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.” ||||| 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.” ||||| Under its deal with the Justice Department, BP will pay about $4 billion in penalties over five years. That amount includes $1.256 billion in criminal fines, $2.394 billion to the National Fish and Wildlife Foundation for remediation efforts and $350 million to the National Academy of Sciences. The criminal fine is one of the largest levied by the United States against a corporation. 
 
 BP also agreed to pay $525 million to settle civil charges by the Securities and Exchange Commission that it misled investors about the flow rate of oil from the well. 
 
 In addition, the company will submit to four years of government monitoring of its safety practices and ethics. 
 
 “All of us at BP deeply regret the tragic loss of life caused by the Deepwater Horizon accident, as well as the impact of the spill on the Gulf Coast region,” Robert W. Dudley, BP’s chief executive, said in a statement. “We apologize for our role in the accident, and as today’s resolution with the U.S. government further reflects, we have accepted responsibility for our actions.” 
 
 A broader settlement that would have resolved the Clean Water Act claims failed to win agreement from some parties, in particular the state of Louisiana. BP and the government now intend to go to trial on those claims in February. 
 
 The government charged the top BP officers aboard the drilling rig, Robert Kaluza and Donald Vidrine, with manslaughter in connection with each man who died, contending that the officials were negligent in supervising tests to seal the well. 
 
 Prosecutors also charged David Rainey, BP’s former vice president for exploration in the Gulf of Mexico, with obstruction of Congress and making false statements for understating the rate at which oil was spilling from the well. 
 
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 As part of its plea agreement, BP admitted that, through Mr. Rainey, it withheld documents and provided false and misleading information in response to the House of Representatives’ request for information on how quickly oil was flowing. While Mr. Rainey was publicly repeating BP’s stated estimate of 5,000 barrels of oil a day, the company’s engineering teams were using sophisticated methods that generated significantly higher estimates. The Flow Rate Technical Group, consisting of government and independent scientists, later concluded that more than 60,000 barrels a day were leaking into the gulf during that time. 
 
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 Lawyers for all three men charged denied that their clients had committed any criminal wrongdoing. 
 
 “This is not justice,” Mr. Kaluza’s lawyers, Shaun Clarke and David Gerger, said in a statement. “After nearly three years and tens of millions of dollars in investigation, the government needs a scapegoat.” 
 
 Mr. Holder, the attorney general, said that the government’s investigation was continuing and that other criminal charges could be filed. 
 
 Under the settlement announced on Thursday, BP agreed to plead guilty to 11 felony counts of misconduct or neglect related to the deaths in the explosion. The company pleaded guilty to one misdemeanor violation of the Clean Water Act and one misdemeanor violation of the Migratory Bird Treaty Act. It also agreed to plead guilty to one felony count of obstruction of Congress over its statements about the flow rate. 
 
 Shelley Anderson, whose husband, Jason, died in the Deepwater Horizon disaster, said she was happy to hear about the settlement. “I think it’s a good thing that BP has owned up to their responsibility,” she said. 
 
 But Ms. Anderson said the agreement did not change her own situation. “Everybody has asked about closure, closure, closure,” she said. “It’s not necessarily closure for us, because we still live every single day. We get up every single day and do it again. Life goes on.” 
 
 BP has repeatedly said it would like to reach a settlement of all claims against it if the terms were reasonable. The unresolved claims have been weighing on the company’s share price. 
 
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 On Thursday, BP’s American shares closed at $40.30, up slightly on the day and down about 34 percent since the accident. 
 
 The settlement is “one less thing to be negative on BP about and a minor step in the right direction toward the rehabilitation of BP,” said Iain Armstrong, an equity analyst at the investment manager Brewin Dolphin in London. But he added that there were still concerns about the remaining claims, and that “lawyers might yet have their day at court.” 
 
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 As part of Thursday’s announcement, BP said it was increasing its reserve for costs and claims related to the spill to about $42 billion. 
 
 Brian Gilvary, BP’s chief financial officer, said in a conference call with analysts that the board weighed the settlement struck with the government against the prospect of a much wider criminal indictment that would have involved more people in the company. “A criminal indictment would have been a huge distraction,” he said. 
 
 BP said that before Thursday’s announced payments, it spent more than $14 billion on operational response and cleanup costs and $1 billion on early restoration projects, and paid out more than $9 billion to individuals, businesses and government entities. 
 
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 In March, BP agreed with the lawyers for plaintiffs to settle claims of economic loss, including from the local seafood industry, and medical claims stemming from the oil spill. The company said it expected that settlement to be an additional $7.8 billion, which it will pay from a trust it set aside to cover such costs. 
 
 Until this week, the only BP employee to be arrested and indicted was a low-level engineer, Kurt Mix, who has been charged with obstruction of justice for deleting text messages about company estimates of the flow rate from the spill. The government has asserted that in October 2010, Mr. Mix, of Katy, Tex., deleted from his smartphone a string of more than 200 messages with a supervisor about the flow rate estimated at the time of a failed effort to contain the spill. He is also accused of deleting a second string of messages with a contractor in August 2011. 
 
 Mr. Mix has pleaded not guilty to both counts of impeding a grand jury investigation, saying that the deletions were routine and that other records of the communications still existed. 
 
 David Yarnold, chief executive of the National Audubon Society, said Thursday’s settlement “matches the unprecedented offense BP committed.” 
 
 “But BP needs to compensate the Gulf Coast in the form of civil damages,” he said. “The rule has to be: You break it, you buy it.” 
 
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 The company could still face billions of dollars in penalties under the Oil Pollution Act or the Clean Water Act. This possibility has spurred political jockeying between the Obama administration and Gulf Coast politicians who want to maximize the amount of money the states receive to help local communities affected by the spill. 
 
 Under the Clean Water Act, fines could range from $1,100 for every barrel spilled through simple negligence to as much as $4,300 a barrel if the company were found to have been grossly negligent. With an estimated 4.9 million barrels of oil spilled in the accident, the company faces liabilities of as much as $5.4 billion to $21 billion. 
 
 Gulf Coast lawmakers passed legislation called the Restore Act last summer under which 80 percent of fines paid by BP under the Clean Water Act would go to gulf communities. 
 
 The Justice Department could also levy fines under a provision of the Oil Pollution Act, in which case BP would face a bigger penalty — more than $31 billion — to repair damages. But BP would be allowed to take a tax deduction for damages paid, and federal agencies would control how the fine money was spent. 
 
 While the government will no longer be able to hold the threat of criminal charges over BP in negotiations about a civil fine, its quiver is not empty. 
 
 Brandon L. Garrett, a law professor at the University of Virginia who studies corporate prosecutions, said the government could still invoke the threat of “debarment,” or disqualification from getting federal contracts. Although debarment is rare, he said, “that could be a very large blow both to reputation and to business BP does with the federal government.” 
 
 Two other companies involved in the Gulf of Mexico accident, the rig operator Transocean and the cement contractor Halliburton, also face potential civil and criminal liabilities. 
 
 Representative Ed Markey, the Massachusetts Democrat who was chairman of the House committee that received false information from BP about the spill rate in 2010, said: “The Obama administration and the Department of Justice have held BP to the highest level of accountability that the law allows, including for their lies to Congress. Now it is up to Congress to enact laws that raise both the safety standards for offshore drilling and the liability cap for companies that still spill.”
– 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.