.S. District Judge Carl Barbier has refused a request by BP to have the $130 million third quarter budget of oil spill claims administrator Patrick Juneau’s office thrown out.

Juneau's office provides oversight of the program that provides damage awards to those receiving economic injuries from the 2010 Gulf oil spill.

Barbier agreed with an earlier ruling by U.S. Magistrate Judge Sally Shushan to force BP to fund the Court Supervised Settlement Program (CSSP) after a daylong meeting with BP, class counsel and CSSP vendors.

“I find that the refusal to fund the third quarter 2013 budget is unreasonable,” Shushan wrote.

Shushan said she ruled against BP because it could not provide specifics on why the budget should not be funded.

“[T]here have not been any specific budgetary discussions as to how BP wants the budget prepared and submitted going forward. Because I find that BP's approval has been unreasonably withheld under the circumstances, BP is ordered to fund the third quarter 2013 budget in its entirety,” she wrote.

However, Shushan wrote that going forward the claims administrator should submit the proposed quarterly budget in its entirety 60 days prior to the quarter.

In a separate ruling, Shushan provided instructions that the fourth quarter budget should be provided by Friday, Aug. 16 giving BP and class counsel a week to review the budget and accompanying documents and suggest any changes. The proposed changes would then be provided to the claims administrator who would have a five-day period to make any necessary revisions, which would be followed by a two day window in which either BP or class counsel would be able to request a claims administration panel to convene.

In the meeting Juneau claimed that BP had run afoul of the settlement agreement by not first asking for a claims administration panel to be convened before any disagreement should go on to the court.

In their request to court on not funding the CSSP budget, BP director of claims Maria T. Travis said the program claimed increased costs within the CSSP, but decreased activity and questioned what the $130,300,000 third quarter budget would go towards.

“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,” she wrote.

The request to not fund the claims administration process comes after months of accusations by BP that the CSSP is being negligently administered and has spawned a culture of corruption in which two claims attorneys have been terminated for allegedly steering claims to their own law firms or those of their peers. Accusations also include that two others have been suspended and are currently under investigation after BP received tips concerning a kickback scheme in which claims were processed in exchange for payments to attorneys handling claims.

In addition, law firms serving as vendors for the CSSP have been accused of charging fees in excess of the work they have provided.

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