NEW ORLEANS – BP has asked the U.S. Supreme Court to intervene after the U.S. Fifth Circuit Court Appeals disallowed maintaining a temporary stay in claims payouts following allegations of fraud within the 2010 Deepwater Horizon oil spill claims process.
BP has already paid out an estimated $3.7 billion to more than 38,000 claimants. The company successfully received a stay on the claims process in December following several revelations that businesses who were not actually harmed by the oil spill were receiving claims. However, the stay was lifted last week by U.S. District Judge Carl Barbier and applies to 30,000 further business claims that will begin being processed again today albeit under a different funding program that is estimated to save BP millions and root out claims by companies who cannot provide proof of injury.
BP’s emergency request to the U.S. Supreme Court includes again staying payments for business claims, many of which they claim are not related to actual losses.
In addition to bringing attention to payments to businesses that do not appear to have lost revenue during the oil spill, critics have made several claims that the payout process as a whole is open to fraud.
Previous fraud accusations in the claims process include a report by Special Master Louis Freeh that linked a $370,000 commercial shrimper's claim Casey Thonn to a $40,000 referral fee allegedly received by Court Supervised Settlement Program (CSSP) attorney Lionel Sutton. In the report, Freeh found that the Andry Lerner law firm had provided the referral fee to Sutton in what he said was a system that amount to “money laundering,” which included funneling the payment to a water reclamation company. Although Sutton was found not to have helped the claim get settled that payout was later ordered to be returned after Thonn was found to have based it on earnings he never filed with the Internal Revenue Service.
In addition to the Thonn case, it was determined that Mikal Watts, a San Antonio attorney who at one time claimed to have represented over 44,000 claimants, was found to have allegedly faked social security numbers of at least half of the claimants on his list and even listed a number of deceased claimants.
Watts’ claims comprised 76 percent of all claims against the BP Seafood Fund for which the oil giant had set aside $2.3 billion, but only 648 of those were pursued. A separate stay was granted concerning Watts’ claimants after he revealed he was under investigation by federal authorities.
Following allegations of systemic fraud, BP set up a hotline in which they quickly received a tip that senior attorneys working in the Mobile, Ala. CSSP office were allegedly defrauding the claims process. After evidence was provided to the court, the CSSP said two Mobile employees were temporarily suspended and that one of the employees was found to have improperly accessed claims files while the other employee processed six claims that had a fraud stop put on them until an investigation can be completed.
The anonymous caller to the hotline alleged that CSSP employees were taking kickbacks in exchange for granting claims to family members.