Audit: Vast Majority of BP Oil Spill Claims Payments Are Correct

Last week, results of a third-party audit of the oil spill settlement program were released which showed the settlement program has correctly processed 99.5 percent of claims. According to the Times-Picayune, the audit concluded the program is “well-designed and appropriate” and made no major recommendations for improvement.

In its attempts to degrade the Program and those who take part in it, BP has long tried to say that the settlement program is grossly overpaying claims, and this audit finally sets the record straight.  The audit was conducted by Chicago-based McGladrey LLP.

The newspaper also reported that, in late October, BP asked a federal judge in New Orleans to force claims administrator Patrick Juneau to turn over the audit, which it said had ballooned in cost from $1.6 million to $14 million. The British oil giant accused Juneau of purposely hiding the results.

Juneau released a statement saying that the audit reinforces the program is running properly. “I am very grateful to all of those people who worked so hard to make this happen. It speaks volumes as to what has been accomplished to date,” Juneau said.

BP continues to look like the sore loser in the legal back-and-forth that has dragged out since it tried to back out of the Program it helped to create.  The Settlement Program was designed to return funds to businesses and individuals who were economically harmed by the oil spill.  BP has been found grossly negligent and squarely at fault for the oil spill disaster.

More from the Times-Picayune:

McGladrey examined 1,852 claims out of 53,512 submitted to the court supervised settlement program since it was approved in 2012.

The total value of the reviewed claims was $741 million. More than half of the claims were for individual or failed business losses.

  • Of the 1,852 claims reviewed, 122 had calculation errors resulting in about $2.1 million in miscalculated awards.
  • Within the group of claims reviewed, the settlement program had an error rate of about 0.3 percent.
  • When the findings were applied to the larger group of claims, the error rate edged up only slightly to 0.5 percent. That translates to about $17.5 million in calculation errors for more than $3.7 billion in total awards.

In a filing with the court, McGladrey auditors said an error rate of less than 1 percent was “a significant accomplishment” given the size and complexity of the claims process.

“By any objective measure, these error rates are extremely low,” the audit report states.

In a statement, lead plaintiffs’ attorneys Steve Herman and Jim Roy, echoed the auditor’s comments.

“BP wanted to see the McGladrey audit, and here it is: the CSSP gets claims right 99.5 percent of the time,” Herman and Roy said. That ‘is a significant accomplishment,’ as stated by the Claims Program’s independent audit committee.”

The McGladrey audit is the second review of the claims program’s internal operations.

A previous audit initiated by Juneau and completed by Minneapolis-based Clifton Larson Allen last year found the program was running properly.

BP objected to the results of that audit, and in late 2013 asked for a second audit by a different auditor. McGladrey was hired in October 2013 to complete the second audit.

A separate, court-ordered investigation into the program found that isolated cases of claims fraud did not impact the integrity of the claims process as a whole.

Investigators said payments would be able to move forward fairly and efficiently under Juneau’s leadership.


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