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BP Business Economic Loss Claim Appeal 2015-1319: Truckstop claim not “implausible” or “suspicious,” scope of business changed


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.

This claim is back before the panelist on return from the remand he ordered for the purpose of having the Settlement Program (“the SP”) investigate it as an “implausible” and “suspicious” one. The panelist ordered such investigation in light of the analyses and holdings of the two-judge majority opinion in In Re Deepwater Horizon, 744 F.3d 370 (5th Cir. 2014). Pertinent to the panelist’s decision to remand were these portions of that opinion:

Neither the Settlement Agreement’s terms nor its implementation ignore causation. Instead, the parties explicitly contracted that traceability between the defendant’s conduct and a claimant’s injury would be satisfied at the proof stage, that is, in the submission of a claim, by a certification on the document that the claimant was injured by the Deepwater Horizon disaster. We explain.

The parties agreed to a form that BEL claimants would submit to make a claim. The introductory section of the form states: “The Business Economic Loss Claim is for businesses … that assert economic loss due to the spill.” (Italics added). The end of the form requires the claimant “certify and declare under penalty of perjury” that all of the information in the claim form is “true and accurate to the best of my knowledge.” The claimant further attests “I understand that false statements or claims made in connection with this Claim Form may result in fines, imprisonment, and/or any other remedy available by law … and that suspicious claims will be forwarded … for possible investigation and prosecution.” Every claim BP argues suffers from some causal-nexus infirmity should have with it an attestation from the claimant or an attorney that the economic loss was caused by the spill.

· · ·

The attestation, of course, applies to all assertions on the claims form, including the financial figures and other details. Suspicious forms would be subject to investigation. These requirements are not as protective of BP’s present concerns as might have been achievable, but they are the protections that were accepted by the parties and approved by the district court. It was a contractual concession by BP to limit the issue of factual causation in the processing of claims. Causation, or in Rule 23 terms, traceability, was not abandoned but it was certainly subordinated.

· · ·

The claims administrator, parties, and district court can resolve real examples of implausible claims as they resolve other questions that arise in the handling of specific claims.

744 F.3d at 376, 377, 378.

In its BEL Claim Form filed January 7, 2013, Claimant attested that its business was that of a “Truckstop.” That was not true as of that date, or for any time during 2010 to 2013. The record evidence is clear cut that Claimant completely ceased all truck stop operations as of November 2009. By its own admission, once it had been questioned by the Program as to why its records reflected that in 2010 it had stopped selling gasoline and diesel, it advised that “the truck stop part of the business shut down in October 2009.” The records in the appeal file reflect that up to October 2009, Claimant conducted a “full facility truck stop encompassing 20 acres.” That truck stop operation included a restaurant, an inside retail sales store, a shop providing road service, light mechanics, oil change and retail tire sales, and a motel. Claimant’s sales tax records spanning 2007-2011 reflect conclusively that all sales from the aggregate “truck stop” operations ceased completely as of November 2009. The sales tax returns for November 2009 through 2011 show gross sales of “$0.00.” Likewise, the separate sales tax records for the restaurant reflect gross sales of “$0.00” for November 2009 through 2011. The record is equally clear, and by Claimant’s own acknowledgments to the Program, that after October 2009 its business operations consisted exclusively of using four tractor-trailers it owned to haul forestry products for a third party, and business management consulting services to another business, provided by its owner [XXXXX].

Relying on the representations in the Claim Form, and applying the objective causation tests set out at Exhibit 4B of the Settlement Agreement, the SP awarded a pre-RTP Compensation Amount of $439,203.51 and accorded a Tourism designation, resulting in a RTP multiplier of 1.5.

As part of the remand order, the panelist directed that, depending on the outcome of the investigation of the nature of business, “the Program should take another look at its classification of Claimant as a ‘Tourism’ business.”

Following remand, Claimant filed a “Statement Regarding Attestation/Causation” in which he declared, in pertinent part:

“I am not certifying or attesting that losses were caused by the spill under any other subjective, anecdotal, evidentiary, or other standard, as such is not a requirement of the Settlement Agreement. I am merely attesting that Exhibit 4B was followed in this case under the policies that were approved, I didn’t make any further inquiry into further causation as doing so wasn’t required under the settlement agreement.”

The “Claims Administrator’s Response to Remand” referenced Policy 308, and the approval of it by the District Court and the recognition of it by the Fifth Circuit, and explained:

As the Settlement Program understands the governing orders of the Courts, causation determinations are dictated solely by the agreed upon objective criteria set out in Exhibit 4B. The Claims Administrator is not to perform a gatekeeping function that would add an additional level of subjective causation analysis beyond the objective terms and conditions of Exhibit 4B. The Settlement Program addresses issues of implausible or suspicious assertions made by claimants in the normal course of claims processing. That analysis, however, does not characterize claims as “suspicious” or “implausible” when the submitted financials satisfy the objective causation criteria set out in Exhibit 4B.

In the instant claim, the Claims Administrator did not determine that there was anything presented by the claimant that would render the claim “implausible” or “suspicious” under the parameters outlined above.

Furthermore, the Claims Administrator’s Office has reviewed the basis for this remand and determined that the claimant’s responses on its Registration and Claim Forms regarding its Truckstop operations were not “implausible” or “suspicious” in light of the fact that the claimant did operate a Truckstop through November 2009 of the Benchmark Period.

However, the SP’s “Eligibility Notice After Remanded Appeal,” while again awarding the original Compensation Amount, now assigns a non-Tourism RTP of only 0.25.

BP again appeals, requesting a further remand for recalculation of the award or, in the alternative, offering a Final Proposal pre-RTP Compensation Amount of $82,866.00 as representing its estimate of the result of excluding the revenue from the defunct truck stop operations.

BP argues in its present appeal that “once Claimant closed its doors in October 2009, it could not have experienced any loss of profits, earnings, or income from the closed business.” Claimant counters that it did not close its doors but, rather, simply continued doing business under the same EIN and at the same location, albeit at a greatly contracted level, having ceased a major section of its enterprise.

There was not presented to the SP a “suspicious form,” in the words of the Fifth Circuit, in the sense that within its four corners there was some obvious misrepresentation or contradiction. Facially, the claim form would arouse no suspicion. Having cleared that hurdle, should the claim itself have been investigated as implausible and suspicious when facts surfaced during the claims handling process which seemingly refuted causation, given that the submitted financials otherwise satisfied the causation criteria of Exhibit 4B? The panelist remanded for that reason. Now, in light of the SP’s Response to Remand, and having painstakingly parsed all of the writings of the Fifth Circuit judges on point, the panelist does not consider that he independently should undertake, or order the SP to undertake, an analysis beyond what has taken place. It may just be that the Fifth Circuit’s observation that “the claims administrator, parties, and district court can resolve real examples of implausible claims as they resolve other questions that arise in the handling of specific claims,” essentially assigns the issue to the exercise of discretion and professional judgment by the SP. The panelist notes that the SP has created the Fraud, Waste and Abuse Department, staffed by a number of experienced investigators and headed up by former law enforcement executives, with the mission to protect the process from fraudulent claims.

Declining to order further “investigation,” the panelist denies the request for a second remand and, as between Final Proposal in the amount of the SP’s award, and BP’s Final Proposal of $82,866.00, adopts that of Claimant under the controlling Baseball Process. Appeal denied.

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