BP Gulf Claims Fund Pressures Spill Victims, Lawyers Say

BP Plc (BP) is using “coercive tactics” to force victims of the 2010 Gulf of Mexico oil spill to agree to final settlements with its claims fund, lawyers suing the company said.

BP set up the $20 billion Gulf Coast Claims Facility to pay emergency, interim and final payments to the victims under the provisions of the U.S. Oil Pollution Act. Lawyers for property owners, businesses and others claiming harm say victims have been forced to sign releases for inadequate payments because they could no longer afford to wait for full compensation.

A federal judge should appoint a special master to oversee the process, the lawyers said in papers filed today in federal court in New Orleans. They also asked U.S. District Judge Carl Barbier, who is overseeing the litigation, to “suspend the effectiveness” of any releases signed by spill victims who received money from the fund.

“BP has failed to comply with the letter and spirit of OPA, a law designed to provide an interim claims process,” according to the filing. The primary function of the claims process has been to convince victims “that the only compensation available is a minimal set amount that comes with a full release attached,” the lawyers said.

“The GCCF will respond to the filing in due course,” Kenneth Feinberg, administrator of the BP fund, said in an e- mail. “We have paid interim payments to over 20,000 claimants and there are over 40,000 final payment offers outstanding. The GCCF has so far paid out over $250 million in interim payments and $4.8 billion in total claims.”

Scott Dean and Daren Beaudo, spokesmen for London-based BP, didn’t immediately respond to e-mail or phone messages seeking comment.

Attorneys General

In April, after four Gulf state attorneys general asked the judge to intervene with the fund, Feinberg said Barbier had no legal authority to oversee the BP claims process. The state officials asked Barbier to conduct an independent audit and hold public hearings on the results, as they claimed Feinberg’s fund was stalling interim payments to pressure “economically desperate’’ victims into settling too soon for too little.

“Even if it did have legal authority,’’ imposing the court’s supervision over Feinberg’s fund would “divert resources and chill the ability of GCCF personnel to work expeditiously without fear of running afoul of an independent auditor and a court-imposed evidentiary hearing,’’ David Pitofsky, Feinberg’s lawyer, said in an April filing.

Independent Audit

Last week, Feinberg agreed to commence an independent audit of the fund before the end of this year, after U.S. Attorney General Eric Holder requested one following a face-to-face meeting over government concerns about delays in payments to spill victims.

BP faces more than 350 lawsuits by thousands of property owners, fishing interests and tourism businesses claiming harm from the worst offshore oil spill in U.S. history. The spill resulted from the April 2010 explosion and sinking of the Deepwater Horizon rig while drilling a BP well off the Louisiana coast.

The case is In Re Oil Spill by the Oil Rig Deepwater Horizon in the Gulf of Mexico on April 20, 2010, MDL-2179, U.S. District Court, Eastern District of Louisiana (New Orleans).

To contact the reporters on this story: Margaret Cronin Fisk in Southfield, Michigan, at mcfisk@bloomberg.net and; Laurel Brubaker Calkins in Houston at laurel@calkins.us.com.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.