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BP Business Economic Loss Claim Appeal 2015-1161: Fire losses are not “implausible and suspicious”

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The following is an Appeal Panel Decision issued pursuant to Section 6 of the BP Deepwater Horizon Economic & Property Damages Settlement Agreement and the Rules Governing the BP Appeals Process. Links may have been added to assist the reader. The original decision may be found here, as well as a glossary of BP Settlement terms.


Claimant manufactures church pews, furniture and furnishings in Dothan AL. It received an award of $424,850.87 (pre-RTP) in its BEL claim, which it has voluntarily reduced to $404,850.87 in its final proposal.

BP submits a final proposal of $0 and contends that the claim is “implausible and suspicious” and therefore should be denied entirely. Alternatively, BP argues that the Program failed to offset insurance proceeds received by the claimant from its revenue and that the Claims Administrator misclassified “Screws,” “Fasteners” and “Staples” as fixed expenses.

Claimant sustained a serious fire on May 7, 2010 which destroyed a significant portion of its business. Following the fire, Claimant’s revenue declined sharply for several months and it recorded no income at all in June and July of 2010. BP maintains that, but for consideration of one of these months in a Benchmark Period, Claimant would not have passed the Exhibit 4B causation test. BP maintains that the fire was the sole cause of the claimant’s loss, not the spill, and to attest otherwise makes this claim “implausible and suspicious.”

BP notes that the Fifth Circuit’s opinion in In re Deepwater Horizon, 744 F.3d 370, 378 (5th Cir. 2014) empowers the Claims Administrator to investigate suspicious claims and attaches an opinion from another appeal panel which BP analogizes to this claim. To the contrary, the facts of that claim, in which the claimant represented that it was a truck stop business when it had ceased such activities in 2009, is factually distinguishable from this claim and provides no guidance at all.

Policy 308 v.2 states:

The Settlement Agreement represents the Parties’ negotiated agreement on the criteria to be used in establishing causation. The Settlement Agreement sets out specific criteria that must be satisfied in order for a claimant to establish causation. Once causation is established, the Settlement Agreement further provides specific formulae by which compensation is to be measured. All such matters are negotiated terms that are an integral part of the Settlement Agreement. The Settlement Agreement does not contemplate that the Claims Administrator will undertake additional analysis of causation issues beyond those criteria that are specifically set out in the Settlement Agreement. Both Class Counsel and BP have in response to the Claims Administrator’s inquiry confirmed that this is in fact a correct statement of their intent and of the terms of the Settlement Agreement. The Claims Administrator will thus compensate eligible Business Economic Loss and Individual Economic Loss claimants for all losses payable under the terms of the Economic Loss frameworks in the Settlement Agreement, without regard to whether such losses resulted or may have resulted from a cause other than the Deepwater Horizon oil spill provided such claimants have satisfied the specific causation requirements set out in the Settlement Agreement. Further, the Claims Administrator will not evaluate potential alternative causes of the claimant’s economic injury, other than the analysis required by Exhibit 8A of whether an Individual Economic Loss claimant was terminated from a Claiming Job for cause.

Claimant has made no false or misleading statements in its claim, nor has it attempted to cover up the existence of the fire it suffered in May of 2010. BP’s counsel admitted to the court that nothing in the Settlement Agreement provides for an offset where a claimant satisfies the causation tests yet other information indicates that the loss may be attributed to a cause other than the spill. BP acknowledged that “. . . [s]uch false positives are an inevitable concomitant of an objective, qualitative, data-based test.”

This claim compares more favorably to the example posed by the Claims Administrator of the three-person accounting firm whose income declined because one partner was on sick leave for an extended period of time. BP offers no persuasive evidence that the Claims Administrator misclassified Claimant’s expenses, nor is there a basis to support BP’s final proposal.

Claimant’s final proposal is the correct result.

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