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June 27, 2013

BP Says Fund is Paying Fictitious and Inflated Claims

“The craziest thing about the [gulf oil spill] settlement is that you can be compensated for losses that are UNRELATED to the spill.”

So says a solicitation letter by plaintiffs’ lawyer Kevin McLean.  And he isn’t alone in his attempt to stir up more clients – a “particularly generous claims administrator” is drawing swarms of lawyers to the fund, Paul Barrett writes inBloombergBusinessweek

Shortly after the gulf oil spill, BP agreed to pay billions to clean up the coast and compensate businesses for lost income.  The company has already paid out $25 billion and could pay out billions more in environmental penalties.

But the claims process is ripe for exploitation by plaintiffs’ lawyers, says the company.

Barrett continues:

“One of McLean’s clients, a real estate agent in Brandon, Fla., an hour from the Gulf, wants $80,000 from BP, reflecting a revenue dip in 2010 that ‘had nothing to do with the spill,’ the attorney candidly admits. (The culprit was the bursting of the Florida real estate bubble.) Under the settlement, though, ‘that’s a good claim,’ McLean says, ‘and we’re going to get paid.’

“He has millions of reasons to be confident. A construction company in northern Alabama, 200 miles from the coast, was recently awarded $9.7 million, even though it does no work near the Gulf of Mexico, according to court records. Attorneys are submitting claims on their own behalf. A law office in central Louisiana that actually enjoyed improved profits in 2010 collected $3.3 million. The compensation process is confidential, so claimants’ identities aren’t a matter of public record, though the amounts are.”

BP is fighting back against what it says are fictitious and inflated losses.  The company is appealing the “windfalls” that the claims fund is paying and is notifying plaintiffs’ lawyers throughout the region that their clients shouldn’t yet spend the money that they received from the fund. 

On top of all this, an attorney working for the claims administrator has been suspended amid allegations that he accepted kickbacks from claimants.  The FBI is reportedly involved.

But not everyone is cashing in.  The city manager of Tarpon Springs, FL refrained from filing a claim.  Expecting a backlash, he was pleasantly surprised when many residents supported his decision.  The only ones that seemed upset, the city manager says, were the plaintiffs’ lawyers. 

“They just kept calling and calling, telling us to do something. We said we didn’t think we had a case, so no thanks.”

Barrett’s entire article is available here:http://www.businessweek.com/articles/2013-06-27/how-bp-got-screwed-on-gulf-oil-spill-claims

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