BP's Settlement Agreement with Worker is Valid, But May Have Been Fraudulently Induced

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On May 15, the United States Court of Appeals for the Fifth Circuit issued an opinion regarding the validity of a settlement agreement between BP and a man who sustained injuries as a result of the blast that caused Deepwater Horizon oil spill in 2010. BP had appealed the District Court's decision finding that the agreement was valid.

Elton Johnson, a member of a boat crew who was injured as a result of the blast, took BP to court because he was never paid in accordance with the terms of the settlement agreement, under which he was supposed to receive almost $2.7 million. BP argued that the settlement agreement was not valid.

Johnson submitted his claim for damages to the Gulf Coast Claims Facility (GCCF), an independent mechanism created to settle numerous claims against BP, along with voluminous medical records. The GCCF reviewed Johnson's claim and determined that he was entitled to receive almost $2.7 million. They informed Johnson of this decision in a determination letter, which instructed Johnson that, to accept the offer, he must sign a final payment election form and execute a release. After Johnson executed the final payment election form, BP came across information that led it to believe that Johnson fabricated his injury claims. After that, BP never sent Johnson a release and refused to issue Johnson final payment.

BP contended that there was never a binding settlement agreement and put forth numerous arguments in support of this contention. However, the court disagreed and found that the GCCF's determination letter constituted a valid offer which Johnson accepted. Furthermore, the court noted, although Johnson had to sign a release in order to get paid, BP's refusal to send the release to Johnson excused his failure to do so.

BP also argued that, even if a valid settlement existed, it is unenforceable because Johnson fraudulently induced BP to enter the settlement. The court noted that there was indeed evidence suggesting that Johnson may have submitted a fabricated claim. Thus, the Fifth Circuit vacated the judgment of the District Court remanded the matter for an evidentiary hearing to determine whether BP's claims of fraud had merit.

This opinion shows the court's dedication to enforcing valid settlement agreements issued by the GCCF. However, if there is evidence that a claim was fraudulently submitted, BP has the opportunity to prove that the settlement agreement was fraudulently induced as a defense to enforcement.

If you or someone you know has been injured as a result of an oil and gas related accident, contact an attorney at Abraham, Watkins, Nichols, Sorrels, Agosto & Friend by calling 713-222-7211 or toll free at 1-800-870-9584.

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