BP fights against 'inflated' US Gulf oil spill payouts

BY SELINA WILLIAMS

LONDON -- BP has written to lawyers of claimants arising from the 2010 Deepwater Horizon oil spill in the United States Gulf of Mexico, warning them that BP could seek to recover some of the payments if they prevail in a legal appeal, a spokesman said.

BP has also taken out full page advertisements in the main United States newspapers, including the New York Times and the Wall Street Journal, saying that the interpretation of the settlement they agreed last year has resulted in payments to businesses that didn't suffer losses from the oil spill.

"Trial lawyers and some politicians are attempting to capitalize on this misinterpretation by encouraging the submission of thousands of claims for inflated losses, or losses that do not even exist," BP said in the advertisement.

A BP spokesman said, "The letters we are sending put claimants' lawyers on notice that, should we prevail on our appeal, BP will seek to recover payments to which claimants are not legally entitled."

Last year, BP agreed a settlement with the plaintiffs' steering committee, a group representing individuals with economic, property or medical damage claims. The settlement was originally estimated at $7.8 billion.

But the costs have escalated because average payments for business economic loss claims have been higher than anticipated.

In April, BP said that the total estimated cost of the PSC settlement will be "significantly higher" than its current estimate of $8.2 billion because business economic loss claims not yet received or processed are not reflected in the estimate and the average payments per claim so far are higher than anticipated.

The latest escalation in the cost of the disaster, which killed 11 men and triggered the worst offshore oil spill in United States history, comes as the company is embroiled in a civil trial to determine environmental fines that could total as much as $17.6 billion.

BP has previously challenged the spill claim fund's process for handing out money, saying in court filings that the administrator has approved "fictitious awards" to some businesses and overestimated the losses of many claimants.

The case is now being heard by the Fifth Circuit court of appeals in New Orleans, with a hearing scheduled for July.

A federal judge denied BP's plea to halt payments from the fund in April.

A BP spokesman said that although the company was actively litigating the payments by the claims program "for inflated and even fictitious losses", it remained fully committed to paying legitimate claims due to the accident.

BP said in the advertisement that ran in the papers that it has already paid out over $25 billion in response, including clean up and restoration costs and in payments on claims made by individuals, businesses and governments for the 2010 disaster.

BP has spent or provisioned more than $40 billion for the Deepwater Horizon disaster.

Last week, BP called for an independent investigation of the process used to compensate business for the losses, following reports that a lawyer working for the claims administrator had been suspended for alleged misconduct.

The company was responding to an Associated Press report, which said that a lawyer working for the court appointed administrator had been accused of collecting a portion of settlement payments referred to a New Orleans law firm.