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Judge urged to let BP settlement payments continue

Michael Kunzelman, Associated Press

NEW ORLEANS (AP) -- A team of plaintiffs' lawyers urged a federal judge on Thursday to reject BP's bid to suspend all settlement payments to Gulf Coast businesses and residents who claim they lost money after the company's 2010 oil spill.

In a court filing, attorneys who brokered a multibillion-dollar settlement with BP PLC say the company hasn't provided any evidence that court-supervised claims administrator Patrick Juneau has improperly paid any claims or wrongfully implemented any policies.

U.S. District Judge Carl Barbier is scheduled to hear arguments Friday on BP's request to temporarily halt all settlement payments while former FBI Director Louis Freeh investigates alleged misconduct by a lawyer who helped administer the program. The lawyer, Lionel H. Sutton III, allegedly received a portion of settlement proceeds for claims he had referred to a law firm before joining Juneau's staff.

Sutton, who resigned on June 21, has denied the allegations. Sutton's wife, Christine Reitano, who also worked as a lawyer for the settlement program, had her contract terminated on June 26.

Barbier appointed Freeh as a "special master," authorizing him to conduct an independent investigation of the alleged misconduct and take a broader look at the program, after Juneau reported the allegations to the judge last month. BP argued in a court filing earlier this week that it shouldn't be required to take the risk that hundreds of millions of dollars in claims payments could be "tainted by fraud, corruption and malfeasance."

Stephen Herman and James Roy, two of the lead plaintiffs' attorneys in the litigation, said Juneau took "immediate and appropriate steps" in response to the misconduct allegations.

"However, BP has not identified a single claim that it contends was 'tainted' or otherwise affected by the alleged conflict of interest," they wrote.

Juneau's attorneys argue that BP's request for a suspension of payments is partially based on "premature speculation" and is "completely overbroad in its scope."

"To support its motion, BP draws wholly unwarranted conclusions and inferences related to the issues being investigated, and then asks the Court to conclude summarily that BP's negative theories will likely carry the day, before Special Master Freeh has spoken a word," they wrote in a separate court filing Thursday.

BP has argued that Barbier and Juneau have misinterpreted the settlement and forced the company to pay businesses for inflated and fictitious losses. The company appealed Barbier's decision to uphold Juneau's interpretation of settlement terms governing payments to businesses.

Herman and Roy said it's "simply not credible" to believe that Sutton or his wife could have improperly influenced the settlement program's system for paying business claims.

"The alleged misconduct, which appears to be limited and isolated in nature, has ceased, the investigation is underway, and the public will be informed of the results in due course," they wrote.

Freeh, who founded a consulting firm in 2007 after serving as FBI director from 1993 to 2001, hasn't indicated how long it will take to complete his investigation.