Plaintiffs’ attorneys strategize behind closed doors on BP claims process

NEW ORLEANS – The recent implementation of a new accounting system in the BP Deepwater Horizon settlement has slowed claims payments to a crawl, creating lots of uncertainty about who will be paid in the future, the lead attorney in the case told fellow plaintiffs’ attorneys last week at a conference sponsored by the Louisiana Association for Justice.

The lead plaintiffs’ lawyer, Steve Herman, said lawyers who “exaggerated things a little bit or maybe had a misunderstanding” have prompted oil giant BP to demand – and win – more forensic examinations of claims. Herman appealed for trial lawyers who are seeing their business economic loss (BEL) claims denied to document cases where onerous demands for more proof of loss are occurring.

“For the collective benefit of everyone that has BEL claims filed what we really need your help with is when you have an example of what you feel, believe, whatever to be a very unwarranted, over broad, unjustified request for documents that are not required under the settlement we need to get the specifics on that,’’ Herman said. “It has to be solid because what happens to us frequently is that we go to the program with complaints, they spend a lot of time drilling shown on it and come to find out that plaintiff attorney exaggerated things a little bit or maybe had a misunderstanding.’’

Herman made his appeal at a trial lawyer’s conference in New Orleans on Aug. 15.

The conference was sponsored by two of the law firms that stand to benefit greatly from the Deepwater Horizon case, Baton Rouge-based deGravelles, Palmintier, Holthaus & Frugé and Lafayette-based Domengeaux Wright Roy & Edwards LLC. Partners at both firms are members of the Plaintiff’s Steering Committee or PSC, a group of 18 lawyers who will split at least $600 million in fees when the case concludes.

The seminar, which focused on maritime law matters, included five PSC presenters, as well as U.S. District Judge Carl Barbier, who oversees the Deepwater Horizon case.

Herman’s presentation focused on Rule 495, which requires unpaid claimants to provide more evidence of a financial loss than has been required in the past.

Rule 495 was created after the 5th Circuit Court of Appeals ruled Claims Administrator Patrick Juneau must provide a more accurate formula pertaining to businesses seeking damages that more closely matches post-spill revenue with expenses. The effect, according to many experts, is that future claims in the Deepwater Horizon case will be smaller and many Gulf Coast businesses once deemed eligible for a settlement may no longer collect at all. BP has filed a motion demanding that all spill claimants adhere to these rules, though for now, Barbier has ruled that only those who have not yet been paid are subject to Rule 495.

Some plaintiff’s lawyers involved in the case have suggested that the PSC firms, who will receive their $600 million in fees regardless of what happens in the case, have not been vigilant in ensuring that the claimants who have not yet been paid receive their fair share of the settlement.

At the seminar, Herman said he did not hold out much hope that Rule 495 would be reversed. He said claimants who have not been paid need to resign themselves to the fact that more proof of loss will be required and more challenges will be made before BP writes any new checks.

“I think people just have to realistically expect [claims administrators] are going to ask for more stuff [and] you are going to have to give them more stuff,” Herman said.

Herman predicted that fraud concerns will make the payment of claims more onerous.

Over the past year, several alleged fraud claims have been flagged by Louis Freeh, the former FBI director who was appointed by Barbier to root out corruption in the claims process.

“We are there trying to push back every day, but if you are [a claims accountant] you don’t want to be the guy who let the fraudulent claim go through,’’ Herman said. “So you might as well ask [claimants] for all of the source documents for the past five years.’’

In the end, Herman said although the immediate effects expected by Rule 495 appear grim, the long-term outlook is still good for many plaintiffs’ attorneys.

“The reality is we thought we had a really good settlement at $8 billion, then everyone thought it might be $19-$20 billion so everybody had really, really, really high expectations,’’ Herman said. “Now it is probably going to probably be, if I had to guess, $12 billion. That is still a pretty good settlement in the grand scheme of things.”