BP exhausts fund for explosion claims

Marilyn Tennissen Dec. 18, 2007, 7:15am

With 1,200 claims still pending, BP says it has spent all of its $1.6 billion fund set aside for claims from the 2005 explosion at its Texas City refinery.

"BP has paid more than $1.6 billion to date to settle death and injury claims," BP spokesman, Neil Chapman, told Bloomberg News in a Dec. 17 story. "The cost to resolve additional claims will be determined as and when additional claims are resolved." The company is "self-insured" for these costs, he said.

After starting with $700 million, the London-based company, increased the size of the fund twice as more claims were filed and settled.

BP is on trial in Galveston on lawsuits by eight men injured in the 2005 accident, which killed 15 people and injured hundreds. The workers in the Galveston trial are seeking $1 billion.

The company reached out-of-court settlements of all death cases and most serious-injury claims before the current trial.

Early settlement offers set off "waves of cases," a Houston lawyer, Tommy Fibich, said. "Initially, BP thought they could make the problem go away by being somewhat generous" with these settlements, said Fibich, who is not involved in the litigation.

"But it had the opposite effect," he said. "It was like blood in the water. It appears to me that everybody who was in that ZIP code has made a claim."

BP settled three previous trials during jury selection or before jurors could hear all the evidence.

In September, during the most recent trial that ended in a settlement, Judge Susan Criss of Texas District Court, who is presiding over the lawsuits, ordered lawyers to mediate all claims by the end of the year.

Jurors have heard testimony on whether BP fraudulently obtained air-quality permits for the parts of the Texas refinery involved in the blast, including evidence that BP supplied regulators with incorrect information and wrong engineering drawings for the unit that exploded.

As a sanction against BP for failing to provide the final diagram for the permit, Criss told jurors last week that they should presume the missing drawing would show BP incorrectly told regulators the unit was vented to a flare.

That instruction gives jurors the right to remove the punitive-damages limit and award the nearly $1 billion requested. The normal cap is twice economic damages plus $750,000.

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