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While Judge Barbier’s late 2013 reversal of his earlier position that the BP Settlement Agreement did not require “matching” was certainly a disappointment, the devastating ramifications of that decision and its progeny are only now becoming apparent. While the statistics provided by the Claims Administration are difficult, if not impossible, to interpret, another data point, the decisions of the appeal panelists, offer insight into a disturbing trend – the decimation of claim compensation values following the application of Policy 495’s matching constructs.

Analyzing the first 100 business economic loss (BEL) appeals decided by the appeal panelists during the program’s early days in 2013, one finds the average claim compensation value to be approximately $451,000. In contrast, the most recent 100 BEL appeal panel decisions, post implementation of Policy 495, indicate an average compensation value of $115,00 – a nearly 75% reduction.

Why the nosedive?

While at first glance this trend is deeply troubling, there may be a reasonable explanation (let’s hope). To be sure, Policy 495 does reduce claim values. The question is whether claimants are getting a trim or a buzz cut.

It’s possible that we are not dealing with an apples-to-apples comparison of the first 100 appeals to the most recent 100. Those early appeal results included claims filed on behalf of construction, agricultural, and professional services concerns – none of which are currently in the mix. That could account for a portion of the global claim value decrease.

In addition, the processing of claims pursuant to Policy 495 is a complex matter. Perhaps Claims Administration accounting vendors have chosen the lower hanging fruit – deciding to first tackle smaller claims filed by less sophisticated entities, temporarily skewing claim values down. But how many such claims could there be? Judge Clement insinuated – not many: “Typically, only very small and fledgling businesses keep their primary financial records in accordance with cash accounting principles.” Maybe the vendors are simply working through those “very small and fledgling businesses” first?

Perhaps BP’s billion dollar PR machine, the company’s insatiable appetite for filing appeals of the most frivolous kind, or its largely unfounded accusations of “fraud” and other imagined misdeeds have spooked the vendors. After all, accountants by nature are risk averse. Are they gun shy to the point that they are consciously putting larger, more complex claims on the back burner for another day?

But what if the trend indicates a substantive 75% devaluation of all claims as a result of Policy 495, not otherwise explainable as per above? I’ve previously expressed concern that vendors are improperly applying AVM to many sufficiently matched accrual claims. Do these latest drastically lower appeal panel compensation values support that doomsday scenario?

Duty to maximize claim value

Claims Administration vendors should only wield the heavy hand of Policy 495’s AVM when it is clearly called for. Sufficient, not perfect matching, is required. The vendors’ duty to maximize claim value is paramount:

“The Claims Administration Vendors shall evaluate and process the information in the completed Claim Form and all supporting documentation under the terms in the Economic Damage Claim Process to produce the greatest economic damage compensation amount that such information and supporting documentation allows under the terms of the economic damage claim framework.” Settlement Agreement, Section 4.3.8 (emphasis added)

Here’s hoping these recent appeal panel decisions do not indicate a dereliction of same.


Pre v Post 495 Claim Value Chart
In the first 100 appeal panel decisions in 2013, the average claim value was $452,000 (left). In the most recent 100 appeal decisions in 2015, the average claim value was $115,000 (right).


  1. Gravatar for Al Ghindal

    What are the predictions going forward? Why isn't processing speeding up(even with 495 applied). Can we also address the bogus incompleteness notices, denials, Policy 70 reviews, discretionary reviews etc. Why is the PSC silent. Is there an end in sight? This is a game BP is CLEARLY winning.

  2. Gravatar for eyeswideopen

    From my experience whats more disturbing is the courts vendors failure to follow the first in first out process order by the judge.

    After satisfying ever silly request the QA department continues to hold back the determination notices. We have some that are going on 10 months just stuck in the black hole.

    As if they are waiting to pass a new policy requiring additional documents so that they can issue a denial notice.

    The 1500 claims that were sent back for 495 review the older claims submitted over 2 years ago should be investigated and then priortized.

    1. It sure makes one wonder what they are doing. I too have claims that have completed QA and satisfied the Policy 70 requirements, yet they languish.

  3. Gravatar for LWJ

    Tom, are you aware of any instances of a claim that requires customer mix data (decline only, mod-v, etc) ever having been approved since the beginning of the settlement? I am not, and I haven't seen any appeal panel decisions involving claims that required customer mix data that were issued eligibility notices. I've seen some where the claim was originally denied because of problems with the customer mix data, resulting in appeal decisions that either affirmed the denial or reversed a denial and remanded the claim for further review. However, I haven't seen one actually approved based on customer mix data. If I am right and they haven't approved a single claim needing customer mix data, then how is it remotely possible that the settlement program still hasn't issued a single eligibility notice on these types of claims? Its not like Policy 495 impacted the customer mix tests, or at least it didn't make the customer mix rules more difficult to interpret or apply in any way. Regardless though, they should have issued at least a few of them before Policy 495. It seems that Patrick Juneau is just refusing to let them finish those claims for some reason. Maybe he is struggling with an interpretive aspect of the customer mix tests, but come on, he can't sit around delaying a decision forever can he? How can he say he is fulfilling his fiduciary responsibility to the class if that is the case? No court orders told him that he can just indefinitely refuse to process certain types of claims just because he is trying to interpret something. After all, he was ordered to efficiently and expeditiously process all claims on a first in first out basis until all claim reviews are complete. If he still hasn't issued a single customer mix related eligibility notice, then he isn't doing his job. Of course, we still haven't seen any professional services, construction, or agriculture claims approved post-495, but customer mix claims have been around since the beginning and should have been processed along with all of the others. Surely some would have been approved by now.

  4. Gravatar for eyeswideopen

    The mix test is a Fools Errand how the PSC agreed to this goes beyond basic understanding.

    Not only does it require a claimant to capture out of state data it requires all the invoices to equal the ammount reported on the P&L's.

    We satisfied two mix test only to get hit with another round of request as if they were disapointed that we did it.

  5. Gravatar for Craig Pays

    There is no doubt that policy 495 has reduced claims substantially and 4506 & 4506-T requirement has SLOWED the process even more. BP is loving this. When are they going to start processing the construction and professional claims? I have some that are over 2 years old and haven't been looked at. So much for the 'first in-first out' process. I am also concerned about something that hasn't been addressed such as the fact there is no vehicle to report and have reviewed grievances where a claim has been denied although the DUE PROCESS was NOT AFFORDED the claimant. I tried to get an answer on that from class counsel and all I got was the sound of crickets.

  6. Gravatar for Dave Simoneaux

    I find the most frustrating issue is, the inability to have any communication whatsoever with the actual staff processing the claim. "Black hole" is an understatement. Every claim has a number, so there is no reason the portal shouldn't be able to provide anonymous statistics of exactly where the claims are. I calculated based off of the statistic report that one of my claims since it has been "waiting to be assigned" approximately 27,000 claims filed AFTER my claim have been reviewed. I'm not saying paid or issued a notice, REVIEWED! I can understand the FIFO method becomes difficult after a claim gets past review. BUT there is no excuse for a claim to not at least be assigned on FIFO basis. The monthly report should include a spreadsheet listing ALL claim numbers and the order they are in according to department. so every month we should be able to see that claim #11000 was in 2000th place "to be assigned" then next month claim #11000 should be either in 2000th place or higher along with every claim # above it. At this point the "status" is pointless because "status" updates would assume an organized process, which we all know there is not.

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