BP, in a lawsuit filed Tuesday in a federal district court in New Orleans, cited "brazen fraud" by attorney Mikel C. Watts when the company put $2.3 billion in a special compensation fund for the seafood industry and asked the court to allow it to stop payments and reclaim some of the unspent funds, the New York Times reported.
The more than 40,000 deckhands claimed as clients by Watts made up nearly 80 percent of the people projected to file claims under the program, the company said in court papers.
In response, Robert Duff, an attorney for Watts, called BP's actions another effort "to walk away from the settlement to which it agreed."
He said Watts "never committed identity theft and did not defraud BP or anyone else" and that he filed claims "in good faith that legitimate claims were being filed for real people."
BP, which so far paid out nearly $13 billion in claims to businesses, individuals and the government, has paid out $1 billion from the seafood fund so far. The company said that 24,520 seafood claims were filed, and fewer than 5,000 of the filed claims were on behalf of individuals. The oil giant isn't arguing that the workers engaged in wrongful conduct, the Times said.
Watts, a well-known fundraiser for the Democratic Party, filed 648 individual crew claims through the seafood fund, BP said, and eight have been found eligible for payment. Seventeen are pending.
Watts since filed 43,976 claims under a different compensation program meant to address claims that were excluded from the settlement agreement. In examining those claims, the company said it found 40 percent of the claims used Social Security numbers belonging someone other than the person making the claim and 5 percent of the numbers belonged to dead people.
"The inference of fraud is overwhelming," the company said in its complaint.
BP has argued for some time that the claims process was fraud-riddled. The federal judge in the case appointed former FBI Director Louis Freeh to investigate the allegations. Freeh found that the process was not corrupt, but there were incidents of conflict of interest and fraud among individual lawyers and fund staff members.