BP ordered to appear in court after refusing to pay oil-spill claim center’s operating bill

BP 435x292 BP ordered to appear in court after refusing to pay oil spill claim center’s operating billBP is refusing to pay a $130.3-million bill for the Deepwater Horizon Claims Center’s operations, and a U.S. magistrate judge wants to know why.

The Deepwater Horizon settlement fund, which pays claims to individuals and businesses harmed by BP’s 2010 Gulf oil spill, forwarded a letter it received from BP that said the oil giant would not make the third-quarter advance payment to operate the claims center. BP said that the bill would go unpaid until it is satisfied that fund administrators are paying claims properly.

The problem is that the claims are being paid on terms that BP designed, fought for and approved after months of intense settlement negotiations with the Plaintiffs’ Steering Committee. However, when it became clear that resolving claims would cost more than the $7.8 billion BP had originally estimated, the oil giant has repeatedly asked the courts to stop the payments.

U.S. Magistrate Judge Sally Shushan has now ordered BP to appear in federal court Wednesday to explain its refusal to pay the bill.

According to the New Orleans Times-Picayune, the letter, addressed to Bob Levine, a senior claims center administrator, was sent on August 3, the same day that BP warned the U.S. Fifth Circuit Court of Appeals that the agreement would be scuttled if the court chose to uphold U.S. District Judge Carl Barbier’s previous rulings tossing out BP’s objections to the center’s claims payments.

BP filed another motion on Monday with Judge Barbier, seeking to suspend claims payments until investigations of its complaints about the center’s handling of claims are completed.

Judge Barbier, who is overseeing BP oil spill litigation in New Orleans, has sternly rejected such motions by BP in the past, criticizing the company for its offensive personal attacks on head claims administrator Patrick Juneau and its multi-million dollar newspaper ad campaign designed to portray it as the victim of corruption and greed.

In a recent Securities and Exchange Commission (SEC) filing, BP said that its claims liability had gone from $7.8 billion to $9.6 billion and could go higher if the terms of the settlement agreement weren’t changed.

In BP’s letter to Mr. Levine, Maria Travis, the oil company’s Gulf Coast Restoration Office claims administrator, said that the claims center’s records show “further declines in productivity and increases in cost,” and she reiterated that BP had “significant concerns” about the center’s “poor productivity and excessive costs.”

Mr. Juneau, who was also approved by BP as the new claims administrator and appointed by Judge Barbier, said that he would appear at Wednesday’s hearing “fully prepared to address” the claim center’s proposed third-quarter budget.


The Times-Picayune