BP on Tuesday accused a Texas lawyer of fraudulently driving up its settlement costs in the 2010 Gulf Coast oil spill by claiming to represent tens of thousands of clients who turned out to be “phantoms.” 
 
 In a lawsuit filed in Federal District Court in New Orleans, the oil giant, which has been fighting the administration of a settlement with plaintiffs in the courtroom and in the news media, claimed that it relied on the client count supplied by the lawyer, Mikal C. Watts, in 2010 when it put $2.3 billion into a special compensation program for the seafood industry. The company, citing “brazen fraud,” is asking the court to allow it to stop payments and reclaim some of the unspent money. 
 
 The more than 40,000 deckhands claimed as clients by Mr. Watts constituted nearly 80 percent of the people projected to file claims under the program, the company said in court papers. 
 
 In a statement, a lawyer for Mr. Watts, Robert McDuff, called BP’s actions “another of a series of efforts to walk away from the settlement to which it agreed.” He said his client “never committed identity theft and did not defraud BP or anyone else.” 
 
 Mr. Watts, a prominent Democratic fund-raiser who is regarded as a formidable litigator, has said that his clients came through referrals from other lawyers. Mr. McDuff stated that Mr. Watts filed claims “in good faith that legitimate claims were being filed for real people.” 
 
 BP, which has paid nearly $13 billion in claims to businesses, individuals and the government so far, has paid out $1 billion from the seafood fund so far. The company said that 24,520 seafood claims were ultimately filed, and of these, fewer than 5,000 were filed on behalf of individuals. Under the structure of the fund agreed to by BP and plaintiffs’ lawyers and approved by the judge, any money not distributed to seafood workers based on their claims would be given out in a second round. The company does not argue that the workers engaged in wrongful conduct, but said the inflated size of the fund would mean an undeserved “windfall” to members of the class. 
 
 Mr. Watts ultimately filed just 648 individual crew claims through the seafood fund, BP said, and just eight have been found eligible for payment. (Seventeen are pending.) That means, the company said, that “98 percent of the Watts claimants never even filed a claim” with the program, and “96 percent of the claims that he did file have been denied.” 
 
 Mr. Watts has since filed 43,976 claims under a separate compensation program intended to address claims that had been excluded from the settlement agreement. In examining those claims, the company said it found that 40 percent of the claims used Social Security numbers that belonged to someone other than the person supposedly making the claim; 13 percent gave incomplete numbers or obvious fakes such as 000-00-0001. Five percent of the numbers belonged to dead people. “The inference of fraud is overwhelming,” the company stated in its complaint. 
 
 BP has argued for months that the claims process is rife with fraud and has paid out claims from people who had no actual losses related to the spill. The federal judge in the case, Carl J. Barbier, appointed former F.B.I. director Louis J. Freeh to investigate the allegations. Mr. Freeh found that the process itself was not corrupt, but did find incidents of conflict of interest and fraud among individual lawyers and staff members of the fund. 
 
 Since then, the company has asked the Court of Appeals for the Fifth Circuit, in New Orleans, to order changes in the way that the settlement fund is run. That court has ordered Judge Barbier to “give further consideration” to the company’s complaints; Judge Barbier has temporarily halted payments. 
 
 In July 2012, Mr. Watts hosted a $35,800-a-plate event for President Obama at his home. Judge Barbier named him to the committee of plaintiffs’ lawyers that helps run the litigation; he resigned from the Plaintiffs’ Steering Committee on March 13 this year, however, not long after Secret Service Agents executed search warrants at his San Antonio law office, a move that the Department of Justice officials suggested was related to the questions about his clients in the BP case. 
 
 Mr. Watts’s client submissions were initially challenged by Kenneth R. Feinberg, who ran the first version of the settlement office after the disaster. Concerns about the claims were first reported in an April 2011 article in The New York Times. 
 
 Lawyers for plaintiffs in the case argued that BP is using the Watts controversy as an excuse to stop payments on the much larger program that affects deserving claimants. In a statement, the lawyers, Stephen J. Herman and James P. Roy, said “the notion that the number of deckhands was the driving factor during negotiations in determining the overall amount is absurd,” and that just $130 million was allocated to deckhands. 
 
 “BP’s overreaching attempt to hold the entire seafood program hostage is part of its continuing effort to rewrite history and the settlement agreement,” the lawyers said, “and is unfair to the hardworking men and women of the seafood industry whose livelihoods were destroyed by BP’s reckless conduct.” ||||| Courts 
 
 Companies are punching back hard at plaintiffs’ lawyers, and today BP (BP) threw what it described as a haymaker at Mikal Watts, one of the most influential mass-tort attorneys in the country. 
 
 BP filed a civil-fraud lawsuit against Watts and his firm, San Antonio-based Watts Guerra, accusing him of claiming to represent tens of thousands of “phantom” claimants in litigation concerning the 2010 Gulf of Mexico oil spill. In the unusual suit filed in federal court in New Orleans, BP said that it relied on Watts’s representations when it agreed to a $2.3 billion portion of its settlement with people and businesses involved with the seafood industry and harmed by the massive contamination. 
 
 “The facts of this case shout fraud,” Geoff Morrell, BP’s chief U.S. spokesman, said in an e-mailed statement. “Tens of thousands of Mikal Watts’s clients have proved to be phantoms. Mr. Watts’s 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.” 
 
 Robert McDuff, an attorney representing Watts, described his client in a statement as “an innocent man” and said he “never committed identity theft and did not defraud BP or anyone else.” The statement added: “All actions taken were in good faith that legitimate claims were being filed for real people who had been hurt by PB’s gross negligence. With respect to those who applied for the settlement, he forwarded the documentation they provided to the independent special master in charge of reviewing settlement claims.” 
 
 Beyond the BP litigation, the Watts has helped lead mass suits against various pharmaceutical manufacturers and other companies. A leading Democrat in Texas, he has been a major financial backer of President Barack Obama. Watts is also under federal criminal investigation as a result of questions about how he gathered clients in the BP case. In response to the criminal probe, his defense lawyer has said Watts did nothing wrong. 
 
 BP said that it uncovered the alleged Watts fraud by checking Social Security records for his supposed clients. Watts had claimed to represent more than 40,000 deckhands who suffered economic injuries from the 2010 spill—more than 76 percent of the individual crew members projected to be potential claimants, BP said. The company asserted that more than half of Watts’s claimants simply don’t exist, and Social Security numbers for 40 percent of the claimants allegedly belonged to another living person. For 13 percent, the Social Security number given was “incomplete or a ‘dummy’ number (e.g. a number such as 000-00-001),” BP added. “For 5 percent, the Social Security number belonged to a dead person other than the named claimant.” 
 
 Watts ultimately filed only 648 individual claims under the seafood-industry program, fewer than 2 percent of the more than 40,000 he originally purported to represent, BP said. Of those 648, only eight have been found eligible for payment by the Seafood Compensation Program, according to BP, with 17 claims pending. 
 
 Earlier this year, in the wake of federal agents executing search warrants at Watts Guerra’s offices in San Antonio, Watts resigned from the Plaintiffs Steering Committee overseeing the multifaceted spill litigation against BP. The oil company has been battling with the steering committee over a separate portion of the pollution settlement: a $9 billion pact intended to compensate businesses outside of the seafood industry. BP has complained that claims worth hundreds of millions dollars in the $9 billion settlement are turning out to be exaggerated or “fictitious,” an allegation the steering committee contests. A spokesman for the committee didn’t immediately respond to an e-mail seeking comment. 
 
 Under the seafood industry pact, about $1 billion has already been paid out, BP said. By means of its fraud suit against Watts and related actions today, BP said it is seeking to recover the portion of the remaining $1.3 billion that “resulted from fraud.”
– Three years after the Gulf of Mexico oil spill, BP has launched a suit of its own—against a plaintiffs' lawyer who, the company says, has represented tens of thousands of "phantom" clients in the case. BP says part of its settlement over the spill, worth $2.3 billion, was calculated using figures from lawyer Mikal Watts. "The facts of this case shout fraud," says a BP rep. "Tens of thousands of Mikal Watts’ clients have proved to be phantoms," and the "false representations improperly inflated the value of potential claims" in the seafood industry, Businessweek reports. Watts has said he was fighting for some 40,000 deckhands affected by the disaster, but half of them aren't real, according to BP, which found that 45% of their supposed social security numbers actually belonged to others, living or dead; others had made-up numbers. A lawyer for Watts says he "never committed identity theft and did not defraud BP or anyone else," and claims were reviewed by an independent body. He calls BP's move "another of a series of efforts to walk away from the settlement to which it agreed," the New York Times reports. In other BP news: An exploration well off Brazil turns out not to have commercially-viable amounts of fuel; the company will write off more than $1 billion in related costs, the Wall Street Journal reports. But BP says it has made a major oil discovery in the Gulf of Mexico, adding to a big year for the company's exploration efforts.