Stay current on changes and developments in corporate law with a wide variety of resources and tools.
By Margaret Cronin Fisk and Laurel Calkins
Sept. 24 — BP Plc was barred by a U.S. judge Sept. 24 from recovering hundreds of millions of dollars it claims to have overpaid some victims for economic losses from the 2010 Gulf of Mexico oil spill.
BP had sought to claw back millions of dollars after the court earlier revised the method for calculating the damages.
U.S. District Judge Carl Barbier in New Orleans rejected that bid, quoting from language of a release people had to sign to receive payment under the settlement.
BP told claimants, “If you sign this release, that's it, it's over for you. It doesn't matter if the law changes or not, or if the interpretation of the settlement terms changes for better or worse,” Barbier said. “I don't know how you get around it.”
The company's attempt to recover the money was “classic hair-splitting,” Barbier ruled. “The only conclusion is that this language bars BP from any attempt at restitution.”
BP sought the return of overpayments on 793 claims it was forced to pay under a now-rejected formula that calculated losses without requiring specific matching of revenue and expenses. BP attributed $185 million in overpayments to just 208 of these claimants, Kevin Downey, a lawyer for the London-based company, told Barbier.
BP will appeal the decision, Geoff Morrell, a company spokesman, said in an e-mailed statement.
“No one disputes that the claimants whose windfalls the court has now upheld have been paid money they didn't deserve for losses they didn't suffer,” Morrell said. BP's request for the return of that money “was an attempt to reach the only fair outcome,” he said.
Barbier's ruling was BP's second courtroom loss in less than a month. Barbier, who is in charge of thousands of consolidated oil-spill claims, ruled Sept. 4 that BP acted with gross negligence in drilling the Macondo well off the Louisiana coast, leading to the explosion aboard the Deepwater Horizon drilling rig that killed 11 and caused the worst offshore spill in U.S. history.
That ruling exposes BP to as much as $18 billion in U.S. water pollution fines, which Barbier has yet to assess. BP has set aside $43 billion to cover all costs of the spill and has already paid more than $28 billion in spill response, cleanup costs and damages.
Joe Rice, one of the victims' lawyers who negotiated the settlement with BP, said Barbier upheld the settlement and release as they were written. “BP agreed to this and they wanted these payments to be final,” he said after the hearing. “We allege that thousands of people were underpaid by BP, but they don't want us opening those back up.”
Barbier didn't immediately rule on a separate request by victims' lawyers to automatically compensate all cleanup workers and coastal residents injured during the spill under BP's settlement, rather than require them to sue the company for help.
Workers who were diagnosed with certain ailments after April 2012 contend the company is trying to save as much as $1.2 billion by altering terms of the medical benefits part of the global settlement with most private party plaintiffs, which BP reached two years ago. The estimated value of the economic and environmental losses covered by that agreement is $9.2 billion.
The workers' lawyers asked Barbier to reverse his earlier ruling that the settlement didn't automatically cover them if they couldn't provide specific diagnostic test results obtained before the deal was approved. The claims administrator for the medical benefits settlement had earlier decided in BP's favor.
“The entire point of the settlement was to efficiently compensate large numbers of existing exposure injuries and to bring them to a close,” Steve Herman, a plaintiffs' lawyer, said in a court filing.
BP's lawyers told Barbier Sept. 24 the company hasn't revised any settlement terms. All individuals with exposure-related injuries diagnosed after the April 2012 cutoff date must file workers' compensation claims or sue BP under provisions reserved for latent injuries, such as cancer, which might develop years after someone came in contact with the spill, they said.
Victims' lawyers estimate as many as 20,000 people are entitled to automatic payments of as much as $60,700 because of chronic eye, skin and respiratory ailments they developed within three days of being exposed to crude oil and dispersants. Now, more than 90 percent of them will have to sue instead of being compensated through the settlement, their lawyers said.
“It's rather strange that a court would approve a class settlement that really doesn't settle thousands of claims, that requires them to file another lawsuit,” Barbier told lawyers at the Sept. 24 hearing. He said it seemed unfair to exclude injured cleanup workers from automatic compensation “because they weren't formally diagnosed and didn't have all the right tests at the right time.”
Kevin Hodges, another BP lawyer, told Barbier it was implausible to think thousands of injured workers would wait more than two years to see a doctor for painful exposure symptoms, many of which would require treatment at an emergency room.
Barbier countered that one-third of Louisiana residents, about 1.5 million people, lack health insurance. “So I don't know you can just assume” that all injured workers went to doctors or got the required medical tests performed in a timely manner, he said.
The April 2010 Macondo well blowout and spill fouled Gulf fisheries and more than a thousand miles of coastline. The accident led to thousands of lawsuits against BP and its contractors: Transocean Ltd., owner of the drilling rig that burned and sank, and Halliburton Co., which provided cementing services.
To contact the editors responsible for this story: Michael Hytha at email@example.com
©2014 Bloomberg L.P. All rights reserved. Used with permission.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)