Firm challenges hold on processing its BP claims

[August 16, 2013]  NEW ORLEANS (AP) -- A New Orleans law firm asked a federal judge on Thursday to lift a hold on processing BP oil spill claims for hundreds of its clients while former FBI Director Louis Freeh investigates allegations of misconduct by an attorney who referred a client to the firm.

A court filing by Andry Lerner LLC said there is no evidence that Lionel Sutton III was paid any money to influence the firm's claims while he worked as a staff attorney for claims administrator Patrick Juneau's office.

U.S. District Judge Carl Barbier appointed Freeh and his consulting firm to investigate allegations that Sutton received a portion of settlement proceeds for claims he referred to Andry Lerner before joining Juneau's staff.

In June, Barbier imposed a temporary hold on more than 700 claims for nearly 500 of Andry Lerner's clients. During a hearing in July, a lawyer representing Andy Lerner asked the judge to lift the hold. Barbier declined but said he had instructed Freeh to "expedite" his investigation of how claims by Andy Lerner clients were handled.

The firm renewed its request on Thursday. Its attorney, James Cobb, said it appears Freeh's probe is limited to the claims of the one client that Sutton referred to the firm. Meanwhile, Cobb added, hundreds of others whose claims are on hold have paid a steep financial price even though they did nothing wrong.

"This financial devastation must be immediately halted," Cobb wrote. "More than sufficient time has elapsed to validate Andry Lerner's consistent contention that there is no evidence of a corrupt quid pro quo by which Sutton was paid any money to influence the law firm's clients' claims."

Cobb said neither Andry Lerner nor John Andry, one of the firm's principals, paid the referral fee to Sutton. Instead, he wrote, it was part of a "separate obligation" between Sutton and Glen Lerner, another firm principal.

"Mr. Lerner felt compelled to pay after numerous representations by Mr. Sutton there was no issue because Mr. Sutton had disclosed to (Juneau) the fact that he was receiving the payments," Cobb wrote.

Sutton, who has denied the allegations, resigned from his job at the settlement program in June. His wife, Christine Reitano, who also worked as a lawyer on Juneau's staff, was fired. She has demanded to be reinstated, saying she didn't do anything wrong.

In a statement Thursday, Andry Lerner accused BP of "waging a nasty, untruthful campaign to renege on its agreement to the people of the Gulf Coast."

"Andry Lerner is confident that (Freeh) will find no wrongdoing by the law firm and will conclude that the overall claims process is administered professionally and conscientiously," it said.

BP has asked Barbier to temporarily suspend all claims payments until Freeh completes his investigation. The company said it uncovered new allegations of fraud and conflicts of interest inside the settlement program after the allegations involving Sutton surfaced.

[Associated Press; By MICHAEL KUNZELMAN]

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