Judge rules BP will not get restitution for claims paid under flawed calculations

Kyle Barnett Sep. 25, 2014, 5:14pm

NEW ORLEANS – A federal judge has denied BP’s request to reclaim hundreds of millions of dollars in claims payments the company says would not have been paid to Deepwater Horizon oil spill claimants if a settlement agreement had properly been followed from its inception. 

U.S. District Judge Carl Barbier entered the order Wednesday.

BP asked Barbier to order the return of fundspreviously overpaid to claimants, following the institution of a new claims calculation for businesses – Policy 495. The change was mandated by an appeals court, which drastically altered how damages are calculated under the BP Deepwater Horizon oil spill settlement

In early 2013, only months after settlement agreement was reached, BP began to raise concerns about the funding formula and alleged that Claims Administrator Patrick Juneau was improperly matching claimant revenue and income, resulting in inflated awards. A subsequent opinion by the U.S. Court of Appeals for the Fifth Circuit required the court to change the way business economic loss claims were calculated.

After the change was made, BP petitioned the court to require overpayments under the old formula to be repaid.

Kevin Downey, an attorney appearing on behalf of BP, said the issue was a simple matter that should be corrected by the court.

“This is a situation where a claimant has been overpaid, or has been paid at all, as a result in error in law that is later corrected by another court that amount should be repaid to the payor,” he said.

BP said at least 793 business economic loss claimants were overpaid as a result of Juneau’s misinterpretation of the settlement agreement and that 50 claimants should never have been eligible for any claims monies at all. Downey said 208 claims alone were overpaid by $185 million.

“The series of payment flowed from the incorrect interpretation, and we are just asking that the agreement be enforced,“ he said.

However, Barbier disagreed saying the Deepwater Horizon matter is a unique one in that the claims payments were paid out before the case was completed. Also, as part of that claims process Barbier said those receiving claims were required to sign a waiver stating that they were no longer eligible for any claims from BP, despite the outcome of any further court proceedings or appeals, such as the one that resulted in policy 495.

“I think it was clearly contemplated that things could change,” Barbier said in reference to a passage in the waiver form.

Attorney Steve Herman, appearing on behalf of the Plaintiffs’ Steering Committee, agreed with Barbier’s assessment.

“All of those claims had gotten to the end of the road and had been paid. [They] were not subject to the Fifth Circuit injunction and are final,” he said.

After Barbier denied BP’s request to require already paid claimants to provide restitution, BP vowed to appeal the decision.

“This misinterpretation resulted in some claimants receiving awards well in excess of what they are entitled to under the settlement agreement and others receiving awards that weren’t warranted at all. Some of these overpayments were in the millions of dollars,” said Geoff Morrell, a spokesman for BP. “No one disputes that the claimants whose windfalls the Court has now upheld have been paid money they didn’t deserve for losses they didn’t suffer. For BP to have asked for the return of that money was not contrary to the release or any other part of the agreement – it was an attempt to reach the only fair outcome.”


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