BP claims new findings of 'systemic fraud' in settlement program, asks for temporary stoppage for third time

By Kyle Barnett | Aug 6, 2013

NEW ORLEANS – On Monday BP filed documents stating they have proof of “systemic fraud” within the settlement program that provides payments to those harmed by the 2010 oil spill.

In their request to seek a temporary stop to all payments under the program, which is the second such request within only a few weeks, BP said they had been provided further information concerning fraud in the program that focuses on two senior attorneys working in the Mobile, Ala., office of the Court Supervised Settlement Program (CSSP). The attorneys in question are both identified in court documents as employees of Mobile-based law firm BrownGreer PLC.

BP said they learned of the alleged fraud due to an anonymous tip to a fraud hotline set up last month. The caller accused one of the employees of granting claims to family members in exchange for a portion of the paid claim and that one of the kickbacks was worth $10,000.

In evidence provided to the court, the CSSP said two Mobile employees have been temporarily suspended and that one of the employees was found to have improperly accessed claims files while the other employee processed six claims that have had a fraud stop put on them until an investigation can be completed.

BP also claims CSSP knew of conflicts of interest that appeals panelist appointees had who allegedly billed time to CSSP through their law firms while those same law firms represented claims that appeared in front of the appeals panel. BP claims the CSSP not disclose this issue until approached by BP with evidence of misconduct.

The caller to the hotline also allegedly stated that fraud is widespread in the the office. According to BP's calculations the Mobile CSSP office's claims approval rate is 86 percent, whereas the approval rates of other offices are only 27 percent.

In a July 19 hearing BP last requested a temporary stop due to fraud in the settlement program. In that instance they cited an investigation into two New Orleans attorneys who were terminated by Claims Administrator Patrick Juneau for allegedly giving preference to claims from which they or their associates might benefit financially.

Despite an ongoing investigation into the matter by former FBI Director Louis Freeh, U.S. Federal Judge Carl Barbier did not grant the stoppage because BP could not sufficiently prove they had been harmed. BP claims with the new evidence they can now provide proof to the court that they have in fact been harmed.

In the latest filing BP said, “These new incidents demonstrate a fundamental lack of oversight or internal controls. When BP first asked for a preliminary injunction, it had compelling evidence of one scheme only. Now, the evidence shows the existence of 'a systemic or widespread problem' with the CSSP.”

BP’s motion claims that any delay caused by granting the temporary stoppage would outweigh the potential harm of fraudulent payments and that it “sends a clear message to future litigants that misconduct in settlement programs will not be tolerated.”

Another request for temporary stop to only business economic loss claims process came in April and concerned the legal interpretation of the settlement agreement. BP alleged Claims Administrator Patrick Juneau misinterpreted the settlement agreement allowing inflated damages to be paid as well as damages to parties who could not show any economic harm during the oil spill. Barbier denied that motion, which BP appealed to the U.S. Court of Appeals for the Fifth Circuit in early July and are still awaiting a ruling.

According to the latest filing, BP is currently making $93 million in payments per week through the settlement program. Altogether they have paid out over $4 billion since the inception of the settlement program.

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