For the past year and a half I've been reporting on issues that have occurred with the BP oil spill multi-district litigation settlement and the Claims Office of the
Deepwater Horizon Economics Claims Center (DHECC).
From the beginning, I was approached by multiple sources that made claims of fraud and manipulation within the DHECC process. Most of the allegations involved issues that were instigated by members of the Plaintiff Steering Committee (PSC)....the lawyers chosen to represent
all the class claimants along the Gulf Coast in their lawsuit against BP.
Typically...frustratingly..... almost every one of my sources refused to go on the record and I've had a difficult time providing hard proof of the allegations.
My luck changed last week.
Allegations
There are two main issues I've been researching regarding the misconduct of specific PSC members:
1. The allegation that some PSC firms sold access to the claim "formula" before the claims office opened. In fact,
it now appears some of the PSC firms entered into joint venture agreements with other law firms around the Gulf Coast without disclosing the nature of their involvement to either the claimants or the claims office.
2. That members of the PSC had their own private claims expedited before other claimants who had filed ahead of them.
The Rules of the Settlement
Before I get to the evidence, I want
to point out again that
by order of Federal Judge Carl Barbier, the claims which come into the DHECC must be processed in the order they are received:
10. New claims may be filed during the Transition Process until such time as the Court Supervised Claims Program is established and operational as set forth above. New claims submitted shall be processed and evaluated in the order they are received. Non-deficient claims previously pending with the GCCF shall be processed and evaluated prior to any new claims filed after the creation of the Transition Process.
A Breach of the Settlement?
Last week, I received an unmarked envelope in the mail that contained
a series of email exchanges between employees of the Claims Office and other DHECC officials. Among those involved in the conversation included Claims Administrator Pat Juneau, court vendor Brown and Greer, and members of the PSC.
These emails clearly suggest that PSC members were not only expediting their own claims, they were actually issuing directives to the employees of the Claims Office. In fact, it looks like they were even holding back specific claims from being processed for political reasons.
Keep in mind the PSC lawyers are supposed to be representing all the claimants in this settlement process, not just their own personal clients.
Trying to get answers
A year ago in March of 2013, I filed a FOIA request with the DHECC in an effort to find out if any PSC members had expedited their own claims within the office. My request was denied:
A little help
After the denial, I drafted a personal letter to Judge Barbier asking him to redact claimants' private information and make the claim data public so the public could be assured the process was operating according to the standards he had ordered:
The DHECC - Examining the "Claims" - Part 1
Judge Barbier never responded to my letter.
I made contact today with the Claims Office and requested an interview with Claims Administrator Pat Juneau. My interview request was denied but he did agree to provide statements and facts to any questions I had. I responded by asking him (via email) if he was aware of any claims that may have been expedited in the office, particularly ones that were being represented by PSC attorneys. This was his response:
"The Deepwater Horizon Claims Center processes claims as they are submitted.
In the early stages of the process prior to the Fairness Hearing, and at the request of all parties, the Claims Administration Office had to select sample claims from each claim type that had the required and sufficient documentation to determine the accuracy of the claims process.
Following this sample selection for the Fairness Hearing, claims are processed as they are received. "
I replied and asked him exactly how many claims were used in the sample selection and what specific time period this sampling occurred. I didn't receive a response as of my publishing this post.
The Evidence
The first email exchange I received in the anonymous package is from PSC attorney Calvin Fayard to former Claims Office employee Christine Reitano with a carbon copy sent to Claims Administrator Pat Juneau.
ITEM 1:
Fayard email exchange request to expedite
As you can see the claim # is blacked out, so I am unable to identify what claim Fayard was asking to be expedited. But note that Fayard says "Pat mentioned for members of the PSC to send along claim numbers for claims that have been filed and
ARE LARGER (emphasis mine) claims that perhaps could be looked at more quickly." Juneau then responds and orders Reitano to contact Brown and Greer with a request to expedite Fayard's claim.
ITEM 2:
The second email goes even further into the process and features directives dictated to the Claims Office by two PSC members, Steve Herman and Jim Roy:
Email exchange with Herman and Roy directives
The first directive in this email states that the Claims Office should only expedite three of the PSC members requested claims, across two or more claim types.
The second directive in this email is very interesting in that it orders the Claims Office to review and expedite roughly 24 claims across different claim types for six of the law firms that were considered major objectors at the time:
Rick Kuykendall,
Sher Garner,
Smith Stag,
Farrel & Patel,
Brent Coon and
The Buzbee Law Firm.
It's not clear why Herman and Roy would have ordered the objectors' claims to be expedited along with their own but one possibility is that it could have been a tactic to eliminate these law firms' objector's status against the settlement.
I contacted three of the six objectors firms, two of them confirmed for me, off the record, that they were unaware their claims had been expedited.
One firm,
Brent Coon, confirmed, on the record, that he was unaware any of his claims had been expedited.
After looking at the email exchange, Coon also called my attention to the relevance of the 3rd directive which orders the Claims Office to cease and desist reviewing the "class representative" claims (i.e., Lake Eugenie). Apparently the PSC wanted to hold up these claims because if they were processed too early it would negate their ability to qualify as a "class rep claim". Coon suggested that if the PSC had those claims sequestered without the consent of the claimants, that could be as big an issue as having their own claims expedited.
And I would also note Odom's curious response to the Herman and Roy directives:
"There was a question regarding item 3 of your email from the accountants. Are they supposed to stop processing all claims for Class Representatives? I assume this would be all of the PSC? If so, what are the accountants supposed to tell the Class Representatives that have been calling them? What happens to the claims?"
Directives 1, 2 and 3 in this email show a pattern by the PSC to manipulate the claims process as defined by the court. The other interesting revelation of this email is that is demonstrates that the Claims Office was apparently taking directives from the PSC members with Pat Juneau's knowledge and consent. It's not the PSC's role to give directives to the Claims Office.
ITEM 3:
The third email exchange contains an actual matrix from Brown and Greer of 409 claims per law firm and claim type that were expedited previous to September 27, 2012:
Email exchange with expedited claim matrix up to Sept. 27, 2012
That's 409 claims that were expedited for both the PSC firms and objectors (with at least three of them unaware this had happened). There are obviously other law firms on the matrix but I have no idea why these particular law firms' claims were expedited.
In the email exchange, Bill Atkinson of Brown and Greer states that they didn't know which three claims to expedite for each objector (per the PSC request) so they just randomly chose the objectors' claims. This would seem to validate the assertion by the objectors I spoke with that they had no idea that their claims had been expedited.
Sampling?
I suppose it is possible that these claims mentioned in the emails were expedited as part of the sampling process but that doesn't seem likely. Please note I did not show Juneau the emails. Had he agreed to the interview I would have shown them to him to get his immediate response. I point this out to note that his response was not directly to the emails but the general question of whether or not claims, particularly PSC member's claims, had been expedited. Also note that he never actually said claims had been expedited but his answer suggests some were for the sampling process alone.
The claims in these emails don't appear to be part of a sampling process and there is no mention of sampling associated with them in the email chain. There are a number of other reasons the sampling suggestion wouldn't make sense. I contacted two lawyers familiar with MDL claims processes (not associated with the DHECC) and they brought up the following points:
- The entire reason a Claims Administrator is appointed is to avoid having the PSC members calling the shots within the office. The Administrator is supposed to be an unbiased arbitrator in the MDL process. The fact that they selectively chose PSC firms' and objectors' claims to sample would not make sense and it's highly unlikely that BP would have agreed to this. I suppose we'll find out if BP people read this post.
- The whole reason for conducting a sample in the first place is questionable considering Feinberg had already been processing claims in the GCCF for some time.
- Why were over 400 claims used for a sampling process and why were they specifically chosen from PSC filings? It would make more sense to pull the first 10 to 20 claims from each claim type. Plus, the PSC samples were most likely all accurate as they understood the filing requirements better than most. This would tilt the sampling process negating the reason to conduct one in the first place. The whole purpose of running a sample would be to discover potential problems.
- Juneau suggested the sample claims were pulled "in the early stages of the process" before the fairness hearing. This fairness hearing did occur approximately one month (November 2012) after these emails exchanges but it seems unlikely they would be sampling claims in the 11th hour, four months after the Claims Office opened for business in June of 2012. Also, if there was a sample that occurred, you would think Juneau should have reported the results in a spreadsheet to the Court and especially in preparation for the fairness hearing. I haven't been able to find any such report (if anyone is aware of that report please contact me).
- Why did Calvin Fayard specify that the PSC members were allowed to expedite "larger" claims? If you were conducting an accurate sample, it seems you would want all type of claims across the spectrum.
If all these claims were expedited for sampling purposes, the sampling process itself needs to be questioned.
A Blind Eye?
The revelations provided in the emails are not a surprise to me. What is a surprise to me is that Special Master Louis Freeh hasn't addressed these issues. He must have this email chain as he obtained Christine Reitano and David Odom's DHECC email databases during his investigation. I must assume he is aware of the issues and he recognizes that they are a clear violation of the terms of the settlement.
In my opinion, these revelations are much more serious than the single claim, Thonn, that Freeh focused on
in his first report. I believe
the issue he mentioned on page 60 of the first report is much more serious than the Thonn claim as well because it suggests actual fraud occurred in respect to the seafood claims....
allegedly by an unnamed PSC firm.
In fact, expediting a claim (for the Andry Law Firm) is exactly the charge Freeh levied against Lionel Sutton. Here we have 409 claims that were expedited, many for PSC members. Is this not worthy of investigation?
The possibility for selective prosecution is of great concern here, as is the overall fiduciary duty to the class claimants by the PSC attorneys. I believe these issues need to be addressed and explained by Louis Freeh, the PSC attorneys, Pat Juneau and in particular Judge Carl Barbier....they simply can't ignore this.
The Real Problem
The processing of claims has recently slowed to a near halt. Many of the claimants who properly filed claims are now being asked to go back and meet new requirements that didn't exist at the beginning of the program. IF PSC attorneys got their own clients paid ahead of other class claimants it is a clear fiduciary breach under MDL standards.
Many of the hard working people of the Gulf Coast...the shrimpers, the oyster fishermen....the people who have suffered the most from this disaster have yet to receive compensation while it appears these PSC attorneys have paid themselves first. I'm going to introduce AZ readers to some of these folks down the road.
Contrary to
Mr. LeCesne's opinion....I believe this is a very big deal.
Attribution note: This website is under a Creative Commons license and any reference to this post and its material should follow the CC guidelines.
The entire email exchange referenced in this post can also be obtained at the following link but if republished it must be attributed to the American Zombie blog and/or "independent, investigative journalist, Jason Brad Berry":
http://www.scribd.com/doc/211748455/DHECC-Master-Email-Exchange-regarding-expedited-claims-of-PSC