In the aftermath of the Deepwater Horizon disaster in the Gulf of Mexico, a settlement fund was established with the goal of fairly compensating victims. In the intervening years, however, a cadre of personal injury trial lawyers, administrators and fraudsters have abused this system for their own personal gain – tarnishing our legal system and further hurting deserving victims.
Nearly five years after the disaster, Louisiana Lawsuit Abuse Watch took a close look at where all the money from the BP settlement is going and asked the critical question: Who is benefiting most from the unprecedented class action settlement set up to compensate victims in the aftermath of the 2010 oil spill? What we found was startling!
Although many know that class action lawsuits are notorious for producing highly lucrative legal fees, the lawyers and administrators profiting from the Gulf settlement have brought this unscrupulous practice to a whole new level.
Transaction costs stemming from the oil spill settlement are easily the largest in American history, with $471 million being spent on administrative overhead in 2013 alone. That’s nearly a half a billion dollars—or about what it cost to run the entire City of New Orleans that year.
The city funded schools, roads and hospitals and provided fire services and police protection, as well as many other critical public services, while lawyers and administrators working on the oil spill settlement used roughly the same level of funding over the same period of time to pay fewer than 42,000 claims. Some may criticize government officials in the Big Easy for wasteful spending, but they look like penny pinchers compared to the plaintiffs’ lawyers and administrators involved in this settlement.
Even more alarming is that a growing number of the claims paid have turned out to be fraudulent. Local and national law enforcement officials have uncovered more than $20 million in fraudulent claims thus far, and more reports are being made every day.
In one stunning example, an Alabama woman pled guilty to conspiracy to defraud the Deepwater Horizon claims center of $1 million by filing false claims under the names of more than 100 people, most of whom were unaware. Fortunately, prosecutors finally caught up with her and she was forced to return the money, but this outlandish case highlights the extraordinary lengths that fraudsters are willing to go to in an effort to profit from the Deepwater disaster. And of course, this comes at the expense of those who were truly impacted by the spill.
While lawyers and administrators get rich and fraudsters continue to file claims that clog the entire system, more than 145,000 disaster victims await their payments.
That is wrong and unacceptable. Legitimate victims should not still be waiting five years after the spill to be made whole. First and foremost, this is about the people, the families, and the businesses that were affected by the spill– not the lawyers, administrators and fraudsters who showed up in its aftermath to profit from it.
As we pass a milestone date and are reminded once again of this disaster, we must not lose sight of the victims who continue to be impacted today. This is yet another reminder of and justification for why America’s legal system needs massive reform.
Melissa Landry is executive director of Louisiana Lawsuit Abuse Watch (LLAW), the state’s leading legal watchdog organization. Since it was formed in 2007, LLAW has grown to nearly 6,000 supporters across the state, representing small business owners, health care providers, retirees, taxpayers and workers and their families. Using community outreach, voter education and grassroots advocacy, LLAW works to raise awareness about the costs and consequences of lawsuit abuse and urge elected officials to bring more balance, fairness and common sense to Louisiana’s civil justice system. To learn more, visit www.LLAW.org.