BP Bid for Spill Payment Freeze Gets Friday Court Hearing

BP Plc’s request to temporarily halt payments from the court-supervised settlement program set up after the 2010 Gulf of Mexico oil spill will be considered at a hearing this week.

BP yesterday asked U.S. District Judge Carl Barbier to suspend payments while Louis Freeh, former director of the Federal Bureau of Investigation, probes possible misconduct in the claims program. Barbier set a hearing on the motion for July 19 in federal court in New Orleans, ordering responses to London-based BP’s claims to be filed by tomorrow.

Barbier ordered the investigation by Freeh on July 2, after a staff attorney at the program was suspended for allegedly taking fees from law firms while processing their clients’ claims from the oil spill settlement.

The program is paying an average of more than $73 million a week and “it would be impractical if not impossible to recover all tainted payments” made during the investigation, BP said in its filing yesterday. An injunction freezing payments “is the only way to ensure that BP is not further irreparably harmed” by paying awards that may be “tainted by improprieties,” according to the filing.

“We cannot comment on the motion since this issue is before the court,” claims administrator Patrick Juneau said in an e-mail today. “We will continue to process claims until the court instructs otherwise.”

‘Adequate Diligence’

BP alleged in yesterday’s filing that Juneau hired key people for the program “without performing adequate diligence.” Two of the settlement program’s “three senior legal counsel recently were terminated after apparently intervening in the processing of claims in which they appear to have had a financial stake,” BP said.

BP is also battling Juneau over what the company has called his misinterpretation of settlement terms. BP contends this interpretation has resulted in the payment of hundreds of millions of dollars in claims for “fictitious” losses.

Barbier has three times rejected BP’s request to force Juneau to adopt the interpretation the company prefers. A U.S. appeals court heard arguments in the dispute July 8, and a decision is pending.

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).