Jury Verdict for Kerr McGee Corp Oil Whistle-Blower is Overturned
Judge Phillip Figa, a federal judge in Denver, overturned a jury verdict in favor of Bobby Maxwell, a whistle-blower at the Interior Department who charged that the Kerr-McGee Corporation cheated the government out of millions of dollars for oil and gas it pumped in publicly owned coastal waters.
According to a Denver Post article citing the ruling, Kerr-McGee's attorney, Scott Barker "Judge Figa's order is a vindication of Kerr-McGee's position from the very outset of the case. This result is especially appropriate since ... Kerr-McGee had properly and fully paid all the royalties that were due." Bobby Maxwell's attorney, Richard LaFond states "They will definitely appeal. A jury determined in January that Kerr-McGee underpaid $7.6 million. With additional fines and penalties, Kerr-McGee was liable for up to $39 million in damages, according to LaFond.
The ruling could have big implications for whistle-blowers, as well as for the oil and gas industry. According to a New York Times article (subscription required), three other federal auditors in Oklahoma City have filed similar fraud lawsuits against more than a dozen oil companies; those auditors also say that they were ordered by superiors to stop making their accusations.
In the New York Times (subscription required), Judge Figa is noted as saying "the False Claims Act requires that a person first ''voluntarily disclose'' any evidence of fraud to the government before filing a lawsuit". Mr. Maxwell presented his evidence of fraud in 2002, and the judge noted that his supervisor in Denver agreed in principle that Kerr-McGee had probably violated the law. But senior lawyers for the Interior Department in Washington said they did not want to proceed, and ordered Mr. Maxwell to retreat.
