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Tom Young
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BP Abuses Claimants in Claims Appeal Process

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The BP Claims Appeal Process is governed by rules and procedures designed to encourage amicable resolution of payment disputes. To be clear, in this context I am referring to appeals of specific Business and Individual Economic Loss Claims, not the global appeals BP has lodged against the Settlement itself in the 5th Circuit and now the Supreme Court (although the scorched earth tactics are similar).

BP frequently and fragrantly abuses the rules governing the internal appellate process by filing frivolous appeals that have no chance of success. In attempting to deny payment to legitimate claimants (or at the very least delay same), the company argues points that (1) have previously been definitively and finally determined by Judge Barbier and the 5th Circuit Court of Appeals, (2) blatantly contradict the language BP itself wrote into the Deepwater Horizon Settlement Agreement, and (3) violate the Rules Governing the Appeals Process by injecting untimely issues.

When BP engages in such behavior, it always losses the appeal, and upon losing the company is assessed a 5% penalty. So why engage in these shenanigans when BP’s own CEO, Bob Dudley, has publicly stated:

“BP made a commitment to help economic and environmental restoration efforts in the Gulf Coast, and this settlement provides the framework for us to continue delivering on that promise, offering those affected full and fair compensation, without waiting for the outcome of a lengthy trial process.” – Robert Dudley, BP CEO, 2012

Why? Because BP = Broken Promises

BP talks out of both sides of its mouth. Management says one thing while meaning another. BP’s spokesperson is a master spin doctor. British Petroleum is a convicted corporate felon, guilty of killing 11 Americans, destroying the Gulf and our economy, and then attempting to cover up the extent of the mess by obstructing Congress. The company simply cannot be trusted. It has become painfully clear to those of us in the Gulf that Mr. Dudley and friends never intended to offer “full and fair compensation.”

Do I need to mention that just yesterday BP was just found to be grossly negligent? That BP’s operation of the Deepwater Horizon rig was, according to the Court, “totally unsafe” and “on the ragged edge”? Or that Judge Barbier determined that BP failed to “exercise even slight care”? 

Yet BP wants our sympathy?

BP Deserves No Quarter

The benefit of the doubt is not reserved for sociopathic organizations like BP. Keep that in mind the next time you see one of the company’s advertisements where the woman from management drones on and on about jobs and BP’s “Commitment to America” as she stands next to the Trans-Alaska Piepline. Take that happy talk with a pipeline of salt.

The Gall

The internal claims process is governed by a system known as “baseball arbitration.” The parties submit initial and final proposals, and if consensus cannot be reached, a third-party arbitrator picks the proposal that most appropriately reflects the loss.

The arbitrator must chose either BP’s final proposal or that of the claimant. The baby cannot be split. This is designed to encourage compromise and reasonable offers.

BP’s final proposals most often offer the claimant zero, zilch, nada, nothing, $0. This despite the fact that the claim has already been subjected to months – sometimes years – of scrutiny by the Claims Administrator and his legions of accountants.

The Claims Administrator does not offer cash to the undeserving. In the overwhelming majority of cases, when the Claims Administrator says a claimant is owed, then the claimant is indeed owed. But BP simply does not care. By appealing the award and offering $0, BP can delay the eventual payment by months. And occasionally they can wear down a claimant, particularly one who is not represented by counsel, who simply throws in the towel. It is a shameful display of corporate hubris.

Filing a losing appeal is not without cost. First, BP is charged a penalty of 5% of the claim value (pre-RTP) for each lost appeal. Second, the company has racked up legal fees fighting this losing battle that exceed $1 billion. BP shareholders, you should be mad as hell.

The typical response by an appeal panelist when BP throws a tantrum and offers $0 is summed up nicely by the panelist in Appeal 2013-2131: “In a baseball setting where BP simply proposes $0 … the proposal of Claimant must be accepted.”

BP Claims Appeal Decision Form

BP frequently makes bad faith offers of $0 to otherwise legitimate claimants. The practice almost always backfires on the company, so one can only speculate why it continues. You can see above that the appeal panelist, when faced with choosing between a reasonable number of $54K as calculated by the objective formulas of the Settlement Agreement, or BP’s boilerplate “offer” of $0, the decision is an easy one.

Examples of BP’s Frivolous Appeals

One of BP’s favorite appellate targets is the classification of claimant expenses as fixed versus variable. Whether an expense is accounted for one way or the other can make a significant difference in the value of a claim.

In the real world, the classification of an expense as fixed or variable is more art than science. In order to avoid arguments over same, BP included an entire exhibit in the Settlement Agreement, Exhibit 4D, that lists which expenses would be fixed and which would be variable.

For instance, looking at the table below, according to the Settlement Agreement and Exhibit 4D, “Advertising Expense” is considered fixed by the settlement program’s accountants. Yet BP often argues on appeal that it is a variable expense. It is nonsensical. But it does not stop BP.

Fixed v Variable Expenses in BP Settlement, Exhibit 4D

Despite BP’s protestations to the contrary, Exhibit 4D of the Settlement Agreement lists with precision which expenses are fixed and which are variable. So why does BP insist on banging its head against the wall by incessantly appealing based on alleged expense classification error? The only explanation is simple bad faith.

Alienating Appeal Panelists

BP frequently complains that Claims Administrator Patrick Juneau mistreats the company, that Judge Barbier is unfair, that the 5th Circuit doesn’t know what it is talking about, Santa Claus is real and the dog ate its homework. From BP’s perspective, the company’s predicament is always someone else’s fault.

But at some point a reasonable observer comes to understand that the petulant child that is BP simply will not take its medicine. “The Judge did it!” “The Claims Administrator did it!” “The 5th Circuit did it!”

In addition to those aforementioned legal minds, there are over two dozen semi-retired attorneys and former judges that act as appeal panelists. These panelists come from all walks of life and both sides of the courtroom (plaintiff and defense). After being subjected to BP’s barrage of frivolous appeals citing meritless arguments, below are some comments from panelists after adjudicating such an appeal:

“BP suggests that switching to this alternative period would actually have decreased claimant’s recovery. This is completely inaccurate and BP seems to be pulling numbers out of thin air.” Appeal 2014-472

“BP offers nothing whatsoever in support of its contention … and it should be noted that the first basis for appeal cited by BP is vague and completely lacking in detail … this panelists finds no support for BP’s contention.” Appeal 2014-433

“I find no merit in BP’s argument.” Appeal 2014-446

“BP’s utter failure to disclose this information is troubling when disclosure is undoubtedly required.” Appeal 2014-385

“BP’s evidence is scant.” Appeal 2014-439

“In this Panelist’s view, [BP’s] arguments have nothing whatsoever to do with the substance of [the alleged error] and should be ignored as a violation of Appeal Panel Procedural Rule 8.” Appeal 2014-486

“There is no textual reading of Exhibit 4C of the Settlement Agreement that supports BP’s argument.” Appeal 2014-437

“Finding no basis in the Settlement Agreement supporting BP’s position.” Appeal 2014-415

“In neither instance does BP cite to anything in the record in support of its suppositions.” Appeal 2014-448

“This appears to be a case in which BP has drawn incorrect conclusions from selected parts of the record and presented them on appeal as fact. A review of the record demonstrates that BP’s argument is incorrect.” Appeal 2014-447

“BP does not offer any evidence that Policy 495 was misapplied.” Appeal 2014-469

“BP’s appeal on the issue is without merit.” Appeal 2014-473

“BP’s position is without merit.” Appeal 2014-494

5 Comments

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  1. Dale Rooks says:
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    One of the worst parts of this BP fiasco is the fact that the price of seafood has gone through the roof. Boxes of oysters have gone up from $35.00 to $58.00. Crab claws before the oil spill went from $12.00 a pound to $19.50 a pound. All seafood has gone up and prices will never go back down. Funny thing to me, no one ever mentions the price of seafood. It is hard for a small business like us to compete with 2 for $20 chain restaurants! In my humble opinion, BP owes seafood restaurants because of the prices. We have been in business for 45 years. Mom and Dad started our restaurant in 1969. We are loaned out to the max just trying to stay open. If we eventually have to close because of this mess BP has created, only 7 families would be destroyed. No big deal, right BP ?

  2. David Arnsby says:
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    So here we have it on very good authority and rightly so : ” “Guilty of Gross Negligence “. I am very pleased that Judge Barbier took plenty of time to come to this conclusion. 153 pages of hard facts with a detailed time line from the very beginning. Totally accurate in its presentation. The type of detail that gives an appellate court a just and right opportunity to deny the appeal that BP will submit to them. More time wasting will occur no doubt when BP attempt to catch the ear of SCOTUS who should send it back with NO stamped on the envellope. Now we need a very loud voice for the victims. It’s all well and good for the CWA fines to bolster the Fed’s pockets, and the States and Counties to be sent huge checks for their sales and bed tax losses, but what about the victims that generated the sales and Hotel rentals etc, and have yet to see a dime offered to compensate them ?. There is no way that State and County payments should be paid until all the thousands of victims and Business owners are compensated first. This message has to be got out there. Something must be done now !, This ruling changes everything.
    Last up : Shame on the EPA for giving BP their licences back in March. The leverage was right there, yet they blew it.
    I never did understand that, and after this weeks ruling, it makes it all the more outrageous that they did it. That gave BP the opportunity to have their cake and eat it . Not for much longer.

  3. David Arnsby says:
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    I recommend all claimants to read the 153 page ruling by Judge Barbier. The detail is incredible. No question at all that BP is guilty of gross negligence. Now let’s see what Judge Edith Brown says when the appeal to the 5th circuit is submitted. All eyes will be on her decision.? I am as good as certain the other panel Judges will reject BP ‘s appeal outright.
    Log in to : uscourts.gov for the 153 page ruling.

  4. David Arnsby says:
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    Tom, my sincere thanks is to you. I am sure I speak for thousands of claimants who are in the same position as me.
    Every day you are taking the fight to BP, and not only for your own clients. You are fighting for everyone.
    This ruling is huge, yet more needs to be done to get all victims paid. Opt out’s like me, cannot be held on a ” Stay ” any longer, while States,Counties, and other Government Agencies are licking their lips, getting paid ahead of us.
    They are not victims like we are ? Seriously, this needs to be addressed right now. They must get in line behind us, not in front. Keep up the good work Tom……

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