In a classic example of “double-dipping,” oil refiner Phillips 66 has paid $2 million to settle allegations it helped itself to a state fund for cleaning up damage from leaking fuel storage tanks even though it had insurance to cover the cleanups. Phillips 66 is among three major oil companies accused of the practice of double-dipping by Utah. Chevron Corp. has paid the state $1.8 million, and a similar lawsuit is pending against BP Amoco.
Phillips claims that it didn’t actually double-dip on insurance claims and said that it inherited the dispute from predecessor company ConocoPhillips. The company “denies that it took an insurance payment for a clean-up” financed by Utah’s Petroleum Storage Tank Fund. Even though the company settled the claim, Janet D. Grothe, senior adviser for health, safety and environment for Houston-based Phillips 66, made this claim of innocence.
The fact oil companies had insurance coverage for underground tank spills, according to a state official, means they never should have turned to the state fund. Phillips was said to have relied on the fund for cleanups at 82 service stations. Therron Blatter, a branch manager for underground storage tanks at the Utah Division of Environmental Response and Remediation, stated:
Consistently, these guys were saying, “no, we don’t have any insurance.” Clearly, they did have the insurance.
Many oil companies reached settlements with insurance companies more than a decade ago that provided coverage for leaking storage tanks. This, according to Blatter, triggered a series of lawsuits by regulators across the country who said the companies had helped themselves to benefits from state funds. He says that Utah law provides no fund coverage for cleanups that are independently insured, even though the oil companies are paying into the state fund. Blatter says that the companies pay Utah’s Petroleum Storage Tank Fund $50 to $150 per tank depending on the tank’s size, plus 1/2 cent for every gallon of gas sold from it.
Source: Insurance Journal
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