Administering BP claims settlement is tough work but worth it, lawyer says

Advocate staff file photo by TRAVIS SPRADLING -- Patrick Juneau Show caption
Advocate staff file photo by TRAVIS SPRADLING -- Patrick Juneau

Administrator touts facility’s efficiency

Patrick Juneau was leaving church in Lafayette recently when a woman approached him.

“She told me that she was saying the rosary for me,” said Juneau, who oversees BP’s multibillion-dollar settlement to resolve hundreds of thousands of claims for losses tied to the 2010 Gulf of Mexico oil spill.

“I said, ‘Say three more.’ ”

Over the past 19 months, Juneau has approved almost $5 billion in payments to Gulf Coast businesses and residents affected by the disaster, which killed 11 men and spilled 4.2 million barrels of heavy crude into the Gulf.

But as the payments mounted, so did BP’s offensive targeting Juneau and his operation. In court filings and full-page ads in national newspapers, attorneys for the British oil giant have criticized Juneau’s oversight of the program’s top executives, several of whom have been fired or have resigned amid controversy. They also claim his generous view of the settlement has resulted in big checks for claimants who suffered no losses from the spill.

In short, the 76-year-old lawyer has become BP’s chief political punching bag as it works to shift the public’s focus from the environmental calamity to what the company claims are opportunistic claimants and trial lawyers seeking an easy payday after the accident.

Speaking publicly for the first time in months, Juneau said last week that after a career mediating thousands of settlements across the country, the BP deal has become a backbreaker. Still, it will take more than a little cage-rattling to run him off.

“Challenging is a very polite word. It’s challenging beyond my belief,” he said. “I had no idea that we would kind of be in the environment we are right now, but when all that’s said and done, it’s a job, and somebody’s got to do this job.”

The multibillion-dollar settlement deal was reached by attorneys for the British oil giant and plaintiff lawyers in 2012.

Both sides praised the agreement at the time, but BP’s outlook quickly changed, as attorneys for the company began taking issue with Juneau’s interpretation of its terms. The settlement treats all claimants who live in certain areas along the Gulf the same way if they can show a loss of income after the disaster, regardless of the reason for that loss. BP has argued that businesses should not be compensated unless they can show the oil spill caused their losses.

In court filings, U.S. District Judge Carl Barbier and plaintiff attorneys acknowledged that settlement claims could, at times, mean unharmed plaintiffs are getting money. But they said BP knew as much when it agreed to the deal, the purpose of which was to avoid having to litigate each case individually.

Avoiding distraction

Throughout the legal back-and-forth between attorneys for BP and the plaintiffs, Juneau has mostly kept quiet, saying he’d rather let his office’s track record speak for itself. And, he said, he’s not letting the chatter distract him from doing his job, which he plans to see through until the end.

Juneau, a former president of the Louisiana Association of Defense Counsel, has mediated high-profile litigation before, including the settlement that resulted from a 1987 railcar explosion in Gentilly; product liability cases against the manufacturers of the heartburn drug Propulsid and the painkiller Vioxx; and lawsuits in California against car manufacturer Toyota over the sudden acceleration of its vehicles.

Still, he admits he’s grown tired of all the distractions and says everyone involved needs to “get focused on the implementation of this agreement.”

“I guess (I) could say, ‘I don’t need this, I’ll get out of here and have a beer on my porch in southwest Louisiana,’ ” he said. “But I’ve got an obligation here.”

Since it opened in June 2012, the claims facility has processed more than 262,500 claim forms, federal court documents show. As of Jan. 10, Juneau’s office had issued more than 62,100 eligibility notices — affirming the validity of the claims — with payment offers totaling almost $5 billion. Nearly 54,800 claims were paid, adding up to more than $3.8 billion.

The checks already cut are in addition to $400 million that was in the pipeline when Juneau took over from Kenneth Feinberg, whose earlier claims facility paid out $6.1 billion to more than 221,000 claimants.

“That’s a remarkable accomplishment if you look at the year and a half (it’s been open), and we’ve got a long way to go on this thing,” Juneau said about his program’s scorecard. “We need to get focused on the task; we need to get focused on getting this thing done.”

Louisiana residents account for 26 percent of the overall damage claims, second to Florida.

BP initially estimated that the settlement would cost it about $7.8 billion. The company has since adjusted that figure, saying in regulatory filings that it is expected to hit $9.2 billion.

The class-action settlement, preliminarily approved by Barbier in May 2012, aimed to avoid piecemeal litigation by resolving hundreds of thousands of claims for economic damages from what is generally considered the worst environmental disaster in U.S. history.

Misinterpretation claimed

In March, BP sought an injunction from Barbier, contending that Juneau’s staff was misinterpreting the settlement — in particular, the formula for claimants to match revenue with expenses in showing post-spill losses. Barbier denied that request, ruling that BP had already acknowledged that “class settlement payments do not always perfectly match economic losses in every instance.”

BP’s lawyers then went to the 5th U.S. Circuit Court of Appeals, complaining to a three-judge panel in July that the settlement program was paying out “fictitious, exaggerated and excessive awards.” The court in October directed Barbier to temporarily stay some business claims, and review some aspects of the complex formula used for calculating settlements, and develop a “narrowly tailored injunction that allows the time necessary for deliberate reconsideration of these significant issues.”

In December, the same appellate panel found that Barbier “erred by not considering (BP’s) arguments on causation.” That led Barbier to temporarily suspend payment of all business claims until the issue of matching claims to losses could be resolved — a process that Juneau said was nearing completion last week.

Last month, a separate three-judge panel of the appeals court, ruling on a much wider issue, upheld Barbier’s approval of the entire settlement. BP has since requested a rehearing on that issue before all the judges of the appeals court.

Regardless of the legal disputes, Juneau said, his role is simply to “get claims paid that should be paid, don’t pay claims that shouldn’t be paid and get this job over with.”

But his office has not been without controversy.

Last year, Barbier named former FBI Director Louis Freeh to investigate the program’s operations after a lawyer on Juneau’s staff, Lionel “Tiger” Sutton III, resigned amid allegations that he got money from a claim he referred to a law firm before joining the claims center.

In a full-page ad that ran in December in three national newspapers, BP contended that “half the management” at Juneau’s claims facility had quit or were fired since it opened in June 2012.

“BP cannot be expected to stand by while the facility continues to operate slowly, inefficiently, exposed to the risk of fraud, and in a fashion that is error-prone and tone-deaf to ethical concerns,” Kevin Downey, an attorney for BP, wrote to Freeh last month, requesting access to materials used as part of his investigation.

In reply, an attorney for Juneau, Phillip Wittmann, said that assertion “lacks any credibility given the efforts BP has undertaken to completely stop the processing and payment of claims.”

Improper behavior

Freeh has issued two reports so far. Although both absolved Juneau of participating in wrongdoing, Freeh found that key executives and senior lawyers in Juneau’s office engaged in improper, unethical and possibly criminal behavior.

Most recently, Freeh disclosed in his second report last month that David Duval, a former claim appeals coordinator who is the son of a sitting federal judge in New Orleans, resigned in October after being confronted with allegations that he forwarded a confidential work email to his cousin, a partner at a Houma law firm that represented businesses and individuals affected by the spill.

“Any allegation or report of misconduct that’s been reported to me, I addressed it,” Juneau said.

Although he wouldn’t discuss the resignations in detail, Juneau defended his staff overall, and noted that he has about three dozen people working for him now.

“We’ve got some hard-working people here busting their tail, some great people who have done a monumental job in bringing this program to where it is, and I just ... I won’t be drawn in and should not be drawn into anything other than accomplishing my job,” he said.