BP seeks to recoup 'windfall' Gulf spill payments

Fri Jun 27, 2014 6:48pm EDT

BP logo is seen at a fuel station of British oil company BP in St. Petersburg, October 18, 2012.  REUTERS/Alexander Demianchuk

BP logo is seen at a fuel station of British oil company BP in St. Petersburg, October 18, 2012.

Credit: Reuters/Alexander Demianchuk

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(Reuters) - BP Plc (BP.L) has asked a U.S. judge to direct what it called a "vast number" of businesses to repay hundreds of millions of dollars it says were wrongly awarded as compensation on claims stemming from the 2010 Gulf of Mexico oil spill.

In a Friday court filing, BP asked U.S. District Judge Carl Barbier in New Orleans to require businesses to make restitution plus interest of excess payments, which it called "windfalls." It also requested an injunction to stop the businesses from spending these excess sums.

BP said letting the overpayments stand would create discrepancies that reward some businesses whose awards were made sooner. It also said "there is no public interest in permitting dissipation of assets to which claimants had no right."

Friday's request escalates BP's legal battle over how to interpret its 2012 settlement to resolve claims by businesses who said they suffered economic losses because of the spill.

BP has long said the businesses' lawyers and claims administrator Patrick Juneau have misinterpreted the settlement, allowing recoveries without proof that the spill caused losses.

The London-based oil company has said the uncapped settlement could cost $9.2 billion, higher than its original $7.8 billion estimate, and that this amount could grow.

On June 9, the U.S. Supreme Court said BP must continue to pay claims as it pursues legal challenges to the payouts.

Friday's filing came six months Barbier directed Juneau to change his policy in reviewing claims applications, and ensure that claimants be able to "match" revenues with costs for the purpose of calculating financial losses.

BP said Juneau's new policy, which won court approval on May 5, will lead to "dramatically different calculations of lost profits," and justifies recouping earlier, inflated awards.

To illustrate the potential changes, BP said a seller of animal skins would have under the new policy been paid $14 million less than it was awarded, while a construction company located hundreds of miles from the Gulf would have been paid $8.4 million less.

Juneau's earlier interpretation "resulted in claimants receiving awards well in excess of what they are entitled to under the settlement agreement - in some cases by millions of dollars - or awards that weren't warranted at all," BP spokesman Geoff Morrell said. "Letting these erroneous awards stand uncorrected would violate basic principles of fairness and equity."

Steve Herman and Jim Roy, the lead lawyers for business claimants, said in a statement: "This is just another attempt by BP to back out of the commitment it made to the Gulf."

A spokesman for Juneau did not immediately respond to a request for comment.

The April 20, 2010 explosion of the Deepwater Horizon drilling rig and rupture of BP's Macondo oil well led to 11 deaths and the largest U.S. offshore oil spill. BP has said it has taken $42.7 billion of pretax charges for the spill.

The case is In re: Oil Spill by the Oil Rig "Deepwater Horizon" in the Gulf of Mexico, on April 20, 2010, U.S. District Court, Eastern District of Louisiana, No. 10-md-02179.

(Reporting by Jonathan Stempel in New York; Editing by Bernard Orr)

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Comments (3)
p19 wrote:
I don’t much like BP and never buy their products, however, if they’ve been defrauded by people who were never financially harmed by the oil spill, they should get back their money.

Jun 27, 2014 7:08pm EDT  --  Report as abuse
Calfri wrote:
It’s amazing how many leeches there are out there. Like thousands of little vampire bats, these fraudsters would eventually suck the life blood out of the company if allowed to go unchecked. I’m glad BP is fighting back.

Jun 27, 2014 9:26pm EDT  --  Report as abuse
Leswjohnson wrote:
The settlement payment you have been offered arises under the auspices of the federal District Court in New Orleans presiding over the multidistrict litigation titled In re Oil Spill by the Oil Rig “Deepwater Horizon” in the Gulf of Mexico, on April 20, 2010 (MDL No. 2179). A class action settlement has been proposed in that case, but the Court has not yet given final approval of that proposed settlement. If the Court does approve the proposed class action settlement, an appellate court could reverse the approval. In addition, it is possible that the terms of the proposed settlement may change in the future—for better or for worse—as a result of further legal proceedings. However, if you sign this Individual Release, none of those uncertain future events will affect you. By signing this Individual Release you are forever waiving and releasing all claims that you may have against BP (except for Expressly Reserved Claims) in exchange for the compensation being provided. In fact, even if the Court does not approve the proposed class action settlement agreement or the approval is reversed by an appellate court, you shall continue to be bound by this Individual Release.

Jun 27, 2014 11:01pm EDT  --  Report as abuse
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