BP says it's paying 'absurd' claims under spill deal

Patrick Juneau, administrator of the Deepwater Horizon Claims Center, in the center's New Orleans headquarters Oct. 15, 2012. Patrick Juneau, administrator of the Deepwater Horizon Claims Center, in the center's New Orleans headquarters Oct. 15, 2012. Photo: Emily Pickrell Photo: Emily Pickrell Image 1 of / 1 Caption Close BP says it's paying 'absurd' claims under spill deal 1 / 1 Back to Gallery

BP upped the ante Friday in its battle to keep from having to pay potentially billions of dollars more for Gulf of Mexico oil spill damages and attacked the administrator of the landmark settlement it reached last year with people and businesses that sued over the 2010 disaster.

The British oil giant sought a court injunction to prevent the administrator handling claims under the class-action settlement from paying inflated or fictitious claims.

It also filed a complaint against administrator Patrick Juneau, alleging breach of contract. The complaint doesn't seek monetary damages, per se, but it asks that Juneau be ordered to change how he interprets the agreement so he complies with what BP believes the agreement says.

The underlying issue involves settlement terms such as revenue, expenses and profit. BP asserts the administrator has rewritten or deleted the terms to the benefit of claimants the company believes were not harmed by the spill.

BP said more than 1,200 awards with a total value of more than $400 million have been granted to claimants in the agriculture, construction, professional services, real estate, manufacturing, wholesale trade and retail trade industries.

But it alleged many of the awards were for damages that never occurred.

It cited examples that it described as "absurd," including $21 million to a Louisiana rice mill located 40 miles inland. BP says the mill brought in more revenue for 2010 than in the previous three years.

'Absurd' claims

In another example, BP said a road construction company in northern Alabama received a $9.7 million award despite being almost 200 miles from the coast and doing no business there. That company had its best year on record in 2010, BP alleged.

In an emergency filing in federal court in New Orleans, BP said if the injunction is not granted, it will suffer irreparable harm.

"Awards for fictitious losses already are hundreds of millions of dollars and could reach billions," BP lawyers said in the filing.

Because of a January decision by the claims administrator about how to handle business economic loss claims, BP has stopped estimating the total amount it expects to pay under the settlement.

Estimates change

Initially, BP estimated it would pay out $7.8 billion under the settlement announced last March covering economic and health claims from the spill, although the agreement carried no cap on damages.

Later, it raised that estimate to $8.5 billion.

But in a recent regulatory filing, the company said it now only can project the amount it can reliably estimate, which is $7.7 billion.

That figure excludes disputed claims that are the subject of Friday's filings.

The company urged U.S. District Judge Carl Barbier to schedule a hearing soon on its motions.

Juneau, a lawyer in Lafayette, La., did not immediately respond to a request for comment left at his office.

The Plaintiffs' Steering Committee, a panel of lawyers that reached the settlement with BP on behalf of thousands of individual and business clients, defended the claims administrator.

"Claims are to be paid under the terms spelled out in the agreement - terms which were negotiated, co-authored and expressly agreed to by BP," lead counsel Steve Herman and Jim Roy said in a statement. "Simply put, BP undervalued the settlement and underestimated the number of people and businesses that qualify under the objective formulas that BP agreed to."

The injunction BP is requesting would not affect the overall claims process.

But it would prevent the paying of business economic loss claims that were subject to the administrator's policy decision BP is challenging.

BP said that decision is tantamount to a fundamental rewriting of the framework to whch it agreed when it reached the settlement.

Trial continues

BP owned the undersea well that blew out in the Gulf.

An explosion on the Deepwater Horizon drilling rig, which BP was leasing from Swiss drilling contractor Transocean, killed 11 workers.

To date, BP has paid out more than $24 billion in damages and clean-up costs. It also has agreed to pay $4 billion in criminal fines and faces potentially billions of dollars more in fines and damages at a civil trial under way before Barbier.

Plaintiffs in the trial include those that opted out of last year's civil settlement, the states affected by the disaster and the federal government, which is seeking a determination that BP acted with gross negligence and should be forced to pay maximum fines under the Clean Water Act.

Transocean's chief executive officer, Steve Newman, is expected to testify Tuesday, during the fourth week of the trial.