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BP Loses Renewed Bid to Halt Spill Settlement Payments

BP Plc (BP/) lost a renewed bid to suspend payments from the court-supervised program administering its settlement of claims tied to the 2010 Gulf of Mexico oil spill.

An investigation of alleged wrongdoing at the Mobile, Alabama, claims assistance center didn’t find “any credible evidence of fraud,” U.S. District Judge Carl Barbier in New Orleans said today.

He also rejected BP’s allegations that its ability to appeal payments was tainted because, the company said, “at least two appeal panelists had apparent conflicts of interest.” The issue earlier was brought to Magistrate Judge Sally Shushan, who investigated and is handling the matter, Barbier said.

“None of the claims represented by the firms of two of the panelists have been approved, paid or appealed,” Barbier said today, referring to law firms. The “alleged conflicts” are not “a basis upon which to suspend the entire claims payment program,” he said.

Barbier last month rejected the company’s request to stop the payments while Louis Freeh, former director of the Federal Bureau of Investigation, probes allegations of misconduct in the claims program. BP renewed the request Aug. 5.

‘Core Systems’

“BP respectfully believes the court’s order is wrong on the facts and the law,” Geoff Morrell, a BP spokesman, said in an e-mailed statement today. The “core systems for ensuring the integrity” of the claims processing program “continue to be deficient,” he said.

Photographer: Chris Ratcliffe/Bloomberg

U.S. District Judge Carl Barbier rejected BP Plc’s allegations that its ability to appeal payments was tainted because, the company said, “at least two appeal panelists had apparent conflicts of interest.” Close

U.S. District Judge Carl Barbier rejected BP Plc’s allegations that its ability to... Read More

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Photographer: Chris Ratcliffe/Bloomberg

U.S. District Judge Carl Barbier rejected BP Plc’s allegations that its ability to appeal payments was tainted because, the company said, “at least two appeal panelists had apparent conflicts of interest.”

Barbier recognized the need for an independent investigation of the program to ensure its integrity when he appointed Freeh to investigate initial allegations of possible misconduct, Morrell said.

“As we await the completion of this broad investigation, we continue to believe a temporary pause in payments is warranted,” he said. “BP is reviewing its options with respect to the district court’s decision today.”

Nick Gagliano, a spokesman for claims administrator Patrick Juneau, didn’t immediately respond to a request for comment on the ruling.

‘Actual Facts’

“We’re pleased that the court relied on actual facts and evidence in reaching its conclusion -- for the second time -- and not the unsupported hyperbole and speculation propagated by BP,” Stephen Herman and James Roy, co-lead attorneys for the plaintiffs suing the company, said in an e-mailed statement.

Freeh was appointed after an attorney at the Deepwater Horizon Court Supervised Settlement Program was suspended and accused of accepting fees from law firms while processing their clients’ claims from the oil spill. Another attorney was subsequently suspended following similar allegations.

BP faces thousands of lawsuits over damages caused by the explosion and sinking of the Deepwater Horizon rig in 2010. The blast killed 11 workers and released more than 4 million barrels of crude from BP’s well off the Louisiana coast.

BP reached the agreement with most private party plaintiffs last year, initially estimating the cost of the settlement at $7.8 billion. The company has since raised the estimate to $9.6 billion.

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 reporter on this story: Margaret Cronin Fisk in Detroit at mcfisk@bloomberg.net.

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

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