U.S. District Judge Carl Barbier on Monday ordered the administrator of the court-supervised settlement of private claims against BP stemming from the 2010 Deepwater Horizon disaster to respond by Aug. 26 to BP's request for an injunction temporarily halting millions of dollars in claims payments until an investigation into possible wrongdoing in the program is completed.
On Aug. 5, BP renewed its request for Barbier to temporarily halt the payments of economic claims, charging that it had found evidence of improper payment of claims by an employee at a Mobile, Ala., claims office, as well as apparent conflicts of interest involving attorneys handling appeals for the claims program.
In his brief order, Barbier, who is overseeing most civil lawsuits involving BP, also gave other parties to the settlement an opportunity to submit briefs, limited to no more than 10 double-spaced pages, by the same Aug. 26 deadline.
BP contends that the claims program, run by court-appointed claims administrator Patrick Juneau, is allowing improper payments of claims to individuals and businesses that were not hurt by the spill. BP contends the program is approving more than $100 million in claims each week.
In June, Juneau announced that he was conducting an internal investigation after hearing rumors that a top-ranking staff attorney had received portions of settlement payments from clients he had referred to the office before his employment there. On July 2, Barbier appointed former FBI Director Louis Free to conduct an investigation into those allegations and into any other concerns he found with the program.
In mid-July, the company filed a first request for an emergency preliminary injunction, arguing that two of three top lawyers involved in the settlement program "apparently intervened" in some claims. Barbier denied that motion after BP was unable to produce any evidence of fraudulent claims.
Last week, the company also was ordered by Barbier and U.S. Magistrate Judge Sally Shushan to pay a $130 million quarterly bill for expenses of the claims office. The company had refused to pay the bill because of its concerns about Juneau's operations.
In its Aug. 5 motion, BP said a tip passed on to the company on July 15 via a BP fraud hotline claimed that an employee at the Mobile claims processing office was processing fraudulent claims and receiving part of the proceeds.
After BP told officials with the Court Supervised Settlement Program about the allegation, an investigation resulted in an employee of the Mobile office being suspended, the motion said.
"According to the tip, the employee was assisting individuals, including family members, in submitting fraudulent subsistence claims to the CSSP in exchange for payment of a portion of settlement awards that may be paid to these individual claimants," said a legal brief accompanying the motion. "The employee allegedly recruited individuals to submit fraudulent claims, provided advice regarding what claim details would yield the maximum claim possible, and received a portion of the awards."
Gulf Oil Spill Claims Administrator Must Respond to BP