NEW ORLEANS (AP) — BP PLC filed a federal lawsuit on Tuesday accusing a Texas lawyer of falsely claiming to represent tens of thousands of deckhands who lost money because of the 2010 oil spill.
The lawsuit filed in New Orleans alleged that more than half the Social Security numbers on Mikal Watts' client list were fake — either dummy numbers or numbers belonging to someone else, living or dead.
Since Watts' list of 42,722 names accounted for 88 percent of the individual crew claims and about three-quarters of all deckhands expected to file claims, the fraud inflated the size of a settlement fund for workers in commercial fishing, according to the suit.
Steve Herman and Jim Roy of the plaintiffs' steering committee disputed the idea that the number of deckhands was the key factor in determining the size of the fund.
"The total amount allocated to deckhands is $130 million — a small fraction of the entire $2.3 billion seafood fund," they said in an emailed statement. "The notion that the number of deckhands was the driving factor during negotiations in determining the overall amount is absurd; the figure was determined by broad, government-provided economic data" and supervised by a federal magistrate and a neutral party appointed by the court.
Watts, of San Antonio, did not immediately respond to a request for comment. He resigned in March from the team of plaintiffs' attorneys who brokered the settlement for commercial fishing vessel owners, captains and deckhands. The San Antonio Express-News reported in February that Secret Service agents had searched his two law offices.
Watts ultimately filed 648 claims for deckhands. Of 631 processed so far, only eight were found eligible for payment, according to the suit.
"The facts in this case shout fraud. Tens of thousands of Mikal Watts' 'clients' have proved to be phantoms," BP spokesman Geoff Morrell said in a news release. "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."
The settlement was set up in two rounds. If money remained after the first round, it could be split among people who received those initial payments.
After paying about $1 billion in claims, the fund still holds about $1.3 billion, according to BP. It said this potentially provides "not a premium, but a windfall" for recipients.
The lawsuit and related motions ask for a halt to further payments until a judge decides "the extent of Mr. Watts' fraud" and how much of the remaining $1.3 billion should be returned to BP.
The lawsuit also said that most Social Security numbers submitted by Watts for the initial settlement matched claims that his firm filed with the BP Claims Program set up for people and businesses that either opted out of the settlement or were not eligible for it, according to the suit.
The claims program found that 45 percent of the numbers belonged to someone else, living or dead, and 13 percent were incomplete or "dummy" numbers such as 000-00-0001.
"The BPCP discovered that one of its own employees — who was not a commercial fisherman, had never retained Watts as counsel, and had never filed a claim — had been included among Watts' client list not once, but twice. His first 'claim' included his name, current address, a defunct phone number, and a wholly incorrect SSN. His second 'claim' included his name, his parents' address, his parents' phone number, and a different, incorrect SSN," according to the suit.