BP is warning some businesses that received compensation from its multibillion-dollar Gulf oil spill settlement that they may have to give the money back if the company wins its appeal of the claims administrator’s payments to people the company alleges weren’t harmed by the disaster.
The steering committee that negotiated the settlement with BP called the letters a “hollow intimidation tactic” and said it is not happy BP is having direct contact with lawyers for claimants, part of an all-out public relations offensive ahead of a federal appeals court hearing next month.
BP is sending hundreds of letters this week to lawyers representing claimants whom BP believes received excessive business economic loss payments.
A copy of one of the letters, obtained by FuelFix, says BP reserves its right to recover not only the money that the client received but also the cut that the attorneys for the claimants received, in the event the claims administrator’s awards are reversed.
“You may wish to advise your client to consider the effect of such potential obligations for budgeting and planning purposes and in relation to any financial statements or other financial reports and disclosures submitted to regulatory agencies or other third parties,” BP lawyer Daniel A. Cantor says in one letter dated Tuesday.
Plaintiffs Steering Committee attorneys James Roy and Stephen Herman sent a strongly worded letter to Cantor this week objecting to what BP is doing.
“No process exists to alter the amount of an award after it has been paid,” the lawyers wrote to Cantor.
They also said that they believe BP’s letters are an attempt to discourage claimants from pursuing claims under the program, and they argue the letters violate the settlement agreement and “BP’s overriding obligation to support the settlement.”
“Therefore, we ask you to reconsider your position,” Roy and Herman wrote.
In a statement Wednesday, Herman elaborated: “One thing the letter is not – is surprising, given that BP has been suspended from doing business with the U.S. government for a lack of corporate integrity, and pleaded guilty to lying to the federal government about the spill.”
BP spokesman Geoff Morrell said in a statement that the BP letters are simply an effort to put claimants on notice that the company will seek to recover payments to which claimants are not legally entitled.
At issue is the company’s allegation that claims administrator Patrick Juneau has improperly rewritten some wording of the class-action settlement reached last year, and BP believes the result could cost the company billions of extra dollars if the inflated payments continue.
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Lawyers for the Plaintiffs Steering Committee counter that BP agreed to the rules for how injuries would be determined and compensation would be calculated. They have cited documents submitted by BP attorneys that they believe show the company fully understood the terms of the deal.
In April, U.S. District Judge Carl Barbier of New Orleans, who is overseeing the multifaceted litigation arising from the 2010 spill, threw out BP’s request for an injunction, and reasserted his belief that the agreement BP signed is being interpreted correctly. BP promptly appealed that ruling to the 5th U.S. Circuit Court of Appeals, which has scheduled oral arguments for July 8.
BP initially estimated it would pay out $7.8 billion under the settlement, though it has no cap. It has since stopped estimating its expected total liability because of the uncertainty over the business economic loss claims it is disputing.
BP owned the undersea well that blew out 50 miles off the Louisiana coast on April 20, 2010, causing an explosion on the Transocean-owned Deepwater Horizon rig that killed 11 men. It took nearly three months to cap the runaway well that spilled millions of gallons of oil into the sea.
BP was trying to secure as much certainty as it could buy when it agreed to a landmark settlement last year with individuals and businesses suffering economic and health damages from the worst offshore oil spill in U.S. history. But it has argued that a January decision by Juneau on his interpretation of the settlement changed everything.
Besides the letters BP sent out this week, the company also published newspaper advertisements Wednesday defending its court battle and saying it is unfair for claimants to receive money they don’t deserve.
Plaintiffs lawyers argue that it’s BP’s problem if it underestimated its liability under the settlement, and that it shouldn’t be allowed to push the rewind button now.
Provisions in the settlement calculate business economic losses partly by comparing a business’ revenue and variable costs during a certain period in 2010 with those numbers in previous years and in the year after the spill.
All economic losses during the period by businesses near the coast are presumed spill-related for purposes of the settlement, plaintiffs’ lawyers say.
They say that for claimants farther from the coast but whose businesses operated anywhere in Louisiana, Mississippi or Alabama or in designated regions of Texas and Florida, economic damage is presumed spill-related when it reaches specified percentages relative to other years.
BP contends, however, that the administrator has interpreted the meaning of certain key terms in the agreement to the benefit of people who could not have been harmed by the spill because of the business they were in or their distance from the coast.
But plaintiffs’ lawyers have said the possibility that factors other than the spill may have contributed to a claimed loss “is a risk that BP accepted in negotiating and agreeing to the terms of the settlement.”
Read the letter that BP is sending to claimants’ lawyers warning they might have to return money they were awarded in the multibillion-dollar Gulf oil spill settlement:
Read the response from Plaintiffs Steering Committee attorneys, objecting to BP’s claim: