BP Plc (BP/) lost a bid to have a judge suspend $1.3 billion in payments to seafood-industry workers who are part of the 2010 Gulf of Mexico oil spill settlement because of alleged improprieties by a lawyer involved in the accord.
U.S. District Judge Carl Barbier in New Orleans today rejected BP’s arguments that fraud allegations against Mikal Watts over his claims to represent more than 40,000 deckhands eligible to receive settlement monies should prompt a suspension of all payments.
BP sued Watts, an attorney with offices in San Antonio and Corpus Christi in Texas, over claims he lied about how many seafood workers were his clients. The company argued the fraud allegations tainted that portion of the $9.2 billion settlement of most private-party claims over the spill.
“I don’t want to hold up everyone else -- an entire program -- until we sort out your case against Mr. Watts,” the judge said today.
BP settled with most private plaintiffs in March 2012, just before a trial on liability for the disaster. BP initially valued the economic-loss accord at $7.8 billion. In a regulatory filing last year, it increased that amount to $9.2 billion. As part of the settlement, the London-based company set aside $2.3 billion for fishing interests harmed by the spill.
Today’s ruling comes as federal prosecutors in Mississippi continue to investigate whether Watts fraudulently claimed to represent clients seeking payment under the settlement. A lawyer for Watts said last month there was a “ real, appreciable” chance the attorney would be indicted over the allegations.
Geoff Morrell, a BP spokesman, didn’t immediately respond to phone and e-mail messages seeking comment on today’s decision.
The blowout of BP’s deep-water Macondo well off the coast of Louisiana in April 2010 killed 11 people and sent millions of barrels of oil into the Gulf of Mexico.
The worst offshore spill in U.S. history, it sparked thousands of suits against BP, as well as Transocean Ltd. (RIG:US), owner of the Deepwater Horizon drilling rig that burned and sank, and Halliburton Co. (HAL:US), which provided cement services for the well.
About $1 billion of the funds earmarked for the seafood compensation program were distributed in a first round of payments designed to cover the industry’s actual losses from the spill, according to court filings. The remainder of the fund was to be distributed during the first quarter of this year to compensate for projected future losses, according to lawyers for the fishermen.
At today’s hearing, Barbier also ordered BP not to pursue its fraud suit against Watts until the criminal investigation is finished.
The cases are BP v Watts, 2:13-6674, and In Re: Oil Spill by the Oil Rig Deepwater Horizon in the Gulf of Mexico on April 20, 2010, MDL-2179, U.S. District Court, Eastern District of Louisiana (New Orleans).
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