Judge refuses to suspend BP settlement payments

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Associated Press

Posted on August 28, 2013 at 11:03 AM

NEW ORLEANS (AP) — A federal judge on Wednesday rejected BP's latest request to suspend all settlement payments to Gulf Coast residents and businesses while a former FBI director leads an independent investigation of the program compensating victims of the company's 2010 oil spill.

U.S. District Judge Carl Barbier said an internal probe by the claims administrator's office didn't find credible evidence of fraud involving employees of the settlement program's Mobile, Ala., claims center. Barbier also ruled that BP's separate complaints about alleged conflicts of interest inside the settlement program didn't warrant a halt in the claims process.

BP PLC had said it received a tip in July that someone who worked at the Mobile center helped people submit fraudulent claims in exchange for some of the settlement money. Last week, however, the head of security for claims administrator Patrick Juneau said his investigation of that allegation didn't uncover any evidence of fraud.

During a hearing last month, Barbier rejected BP's first request to suspend payments after he appointed former FBI director Louis Freeh to investigate possible misconduct by a lawyer who worked on Juneau's staff.

The attorney, Lionel H. Sutton III, is accused of receiving a portion of settlement proceeds for claims he referred to a law firm before he went to work for Juneau. Sutton, who resigned from Juneau's staff June 21, has denied the allegations.

BP renewed its request for Barbier to suspend settlement payments on Aug. 5, citing the alleged fraud at the Mobile claims center and alleged conflicts of interest by lawyers hearing and ruling on appeals of disputed settlement awards.

The London-based oil giant said two lawyers who have served as "appeals panelists" were partners at law firms that have represented claimants and filed claims of their own to be compensated. Barbier said the appeals panelists were appointed and supervised by the court, not Juneau.

"Accordingly, this is an issue for the Court, not for Mr. Juneau," he wrote.

One of the appeals panelists contacted U.S. Magistrate Sally Shushan in April and said he had recently learned that his law firm had filed a claim with the settlement program. The attorney withdrew from the firm and has continued to serve as a panelist with Shushan's consent.

"He was never assigned an appeal in which his former law firm was involved," Barbier wrote.

Shushan learned in June that another panelist's law firm also filed its own claim without the lawyer's knowledge, Barbier said.

"After investigating the circumstances, Judge Shushan determined that this panelist might elect to withdraw from any financial interest in his law firm, and still serve as an appeal panelist," Barbier wrote. "Meanwhile, all appeal assignments to this panelist have been suspended while the matter is being resolved by Judge Shushan."

A third panelist resigned after learning that his wife's law firm had filed a claim, Barbier said.

"Notably, none of the claims represented by the firms of two of the panelists have been approved, paid, or appealed," he wrote. "With respect to the third panelist, only a handful of its claims have been paid and none were appealed."

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