BP Sues Plaintiffs’ Lawyer, Alleging Thousands of ‘Phantom Clients’ and Fraud in Seafood Compensation Program

BP Sues Plaintiffs’ Lawyer, Alleging Thousands of ‘Phantom Clients’ and Fraud in Seafood Compensation Program

 BP has filed a civil lawsuit in federal district court in New Orleans against plaintiffs’ lawyer Mikal C. Watts, alleging that he fraudulently claimed to represent more than 40,000 deckhands who allegedly suffered economic injuries as a result of the Deepwater Horizon oil spill. BP asserted that it relied on Watts’ representations when it agreed to pay $2.3 billion to the Seafood Compensation Program, which was established to compensate those who earn their livelihood from Gulf waters and were directly affected by the spill. 

The lawsuit and related motions collectively seek to suspend the distribution of the remaining money in the Program fund and grant BP discovery and an evidentiary hearing “regarding the extent of Mr. Watts’ fraud and how much of the balance of the Seafood Compensation Program fund should be returned to BP as a result of it.” 

“The facts in this case shout fraud. Tens of thousands of Mikal Watts’ ‘clients’ have proved to be phantoms,” said Geoff Morrell, BP’s senior vice president for U.S. communications and external affairs. “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.” 

The lawsuit and related motions filed by BP concern the Seafood Compensation Program of the Deepwater Horizon Economic and Property Damages Settlement Agreement. BP alleged that Watts, a member of the plaintiffs’ steering committee from October 2010 until March 2013, claimed to represent more than 40,000 deckhands who allegedly suffered economic injuries as a result of the oil spill – more than 76 percent of the individual crew members projected to be potential claimants under the Seafood Compensation Program.

BP asserted that it has checked the Social Security numbers for Watts’ clients and discovered that more than half were phantoms. According to BP, for 40 percent, the Social Security number belonged to a living person other than the named claimant; for 13 percent, the Social Security number given was incomplete or a “dummy” number (e.g., a number such as 000-00-0001); for 5 percent, the Social Security number belonged to a dead person other than the named claimant.

According to BP, Watts ultimately filed only 648 individual crew claims under the Seafood Compensation Program, which was less than two percent of the more than 40,000 claimants he purported to represent. BP said that of those 648 claimants, only eight have been found eligible for payment by the Seafood Compensation Program, with 17 claims still pending.  

Robert McDuff, a lawyer for Watts, told the Times that BP’s actions were “another of a series of efforts to walk away from the settlement to which it agreed” and that Watts “never committed identity theft and did not defraud BP or anyone else.” Watts filed claims “in good faith that legitimate claims were being filed for real people,” the Times quoted McDuff as saying.

 Contact the author at smeyerow@optonline.net

For more information about LexisNexis products and solutions connect with us through our corporate site.