BP Business Claims Payments
Ever since BP put a hold on paying claims to businesses, gulf coast businesses that were affected by the 2010 Deepwater Horizon oil spill have been patiently waiting for the British Oil Giant to pay up and honor the terms of the Deepwater Economic Settlement Agreement.
Now, after months (years in some cases) of claimants providing documentation to prove their claim is legitimate, the rules have suddenly changed.
It’s just another chapter in the ongoing tug-of-war over who should be paid under the multibillion-dollar settlement for victims of the BP oil spill.
First, BP appealed the issue of causation; stating that businesses should have to prove that their losses were directly caused by the spill.
This became an issue after some “questionable claims” were submitted and unfortunately paid under the current Settlement Agreement which assumes causation based on where a business is located, the industry, and the pattern of revenue.
Admittedly, there were some claims were paid that had nothing to do with the oil spill. Sadly, the legitimate claimants on the gulf coast are suffering for the dishonesty of firms and claimants who submitted bogus claims.
The Greedy Game of BP Claims
It didn’t help that some firms were actually encouraging people to file regardless of how they lost money after the spill; they ruined what could have been a fairly simple process and helped to bring the causation issue under scrutiny.
The original content of the Settlement won out in the end, in early March Judge Leslie H. Southwick ruled that BP was bound by the agreement it had signed and ordered them to pay up NOW. Southwick, who was one of the judges on the smaller panel of the 5th Circuit, ruled 2-1 against BP.
In turn, BP requested an “en banc” review to settle the issue. BP now wants the full 5th Circuit Court of Appeals to hear its argument that businesses seeking compensation for oil spill losses should have to prove those losses came from the effects of the spill, and not from some other factor not be allowed under a class settlement.
Just when we thought the issue of causation was nearly put to rest, another issue has come to pass. Proposed Policy 495: Business Economic Loss Claims: Matching of Revenue and Expenses is now official.
Originally, Judge Barbier ruled against BP’s request for this so-called “matching” of expenses to revenues, but he was asked to revisit the issue. On May 6th 2014 the proposed policy became final, leaving gulf coast claimants asking, “what does this mean for my claim”?
First, it means that all claims that have not been paid yet will be “tested” according to Policy 495. Claims that have widely varying revenues and expenses will be affected the most. BP of course agrees with 495 completely, but the plaintiff steering committee feels differently. They argue that 495 changes the method of calculation, and by doing so it changes causation.
BP Claims new tests
When the “matching and smoothing” process is performed on a claim, the revenue changes. When the revenue changes, you have to re-run causation, and that could potentially throw some claimants out of the Settlement.
This policy adds 88 pages to the already voluminous Settlement agreement, and class counsel of the plaintiff argues that this proposal makes the settlement “unrecognizable”.
On the other hand, the passing of Policy 495 means that we could be on the road to resuming payments. Even if the Plaintiff steering committee disagrees with parts of 495, it does resolve the issue of losses potentially being overstated.
While It is possible that payments may be delayed slightly if 495 is appealed, it does appear that Judge Barbier will do whatever is necessary to “get the show on the road” with regard to claimants getting paid.
It seems a compromise has been met; BP may have lost the causation argument, for now, put they did get Policy 495 pushed through. Now we are just waiting on the Fifth Circuit to issue a mandate directing Barbier to lift the injunction.
Unfortunately, even after the changes are implemented claims administrator Juneau may still not be able to resume payments. They may remain on hold while BP pursues a separate appeal at the 5th Circuit – this one involving whether business claimants must prove that their losses actually stemmed from the spill.
It is uncertain at this time how Policy 495 will affect the value of claims but we do feel that the acceptance of this policy will avoid future appellate delays. All we can hope for now is that the Fifth Circuit will come together and issue the mandate to resume payments.
From all that we have seen, we are cautiously optimistic, with the acceptance of 495 we could potentially see payments resume in as soon as 4-6 weeks.
By: Kathy Schulz