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Tom Young
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Proposed “Matching” Rules in BP Case Contradict Settlement Agreement

11 comments

Earlier this month, BP Deepwater Horizon Claims Administrator Patrick Juneau submitted his proposed rules for implementing Judge Barbier’s Order requiring claimants’ revenues to be “matched” to expenses.

The word “match” nowhere in Settlement Agreement

Judge Barbier initially ruled against BP’s request for this so-called “matching” of expenses to revenues. However, after a controversial ruling by the 5th Circuit Court of Appeals in October, Judge Barber was asked to revisit the issue.

While the clear language of the 1,200 page Settlement Agreement fails to contain the word “match” or “matching,” and Judge Barbier concluded that neither party, BP nor counsel for the plaintiffs, ever discussed the issue, he nevertheless reversed his previous decision and found that unmatched profit and loss statements must indeed be “matched.” He then directed Claims Administrator Juneau to devise a policy and procedure to accomplish the task.

Policy 495 is overkill

Following that mandate, the Claims Administrator issued Proposed Policy 495 which purports to “match” otherwise “unmatched” profit and loss statements. The policy adds nearly 100 additional pages to the already voluminous Settlement Agreement.

Unfortunately, the complexity of the policy will likely prove unworkable in the real world, as it treats certain industries more favorably than others, seeks financial documentation not required by the controlling Settlement Agreement, expands the applicable forensic accounting time periods well beyond the years 2007 through 2011 agreed upon in the Settlement Agreement, and in some instances will be applied retroactively to determine causation, something outside the scope of the controversy involving the compensation formula.

Not surprisingly, BP fully supports the proposal, which is telling of its devastating impact, particularly on small business claims. In short, it is a real mess.

“Matching” makes Settlement Agreement unrecognizable

Class Counsel (the attorneys representing plaintiffs harmed by the spill) have appealed the proposed policy to Judge Barbier. Until resolved, no Business Economic Loss (BEL) claims are likely to be paid and the timeline for resolution is unknown.

Of very real concern for the tens of thousands of claimants who relied on the clear and unambiguous language of the Settlement Agreement and the application of the previously controlling objective claim qualification standards is how their claims will be treated under this proposed policy. Many of these claimants may have otherwise opted out of the Settlement had they known of the potential for adverse accounting treatment. Unfortunately, the opt-out date has long since passed and claimants are now stuck in a take it or leave it posture.

What’s the fix?

Proposed Policy 495 exceeds the authority of the Claims Administrator to interpret and implement the Economic & Property Damages Settlement Agreement. The Claims Administrator is to “faithfully implement and administer the Settlement, according to its terms.”

The Court, having approved the Settlement, should enforce the agreement as bargained for, and not modify any of its substantive provisions. The policy fundamentally and materially departs from the controlling Settlement Agreement, even as interpreted by the U.S. Fifth Circuit and Judge Barbier upon remand.

The Claims Administrator and the Court should:

  1. Limit the Matching Triggers and Policies to Cash Basis Claims, allowing Accrual Basis Claims to be submitted, processed and paid under the established methodologies
  2. Achieve matching, where required, through the re-allocation of Expenses only, without averaging, smoothing, re-allocating or otherwise moving Revenues that were properly recorded in accordance with an accepted Cash, Accrual, Percentage-of-Completion, or other accepted Accounting Methodology; and
  3. Utilize the Annual Variable Margin Methodology for all un-matched Claims, without resorting to different Construction, Agricultural, Educational or Professional Services Frameworks which were never negotiated nor agreed to, and are in many ways inconsistent with the Settlement Agreement.

In the alternative, the Claims Administrator and the Court should, at the very least:

  • Limit the matching generally – and any Revenue adjustments in particular – to the specific transaction or transactions which ‘triggered’ or caused the Claim to be “un-matched”, rather than re-calculating the entire Claim; and
  • Not re-visit Causation under Exhibit 4B where Contemporaneous P&Ls objectively indicate a loss caused by the Spill.

11 Comments

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  1. Edward Dale Jansen says:
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    I have been unable to find a lawyer to help with my ongiong loss of income since june 2012 I registered for it by myself, The Courts lie to me over and over, They have everything they ask for over and over, They keep screwing me.

  2. Kdickson says:
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    I just wish they’d get off their ass and do what they agreed to! I have a medical claim and have not gotten any kind of status update as of yet. My claim was stamped rec. by them on 11/12/12 ! I am still paying medical bills from being put into the hospital for 22 days because of that crap!

  3. Amanda says:
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    I appreciate your response, Tom. Also, the link you provided gave me even more information about Judge Clement’s questionable “affiliations” as a Judge.

    “That her FREE role is highly unethical is plain from the Judicial Conference ruling that led Davis to resign. He was found in violation of the code of conduct because his board membership reflected “adversely on a judge’s impartiality” and allowed “FREE to exploit the prestige of the office.””

    My next question: is there a way to make her recuse herself (or, to have her recused) from influencing and ruling on this case because of the very clear conflict of interest & the corresponding very clear lack of impartiality?

    How is she allowed to be a member of this group AND be a federal judge ruling in the Deepwater Horizon case AND say that she is impartial when all of the evidence proves otherwise?

  4. Eyeswideopen says:
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    J, they are one in the same. Although they have a Medical Claim center the same tactics are being used.

    Tom locate the BDO Final Report on GCCF all this was indentfied same vendors same tricks.

  5. J.yerkes says:
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    How about putting all of your claim BS Aside and worry about the people that are dying on a weekly basis now.

  6. Amanda says:
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    I agree with the other commenters; your posts have been very much appreciated during this time of back-and-forth nonsense in the courts. You provide the only new information about these proceedings that I’ve been able to find. (Everyone else’s stories are outdated, regurgitated, and sometimes uninformed.)
    I’m still trying to understand how BP has been able to get as far as they have with these appeals — they’ve succeeded in holding things up for about six months now, and there’s still no timeline for when the determination of claims will be “moving” again.
    I was in the court room at the Fairness Hearing in November 2012 when BP’s attorneys were urging the objectors (and the rest of the world) that the Settlement that they helped write and both parties agreed upon was fair and should be approved/implemented.
    Oh, how things have changed since then… How did this happen, and how is it able to continue?!

    • Tom Young says:
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      Thanks Amanda. As to how this happened, I think we have to give Judge Clement much of the credit. She practically begged BP’s attorney Ted Olson during oral arguments to challenge the causation requirements, which theretofore BP had no issue with.

      On July 8, 2013, the parties appeared before the Fifth Circuit BEL Panel:

      Judge Clement: I have a question, sir. In your reply brief, you said the only issue in this appeal is the lost profits calculation and you were talking about how the variable profit is to be calculated . . . . My problem is I think the real issue in the case is causation and consideration. If you look at 4B, where is BP’s consideration for agreeing to pay those claims without proving they were caused by the Oil Spill?

      Olson: This is a settlement, and with respect to the causation issue, that is not the issue that is before this court . . . The settlement agreement with respect to 4B as to causation provided a mechanism which allowed someone to come through the door, to be then entitled to prove the amount of actual lost profits. It was a compromise, which every settlement agreement is. With respect to causation issues, some businesses that are very close to the spill, the causation issue is waived entirely.

      Judge Clement: Right. I’m not talking about those. I’m talking about the example that Administrator Juneau sent out for comments, where if there’s an accounting firm of three members, one is hospitalized for several months, of course they lose money. . . . Where is the legal connexity between a damage or an injury and the ability to make BP pay?

      Olson: It was a part of a compromise, which there’s going to be thousands – tens of thousands –

      Judge Clement: Where’s the consideration?

      Olson: The consideration is the consideration of the settlement class as a whole. But the causation issue is going to be different with respect to each particular claimant. Judgments were made with respect to compromises on a proof of causation.

      Judge Dennis: Well, your major consideration is no one can bring suit against you on the oil spill outside of this class action, which you have announced you have settled.

      Olson: Exactly, your honor.

      Judge Clement: They couldn’t bring suit against you anyway if it wasn’t caused by –

      Olson: They could bring suit. They’d have to prove causation. They could bring suit – they could. And this is a compromise of tens of thousands of claims. But the important thing, and the issue that we’re talking about here, is, assuming causation, assuming that a claimant gets through the door and is now entitled to prove lost profits; we then come to what everyone agrees in this case. The Appellees say this on page 27 of their brief: This appeal presents a straight forward question of contract interpretation.

  7. Joe Pa says:
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    Ditto to what Al said! My attorney no longer even returns my calls. Your detailed coverage and updates are appreciated.

  8. Joe Edwards says:
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    Been reading all your comments since late 2013 and agree without further comment with all your postings and conclusions. Lately, I am perceiving the notion without the word that BP has conspired to create the confusion and delay in payments.
    I am not trying to excite the tin foil hat community, but do you really believe in a conspiracy and how do you see the rest of this story unfolding?

  9. Al Ghindal says:
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    Thank you for providing prompt updates on this matter.

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