11252017Headline:

New Orleans, Louisiana

HomeLouisianaNew Orleans

Email Tom Young Tom Young on LinkedIn Tom Young on Twitter Tom Young on Facebook Tom Young on Avvo
Tom Young
Tom Young
Attorney • (813) 251-9706

BP: Pigs get fat, hogs get slaughtered

5 comments
BP gorges itself on spill victims.

BP gorges itself on spill victims.

BP has been complaining for months that the company was suckered into a Settlement Agreement with Gulf Coast business owners that rewards those not harmed by the Deepwater Horizon Disaster. While the courts have largely rejected BP’s efforts to unwind the Agreement, calling the company’s position “nonsensical,” few commentators have opined on the decidedly anti-claimant characteristics of the Contract – the so-called “False Negatives” that provide BP with a sizable free pass.

If BP thinks it is getting the short end of the stick, then the company should speak to the 50,000 or so businesses whose claims have been rejected by the Settlement’s Claims Administrator, Patrick Juneau. In fact, Mr. Juneau has rejected more claims than he has paid.

You’d be forgiven if that comes as a surprise given BP’s incessant self-serving television and newspaper advertisements where the oil major portrays itself as the victim of greedy lawyers and unscrupulous claimants. Turns out that a few hundred million dollars of media buys can do wonders for corporate spin.

Unbeknownst to most, the hurdles facing businesses seeking a check from BP are many and varied. In fact, the 1,200 page Settlement Agreement and nearly 500 “interpretive policies” throw so many obstacles at claimants that the program can no longer be considered “claimant friendly,” a phrase BP used when lobbying Federal Court Judge Carl Barbier to approve the deal in 2012. It is now anything but, yet BP wants more and continues to go for the jugular. Makes you wonder if this was the company’s plan from day one?

The latest example of the shift from “claimant friendly” to “BP friendly” is the Claims Administrator’s implementation of the “Customer Revenue Mix Test” (CRM) policy. The Settlement Agreement requires many claimants  to demonstrate that tourists stopped frequenting their establishments due to the spill. The method required to demonstrate same is to show the geographic origin of 100% of the claimant’s revenue, to the penny.

Claimants required to pass the CRM test must know exactly where the customer that generated that penny lives. This is a nearly impossible task for all but the most savvy businesses employing the most sophisticated accounting techniques and systems. What restaurant, bar, t-shirt shop, ice cream parlor, 7-11, surf shop, boat captain, taxi driver, dive shop, etc knows the mailing address of every patron? Credit card receipts simply have zip code info. The CRM test requires complete mailing addresses. And if a claimant has cash sales? Forget about it.

In other words, most small businesses are simply out of luck. And BP laughs all the way to the bank on the shoulders of these “false negatives.”

On April 21, 2014 the Claims Administrator officially recognized the inherent flaw in this patently unfair requirement. However, as his job is to implement the Settlement Agreement as written, Mr. Juneau concluded that his hands were tied with the announcement of Policy 345:

“The Claims Administrator has observed that it is difficult or even impossible for some claimants with Business Economic Loss or Start-Up Business Economic Loss claims to satisfy this test because they do not have documentation to establish the addresses/locations of their customers. This is particularly problematic for businesses that deal primarily in cash, which often do not maintain the type of records specified in the above-referenced section of the Settlement Agreement. However, the Claims Administrator interprets the Settlement Agreement’s documentation requirements as mandatory. The Settlement Agreement does not grant the Claims Administrator discretion to waive these document requirements.”

So, no matter how unfair this may seem, there is likely nothing the Claims Administrator can do to grant relief to the tens of thousands of business claimants who have fallen victim to the CRM requirement in Policy 345. BP is fond of trotting out a few dozen examples of what the company feels are frivolous claims that should not have been paid. Yet you never hear BP complaining about getting to walk away from these tens of thousands of claimants with billions due in restitution who were waylaid not only by BP’s spill, but by this absurd CRM requirement.

Perhaps BP should throttle its lawyers and spokesperson before the public and the courts wake up to who is really getting screwed here.

You’ve come a long way in your disingenuous PR battle, but remember BP, pigs get fat, hogs get slaughtered.

5 Comments

Have an opinion about this post? Please consider leaving a comment or subscribing to the feed to have future articles delivered to your feed reader.

  1. up arrow

    Thank you, Mr. Young. There is no press on this issue/ I believe Rule 495 will prove no different than Rule 345. BP complained that only accrual-basis Generally Accepted Accounting Principles (GAAP) should be used. So what happens? The “Annual Variable Margin Methodolgy” is adopted with Rule 495. Don’t bother looking for that method in an accounting textbook because It definitely is NOT GAAP. There will be no 60-minutes run on these issues and BP won’t complain about this non-GAAP procedure because it favors only them.

  2. Jay says:
    up arrow

    No one has even explored how Policy 495 completely distorts the Customer Mix Test analysis. The settlement stipulates that the Revenue Pattern Test and Customer Mix Test must correspond as far as the three month aggregates in which both are passed. This makes logical sense as the CMT is a further investigation of the time period in question’ revenue data. The Claimant must pass each during the SAME time period. Policy 495 requires the retesting of causation for four of the five methodologies. The Revenue Pattern Test will be conducted on the restated books while the CMT must be conducted using the original books even though they are not comparable. The problem is that revenue can be drastically moved around based on these methodologies. If one of these claimants pass Mod-V or Decline-Only Revenue Pattern Requirements, they now have to conduct a CMT during the same time period even though the revenue is coming from different sources. It makes a flawed analysis completely irrelevant. If a claimant passes or failed it will have NOTHING to do with the spill. My concern is not for BP, it is for all those claimants who will be denied based on a completely ludicrous criteria. Mod-V and Decline-Only Causation have now been reduced to a proverbial blindfolded dart throw.

  3. Bill says:
    up arrow

    I think this is a mix of BP’s push and the Claim’s Administrator taking things too far. Policy 345 – is yet another example of the claims administrator’s reviewing accountants and lawyers issuing policies that overreach the 1000+ page CONTRACT that was signed. Nothing in the Settlement Agreement reads that the claimant should arbitrarily consider that certain customers that a company has no data for (typically of no fault of its own – i.e. restaurants and cash sales, etc) should be considered into a calculation and grouped to its detriment and artificially impacting the Company’s customer-mix percentages. I have performed dozens of these customer analyses and NO claimant has had 100% accounted for customers with their physical addresses. Again, where in the Agreement does it say that 100% of the customer data should be accounted for? A materiality threshold would be much more appropriate than distorting the Company’s actual records as this policy is DOING!!

  4. Al Ghindal says:
    up arrow

    Why can’t the PSC make a statement in regards to Policy 495. Also, how long does it take the damn 5th Circuit to decide on en banc? BEL claimants better start looking to make up that lost revenue elsewhere.

  5. up arrow

    […] BP: Pigs get fat, hogs get slaughtered 3 mins ago […]

Leave a Comment

Have an opinion? Please leave a comment using the box below.

For information on acceptable commenting practices, please visit Lifehacker's guide to weblog comments. Comments containing spam or profanity will be filtered or deleted.