BP says settlement easy set up for fraud, seeks reversal from appeals court

Lawyers for BP claim a judge’s ruling has allowed payments for fictitious claims from the 2010 oil spill, and are asking a federal appeals court to reverse the decision.

A three-judge panel of the U.S. Court of Appeals for the Fifth Circuit in New Orleans will hear arguments today from BP and Gulf Coast businesses. BP says U.S. District Court Judge Carl Barbier and the court appointed claims administrator have misinterpreted the settlement.

"The result is that thousands of claimants that suffered no losses are coming forward in ever-increasing numbers, seeking and obtaining outrageous windfalls and making a mockery of what was intended to be a fair and honest court-supervised settlement process," company attorneys wrote in their brief for the hearing.

Washington-based attorney Theodore Olson is expected to present BP's case and answer questions from the judges during Monday's hearing.

After the settlement was approved last year, Barbier appointed Patrick Juneau, a Lafayette, La., attorney, to take over the process of evaluating and paying claims.

The attorneys for the oil company say Juneau made a decision, approved by Barbier, that is allowing claimants to manipulate the process.

Awards to businesses are based on a comparison of their revenue and expenses before and after the oil spill. But BP says claimants are choosing time periods for comparison that will result in losses and higher payouts.

"Such 'losses' reflect nothing more than arbitrary cash-flow computations or incorrect recording of revenue and expenses — not actual economic performance," their attorneys wrote.

BP cited a $21 million payout to a Louisiana rice mill that earned more revenue in 2010 than it did in the previous three years as an example of how the settlement can be manipulated.

Plaintiffs’ attorneys however, say BP agreed that the claims administrator should be the one to determine the compensation framework and now simply has a case of ‘buyer’s remorse.”

BP attorneys say that there will be a “black mark on the American justice system” if the appeals court doesn’t overturn Barbier’s ruling.

James Dennis, Edith Brown Clement and Leslie Southwick are the 5th Circuit judges assigned to the case.