Judge Denies BP’s Request to Recoup Overpayments to Oil Spill Victims
By John Schwartz
The oil giant BP cannot recoup hundreds of millions of dollars it claims to have overpaid victims of a 2010 Gulf Coast oil spill, a federal judge ruled Wednesday.
At a hearing in Federal District Court in New Orleans, Judge Carl J. Barbier rejected BP’s request that it be allowed to claw back the extra money paid out under an old accounting method.
BP had successfully argued last year that the accounting methods that determined claims payments were too generous, and earlier this year, Judge Barbier ordered the office that processes claims to adopt an accounting procedure more to the company’s liking.
But in a ruling from the bench, Judge Barbier said the earlier claims “were paid under the settlement’s terms as it was interpreted by the claims administrator and the court at that time.”
He added, “The fact that the decision and the interpretation were later reversed does not equate to fraud or anything close to it by these claimants.”
In a statement, Geoff Morrell, the senior vice president for communications at BP, said the company had asked the court to order the money returned “as a matter of equity and fairness.”
Lawyers for those suing BP pointed to the language in the settlement on the first page of the forms signed by claimants who received money; the form promised the amount paid would not change because of subsequent events.
The form, which was approved by BP as part of its 2012 settlement agreement with lawyers for spill victims, states, “It is possible that the terms of the proposed settlement may change in the future — for better or for worse — as a result of further legal proceedings. However, if you sign this individual release, none of those uncertain future events will affect you.”
The company has repeatedly argued that although it stands by the settlement as signed, its implementation was subsequently “hijacked” by the claims administrator, Patrick Juneau, who the company says misinterpreted the agreement, and then was exploited by unscrupulous plaintiffs.
“For BP to have asked for the return of that money was not contrary to the release or any other part of the agreement,” Mr. Morrell said. “It was an attempt to reach the only fair outcome.”
In court Wednesday, Judge Barbier dismissed BP’s argument that the language of the release form did not cover this situation, saying, “The court finds this is classic hairsplitting.” He said that he had ordered restitution where fraud had been proved, but said that these claimants “did not commit fraud.”
A leader of the steering committee of lawyers for plaintiffs, Stephen J. Herman, said, “I think the judge correctly analyzed the law and the facts, and we’re pleased with the outcome.”
Mr. Morrell said BP “disagrees with today’s decision and will appeal it.”
Judge Barbier also heard arguments on Wednesday about the medical compensation plan BP agreed to for oil spill workers for conditions related to toxic exposure. The judge made no ruling on those arguments.
Judge Barbier is presiding over the sprawl of litigation from the 2010 Deepwater Horizon explosion that killed 11 men and spilled millions of gallons of oil into the gulf. This month, he ruled that BP was grossly negligent in the days and months leading to the disaster, a finding that could cost the company billions of dollars in penalties.
Edward F. Sherman, a professor at Tulane University Law School who has followed the case closely, said it was “not surprising” that Judge Barbier had rejected the effort to reclaim the funds, given the language of the release form.
He noted that the company had also asked the Supreme Court essentially to declare its settlement agreement invalid because it allows payment to people with no obvious causal connection to the spill, despite the fact that the company negotiated the terms and argued for them in court. The argument was rejected by Judge Barbier and by the United States Court of Appeals for the Fifth Circuit.
Professor Sherman said, “They keep trying, don’t they?”