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Court to review approval of BP settlement

Federal panel to hear objections to multibillion-dollar deal

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U.S. Coast Guard crews spray water on BP’s Deepwater Horizon offshore oil rig in 2010. The blast killed 11 people and spurred a massive oil spill in the Gulf.

U.S. COAST GUARD Enlarge

NEW ORLEANS — A year ago, lawyers for BP and Gulf Coast residents and businesses took turns urging a federal judge to approve their settlement for compensating victims of the company’s massive 2010 oil spill.

Today, however, the one-time allies will be at odds when an appeals court hears objections to the multibillion-dollar deal.

Several months after U.S. District Judge Carl Barbier approved the settlement, BP started complaining that the judge and the court-appointed claims administrator were misinterpreting it.

The London-based oil giant is worried it could be forced to pay billions of dollars more for bogus or inflated claims by businesses.

Plaintiffs’ attorneys who brokered the deal want the 5th U.S. Circuit Court of Appeals to uphold the class-action settlement.

Payments have been made so far to more than 38,000 people and businesses for an estimated $3.7 billion. Tens of thousands more could file claims in the coming months.

The settlement doesn’t have a cap, but BP initially estimated that it would pay roughly $7.8 billion to resolve the claims. Later, as it started to challenge the business payouts, the company said it no longer could give a reliable estimate for how much the deal will cost.

The dispute centers on money for businesses, not individuals.

Awards are based on a comparison of revenues and expenses before and after the spill.

BP says a “policy decision” that claims administrator Patrick Juneau announced in January has allowed businesses to manipulate those figures in a way that leads to errors in calculating their actual lost profits.

Last month, a different 5th Circuit panel threw out Judge Barbier’s rulings on the dispute and ordered him to craft a “narrowly tailored” injunction that modifies the damage calculations.

The lead plaintiffs’ attorneys said the panel’s decision has no effect on the separate appeal of Judge Barbier’s December, 2012, approval of the settlement.

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