BP PLC, citing what it called fresh evidence of fraud in the claims process, once again has asked a federal judge to halt payments from the Deepwater Horizon oil spill settlement fund.
The company said it had learned within the past week about a potential conflict involving two members of the claims administrator’s appeals panel who were reviewing payments while their law firms were submitting claims. BP’s motion for a preliminary injunction, filed on Monday, did not name the firms or the appeals panelists.
BP also asserted potential fraud, citing a July 15 tip from its recently established fraud hotline that an employee at the claims center in Mobile, Ala., had been assisting family members in submitting “fraudulent subsistence claims” in exchange for a share of the payments.
“Previously, the Court expressed concern that BP had not presented any evidence that the alleged improprieties involved more than the two isolated employees or actually had resulted in improper payments. That is no longer the case,” BP attorney Richard Godfrey, a senior partner at Kirkland & Ellis in Chicago, wrote. “Three distinct operations in the [claims administration process] suffered a breakdown in prudent management, which demonstrates a ‘systemic or widespread problem.’”
As recently as July 19, U.S. District Judge Carl Barbier in New Orleans refused to halt payments to individuals and businesses under the settlement of economic damages, the value of which BP last month revised to $9.6 billion. He cited a lack of evidence of fraud involving two former attorneys for the claims administrator accused of accepting payments from The Andry Law Firm in New Orleans, to whom they had once referred oil spill clients.
Barbier refused a similar request earlier this year, when BP alleged that the way administrator Patrick Juneau was calculating claims was leading to “windfall” payments to businesses that suffered “fictitious losses.” The U.S. Court of Appeals for the Fifth Circuit heard oral arguments on that matter July 8.
BP spokeswoman Ellen Moskowitz declined to comment regarding the latest request. Nick Gagliano, a spokesman for Juneau, wrote in an emailed statement: “As has been the case since day one, we have investigated all allegations brought to our attention, and until our investigation is complete, we will not and should not comment.”
Since the appeal panelists were appointed last year, their law firms have submitted claims for their own losses and represent claimants, according to BP’s motion. One represented five oil spill clients asserting claims, while the other had nine claimants. When another BP attorney, Keith Moskowitz, alerted the claims administrator to the conflicts on August 2, Juneau told him that one panel lawyer was no longer affiliated with the firm in question, having left to open his own practice. Juneau disclosed that a third appeals panelist had resigned following the revelation that his wife had filed an oil spill claim, according to BP’s motion.
“As a result of these conflicts, BP was unknowingly in the unenviable position of having disputes with claimants decided by attorneys who, at the same time, were adverse to BP and essentially suing BP,” the company wrote.
As for the tipster’s information, a Juneau representative verified that the employee in Mobile had been suspended and suspect claims placed on hold, according to a letter attached to BP’s motion. A second employee un Mobile was suspended on July 19 for violating security protocol by accessing claims data for the first employee, according to the official.
BP called the revelations proof of a rampant problem, noting that the overall claims approval rate in that center is three times the average of other offices.
Last month, Barbier appointed former FBI director Louis Freeh to investigate the claims process.