NEW YORK- Ken­neth Fein­berg, the for­mer­ly free­wheel­ing ad­min­is­tra­tor of BP Plc's fund to com­pen­sate vic­tims of last year's oil spill, could be forced to re­vamp dra­mat­i­cal­ly how he han­dles claims now that the fund has come un­der the ju­ris­dic­tion of a fed­er­al judge in New Or­leans. A rul­ing last week by US Dis­trict Judge Carl Bar­bi­er that Fein­berg stop telling po­ten­tial claimants that he is "com­plete­ly in­de­pen­dent" of BP brings Fein­berg and the fund-cre­at­ed in the wake of the largest oil spill in US his­to­ry-un­der ju­di­cial over­sight for the first time.

Be­yond the im­me­di­ate di­rec­tive about how the fund de­scribes it­self, Bar­bi­er's de­ci­sion al­so opens the door for more changes to how the fund op­er­ates, ac­cord­ing to ex­perts in mass torts and le­gal ethics. Specif­i­cal­ly, it could lead to the rene­go­ti­a­tion or un­do­ing of set­tled claims, on­go­ing court in­ter­ven­tion in the fund's op­er­a­tions, and more claimants seek­ing le­gal rep­re­sen­ta­tion. "It's a sig­nif­i­cant as­ser­tion of over­sight, if not con­trol, of the claims process by the judge," said David Lo­gan, dean of Roger Williams Uni­ver­si­ty School of Law in Bris­tol, Rhode Is­land. "There is now a ques­tion mark loom­ing over the ac­cu­ra­cy of the de­ci­sions made up to this point by the (fund) and over how it will work mov­ing for­ward."

The un­prece­dent­ed $20 bil­lion Gulf Coast Claims Fa­cil­i­ty (GC­CF) was set up af­ter a meet­ing be­tween BP and Pres­i­dent Barack Oba­ma last June. The White House said at the time that the claims process would be in­de­pen­dent and Oba­ma tapped Fein­berg, who ran the 9/11 vic­tims' com­pen­sa­tion fund, to ad­min­is­ter it. BP pays $850,000 a month to Fein­berg's Wash­ing­ton, DC, firm, Fein­berg Rozen, for his ser­vices. Fein­berg, who has pro­mot­ed his claims process as faster and less cost­ly than lit­i­ga­tion, has paid out more than 250,000 awards to in­di­vid­u­als and busi­ness­es worth more than $3.36 bil­lion. Of those, more than 86,000 claimants signed re­leas­es say­ing they will not sue BP or its part­ners. Un­til last week's rul­ing by Bar­bi­er, who is over­see­ing hun­dreds of spill-re­lat­ed law­suits against BP, Fein­berg did not an­swer to any court or gov­ern­ment agency.

To be sure, some schol­ars and prac­ti­tion­ers are down­play­ing the po­ten­tial im­pact of Bar­bi­er's or­der and say the court is un­like­ly to in­ter­vene fur­ther in the fund's op­er­a­tions. In his rul­ing, Bar­bi­er called his own or­der a "nar­row­ly fo­cused rem­e­dy" that "will not un­du­ly bur­den BP's, Mr. Fein­berg's and the GC­CF's abil­i­ty to speak on their own be­half." But sev­er­al aca­d­e­mics and plain­tiffs' at­tor­neys said that, based on Bar­bi­er's rul­ing, set­tle­ments al­ready made with the fund could be reeval­u­at­ed. A court could in­val­i­date the agree­ments or al­low them to be rene­go­ti­at­ed if claimants can prove there was de­cep­tion on the part of the fund, said Mon­roe Freed­man, a pro­fes­sor at Hof­s­tra Uni­ver­si­ty School of Law and con­trib­u­tor to the Le­gal Ethics Fo­rum, a pop­u­lar le­gal blog.

The court's opin­ion makes it clear that Fein­berg act­ed "mis­lead­ing­ly, at best," by say­ing he was in­de­pen­dent of BP, Freed­man said. "As a re­sult, tens of thou­sands of claimants who were ef­fec­tive­ly de­fraud­ed will have the op­por­tu­ni­ty to open the set­tle­ments they en­tered in­to." In an e-mail, BP said, "We do not be­lieve that there is any ba­sis to un­do or chal­lenge the set­tle­ments that have been con­clud­ed." Fein­berg de­clined to com­ment. Kevin Dean, an at­tor­ney with the plain­tiffs' firm Mot­ley Rice in Mount Pleas­ant, South Car­oli­na, said he has reached out to clients who had ac­cept­ed set­tle­ments and giv­en up the right to sue to in­form them of the judge's rul­ing.

He said his clients were forced to ac­cept these set­tle­ments un­der fi­nan­cial duress and were not in­formed of their rights be­fore they signed le­gal re­leas­es. If the court takes no fur­ther ac­tion in the next 30 to 60 days, Dean said he will con­fer again with his clients to ex­plore their le­gal op­tions. "My firm be­lieves that clients were forced fi­nan­cial­ly to take an ill-ad­vised set­tle­ment, and that that's a vi­o­la­tion of the Oil Pol­lu­tion Act." The Oil Pol­lu­tion Act of 1990 re­quires the re­spon­si­ble par­ty-in this case, BP-to set up a claims fund to com­pen­sate vic­tims, but does not spec­i­fy how the fund should re­solve claims and makes no men­tion of claimants sign­ing le­gal re­leas­es giv­ing up the right to sue.

Now that Bar­bi­er has brought the fund un­der his ju­ris­dic­tion in the East­ern Dis­trict of Louisiana, he could rule on whether the fund can ask claimants to sign away their le­gal rights. And he could ap­point a spe­cial mas­ter to su­per­vise the fund's oral and writ­ten com­mu­ni­ca­tions, in­clud­ing re­lease forms. In ad­di­tion, more claimants or would-be claimants could seek le­gal rep­re­sen­ta­tion for their deal­ings with the fund. As of this week, few­er than three per cent of those fil­ing claims had their own lawyers. Plain­tiffs' at­tor­ney Daniel Bec­nel, who heads a 21-lawyer firm based in Re­serve, Louisiana, said his firm has tak­en on hun­dreds of new clients in the days fol­low­ing Bar­bi­er's rul­ing-most of them look­ing for help bar­gain­ing with the claims fund.

Claimants now un­der­stand that the process is ad­ver­sar­i­al, ac­cord­ing to By­ron Sti­er, a pro­fes­sor of mass tort lit­i­ga­tion at South­west­ern Law School in Los An­ge­les. "It's much more one of hag­gling and ne­go­ti­a­tion than of pro­cess­ing pa­per­work and ten­der­ing con­tracts," Sti­er said. "It's now clear that claimants need coun­sel to de­ter­mine if the fund is the right path for them." Bar­bi­er has asked plain­tiffs and de­fence in the con­sol­i­dat­ed case against BP to sub­mit briefs by to­day on the claim fund's com­pli­ance with the Oil Pol­lu­tion Act.

(Reuters Le­gal)