Judge orders claims administrator to suspend BP settlement payments to some businesses

A federal judge on Thursday ordered the administrator of a multibillion-dollar settlement over BP's 2010 Gulf oil spill to immediately suspend making settlement offers and payments to some businesses that claim the company's 2010 oil spill cost them money.

U.S. District Carl Barbier issued his order a day after an appeals court reversed his rulings in a dispute between BP and a team of private plaintiffs' attorneys over the settlement's formula for compensating businesses.

BP argued that claims administrator Patrick Juneau's interpretation of the settlement could have forced it to pay billions of dollars for bogus or inflated business claims. Barbier had upheld Juneau's interpretation.

Barbier said Thursday's order applies to any business claims in which the "matching of revenues and expenses is an issue," but he didn't specify how many claimants could be affected.

In its ruling Wednesday, a divided three-judge panel from the 5th U.S Circuit Court of Appeals said BP has consistently argued that the settlement's complex formula for compensating businesses was intended to cover "real economic losses, not artificial losses that appear only from the timing of cash flows."

Barbier ordered Juneau to continue processing all other claims and appeals of settlement offers.

"Staying the processing or payment of all (business) claims would be overly broad and unnecessary as applied to those claims for which matching of revenues and expenses is not an issue," he wrote.

The 5th Circuit panel directed Barbier to craft a "narrowly-tailored injunction that allows the time necessary for deliberate reconsideration of these significant issues."

Barbier instructed attorneys on both sides of the dispute to provide him by Wednesday with proposed orders that comply with the 5th Circuit's ruling.

In the panel's majority opinion, Judge Edith Brown Clement said Barbier's injunction should ensure that claims for losses that didn't result from the Deepwater Horizon disaster shouldn't be paid "until this case is fully heard and decided through the judicial process."