NEW ORLEANS -- BP’s toxic battle to undo its expensive oil spill damage settlement may have hit a new low on Tuesday.
Just hours after plaintiffs’ attorneys filed a motion in federal court saying that BP misled the court about the true nature of business claims the company complained were improperly paid, the oil giant took the fight to a new level by accusing a plaintiffs’ lawyer of fraud and attempting to shut down the previously unquestioned seafood compensation program.
BP’s separate lawsuit filed Tuesday against Texas lawyer Mikal Watts accuses the well-known and controversial Democratic Party stalwart of putting forth 40,000 bogus seafood industry claims. More significantly, BP is using the lawsuit to argue that its second round of payments to fishermen should be suspended while their fraud accusations are investigated.
Over the last year, as BP has argued that the court-appointed claims administrator was “hijacking” its settlement, it has focused on business claims. Law firms, tech companies, accountants and construction claimants have had their losses questioned at every turn.
But the seafood industry workers and companies that were on the front lines of the spill have not had their payments delayed. Until now.
BP is now blaming Watts, whose Texas offices were raided by the Secret Service and was forced to resign from the plaintiffs’ legal steering committee last spring, for ever agreeing to set aside $2.3 billion for seafood claims in the first place.
BP says only eight of Watts’ 40,000 clients were actually found eligible for payment. The company says $1 billion went to all seafood claimants under a first round of payments. Under the settlement, a second round was supposed to disburse the remaining $1.3 billion to the approved seafood claimants. But now, BP wants to stop any further payments until it can be determined how much of the seafood compensation fund was set aside based on Watts’ alleged fraud.
“Tens of thousands of Mikal Watts’ ‘clients’ have proved to be phantoms,” BP Vice President Geoff Morrell said. “Mr. Watts’ false representations improperly inflated the value of potential claims against the Seafood Compensation Program and resulted in an overblown $2.3 billion fund. Under these circumstances, BP is not going to stand idly by and allow payments to proceed without first addressing the fraudulent conduct.”
Lead plaintiffs' attorneys Steve Herman and Jim Roy called BP's argument "absurd" and "part of its continuing effort to rewrite history and the settlement program."
They said BP is holding the whole $2.3 billion seafood program "hostage" over deckhands that Watts purportedly represented, even though only $130 million of the settlement was ever set aside for deckhand payments.
"The notion that the number of deckhands was the driving factor during negotiations in determining the overall amount is absurd," Herman and Roy said. "The figure was determined by broad, government-provided economic data under the supervision of a U.S. Magistrate and Court-appointed neutral.
“Further, it is common knowledge that deckhands do not maintain as extensive financial records as other types of claimants," they added. "As a result, multiple extensive protections were put in place to ensure that only eligible deckhands would be compensated."