By: Mark Schleifstein, | The Times-Picayune

To view at

The court-appointed administrator of the multibillion-dollar settlement of private economic and medical claims stemming from the BP Deepwater Horizon disaster and oil spill charged Tuesday that BP's attempts to cut his budget are part of a company strategy to halt the payment of valid claims.

"The point will not be lost to any reasonable observer that 'defunding' the settlement program can have effects almost as devastating as stopping it," attorneys representing Claims Administrator Patrick Juneau wrote in papers opposing BP's attempts to cut $45 million from the office's $131 million fourth-quarter budget.

"Particularly in an atmosphere where BP continues to ask courts to stop or undo the (court-supervised settlement program), even legitimate actions to curb expense and achieve more efficiency could be viewed as nothing more than an effort to 'slow walk' claims payments while the court battles rage on," the filing said.

Juneau argued that while BP maintains that "more must be done with less," the multi-national company is only one party in the claims agreement.

"Indeed, the other 'party' to the (settlement program) is a class that includes well over 150,000 claimants who presently are barred from pursuing their claims against BP in return for a right to participate in the program," the court filing said. "They have no other recourse or remedy," and BP's demands for cuts that will result in financial savings must be weighed against a claims backlog that totals more than 88,000.

As of Sept. 12, the claims program had received 207,310 claims, of which 119,301 had been processed. Of those, 56,299 were declared eligible for payment and 46,490 were denied. There have been 4,038 appeals of claims decisions, with 3,172 of the appeals, or 79 percent, filed by BP, according to statistics filed with Juneau's response.

On Sept. 11, BP asked U.S. District Judge Carl Barbier to cut the claims office budget by $25.5 million more than the office had tentatively agreed to during negotiations with the company. Barbier had denied a similar request BP made in August involving the office's third-quarter budget, finding that the company had not shown that the expenses were out of line. At that time, Barbier ordered Juneau and BP to hold meetings about the fourth-quarter budget.

In his response to BP's latest request to cut the budget, Juneau backed away from his tentative agreement to cut $20 million, saying BP had not proved its case that the costs were unreasonable. He now wants the full $131 million for fourth-quarter expenses, but said he would agree to $111 million, although warning that would result in a backlog in processing claims.

"The (claims administrator's office) budget was based upon the CAO's fully supported and reasonable estimate of the staffing levels necessary to keep the backlog rates of claims at present levels," the filing said.

"In order to come to a mutually agreeable budget" during the negotiations with BP, Juneau agreed to a $20 million reduction that required postponing hiring 99 accountants that were to have worked on complex "business economic loss" claims, eliminating the addition of employees to review seafood damage claims, and cutting the budget's 5 percent contingency fund by half."

But BP contended that another $25 million should be cut from the budget, citing the recent report to Barbier on possible corruption of some claims office and contractor employees by former FBI Director Louis Freeh as confirming that one vendor hired to administer claims, BrownGreer, which averages more than $15 million a month in fees, "resisted the CAO's efforts to control costs and create efficiencies" to "promote (BrownGreer's) own business and financial interests."

Juneau pointed out that BrownGreer and other companies working for the claims office were selected and approved by both BP and attorneys representing the claimants, and that BP helped negotiate their payment rates.

Also opposing BP's request to cut the claims office budget on Tuesday was the Plaintiffs Steering Committee, made up of attorneys representing the claimants.

"It is clear that BP, having failed in its repeated efforts to enjoin the Settlement Program after realizing that its lawyers and consultants had under-estimated the projected settlement program pay-outs by several billion dollars, is engaged in yet another bad faith attempt to significantly slow down, if not shut down, the processing and payment of legitimate claims, by distracting the claims administrator and his staff with burdensome requests while depriving the program of the administrative funds to efficiently and effectively operate," said the response motion filed by attorneys Stephen Herman and James Parkerson Roy.

Several months ago, BP objected to rules used by the claims office to administer claims for "business economic losses," and when Barbier overruled those objections, appealed that ruling the the U.S. 5th Circuit Court of Appeals. That court has yet to rule on the motion.

In a separate 5th Circuit appeal of Barbier's original order approving the settlement between BP and the Plaintiffs Steering Committee by claimants who were either not covered or believed they would be inadequately compensated, BP filed a motion saying that if the 5th Circuit didn't overrule Barbier on the business claims issue, the settlement agreement would no longer be valid. The 5th Circuit hasn't ruled on that appeal, either.

BP has conducted an extensive public relations campaign in support of their positions that the claims program is being operated improperly and that fraud is occurring in the payments process, including the publication of a full-page advertisement in Tuesday's New York Times.