BP Wants Restitution on Some Gulf Oil Spill Business Claims

By KEVIN McGILL | September 10, 2015

Attorneys for BP told a federal appeals court last week that the company should be able to seek restitution of some of the money it paid in economic damage claims to businesses and individuals under a settlement arising from the 2010 Gulf of Mexico oil spill.

After the 2012 settlement was approved, BP argued that the claims administrator had not been correctly matching business’ revenues and expenses, resulting in overpayments. A court eventually ordered a new calculation method but refused to order restitution of payments already made.

The company wants restitution of some of the money paid out prior to October 2013. Attorneys told the 5th U.S. Circuit Court of Appeals that restitution could involve more than 790 businesses, with hundreds of millions of dollars at stake.

“A wrong was done,” BP attorney Thomas Hungar told a three-judge 5th Circuit panel, arguing that the settlement does not preclude BP from seeking repayment of inflated claims.

Attorneys representing a variety of plaintiffs in the case opposed the move. Samuel Issacharoff told the court that those who signed releases and received settlement payments had a right to expect that “this was their money. They were able to get on with their lives.”

Fifth Circuit chief Judge Carl Stewart heard the arguments with judges Edward Prado and Gregg Costa. A ruling isn’t expected immediately.

The case is among the lingering legal issues after major settlements in the massive oil spill that resulted from the April 2010 explosion of the Deepwater Horizon offshore rig, which killed 11 people. Earlier this year, BP reached an $18.7 billion agreement with governments in the five Gulf Coast states affected by the spill.

The 2012 settlement with businesses and individuals claiming losses from the spill is expected to cost BP over $10 billion. As of July 31, the claims administrator had paid out $5.61 billion, according to a report filed in federal court this week.

Other costs incurred by the company after the spill include an estimated $14 billion for response and cleanup and $4.5 billion in penalties announced after a settlement of a criminal case with the federal government.

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