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BP alleges breach of contract against claims admin over oil spill

On Behalf of | Mar 25, 2013 | Business Litigation

It’s possible for a business to become involved in a corporate dispute over damages resulting from an accident the company was held liable for. When a company in Texas is attempting to resolve an issue for which it claims responsibility but other companies are committing fraud by filing false claims, it can cause irreparable damage, and can also weaken the credibility of businesses that have legitimate claims.

BP is challenging its claims administrator, alleging breach of contract and misinterpretation of the class-action settlement the oil giant agreed to for the devastating 2010 Gulf of Mexico oil spill. The business litigation comes after what BP says were millions of dollars in false or inflated claims by companies that were barely affected, or not at all, by the spill. BP has filed for an emergency court injunction asking for the administrator to comply with BP’s interpretation of the settlement agreement.

The oil company says they’ve paid over $400 million to date to claimants in agriculture, construction, real estate, retail trade, and more, for damages they doubt occurred. For example, a Louisiana rice mill received $21 million in damages, despite being 40 miles from the coast and doing better financially in 2010 than in the previous three years. A northern Alabama road construction company 200 miles inland with no ties to business near the Gulf of Mexico, received $9.7 million, despite having its best year in 2010.

Since the settlement has no cap on potential damages, BP says they can be harmed permanently if they’re required to continue paying presumably fraudulent awards. Any business that feels it’s the subject of false claims and unethical administrators is entitled to seek protection from a court of law.

Source: Houston Chronicle, “BP says it’s paying ‘absurd’ claims under spill deal,” Harry R. Weber, Mar. 15, 2013


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