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Accounting audit shows nearly 20% of business & seafood claims not properly documented in Deepwater

Plaintiffs’ lawyers are working overtime to spin media coverage of a recently released accounting audit of the all-you-can-eat litigation buffet otherwise known as the BP settlement. With hopes of restoring integrity to this fundamentally flawed program, some members of the trial bar are enthusiastically cheering some aspects of the report while conveniently overlooking others. For example, the Houston Chronicle recently covered the release of the report with an article that focused on the error rate for calculating claims, which was less than .5%. Obviously, thousands of accountants and administrators generating overhead of more than $36 million a month should be capable of doing some simple math. That shouldn’t surprise anyone.

The more interesting aspect of the story is that auditors also found nearly one-fifth of all the randomly sampled business and seafood claims had document deficiencies, which means almost 20% of these selected claims had missing or incomplete documents. According to the audit, the value of claims that have documentation issues could total to more than $500 million.

While the audit draws “no conclusion” as to whether a document deficiency had any impact on the amount of the award, we know many of the fraudulent cases that have been identified and prosecuted thus far were based on false income tax records. Just last month, for example, the U.S. Secret Service indicted 27 people who orchestrated an elaborate scheme based on false income documents to defraud the program for more than $1 million. In other words, the simple math used to calculate claims might be right, but if it is based on fake records the outcome is wrong. Fraud is still fraud, even if it is added up correctly.

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