Judge orders BP to explain its refusal to pay $130 million cost of operating oil spill settlement claims center, Attorneys gather as BP trial begins in Federal court

Judge orders BP to explain its refusal to pay $130 million cost of operating oil spill settlement claims center, Attorneys gather as BP trial begins in Federal court by Mark Schleifstein, August 6, 2013, The Times-Picayune
A U.S. magistrate judge has ordered BP to appear in federal court on Wednesday to explain why the company should not be directed to pay a $130 million bill it was sent to underwrite the cost of operating the center that is processing billions of dollars in economic claims covered by a settlement between BP and private claimants last year. U.S. Magistrate Judge Sally Shushan issued the “show cause” order late Tuesday, after being forwarded a BP letter sent to the Deepwater Horizon Settlement Program that says BP won’t pay the third-quarter advance payment of $130.3 million to operate the office, until the company is convinced the claims program is being operated properly. The refusal to pay the bill was contained in an Aug. 3 letter from Maria Travis, BP’s Gulf Coast Restoration Office claims administrator, to Bob Levine, a senior official with the claims office. It was filed the same day that BP warned the U.S. 5th Circuit Court of Appeals that a decision by that court upholding U.S. District Judge Carl Barbier’s interpretation of rules governing the payment of business economic claims, which BP is appealing, would likely result in the multibillion-dollar settlement being dissolved.

And on Monday, BP filed a motion demanding a temporary halt to the payment of economic claims until investigations into the operation of the claims center are completed. In that motion, the company presented evidence of what it said was improper payments by an employee of a Mobile, Ala., claims office, and alleged conflicts of interest involving attorneys serving on claims appeal panels whose parent law firms represented claimants participating in the settlement. The BP motion also alleged those law firms had filed their own claims with the center. Monday’s motion was filed with Barbier, who is overseeing the settlement and other federal lawsuits against BP stemming from the BP Deepwater Horizon disaster. Barbier in mid-July had dismissed a similar BP motion to halt the payments, after saying the company had failed to provide evidence of wrongdoing.

BP has been critical of the business economic claims, and said in a recent Securities and Exchange Commission filing that the company believes its claims liability has grown to $9.6 billion, from an original estimate of $7.8 billion, and could grow higher if the rules aren’t changed. The company said that as of the end of the second quarter, it had booked charges of $42.4 billion related to the spill, and had nearly used up all of a $20 billion trust fund set aside to cover claims. [Emphasis added]

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