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BP Business Economic Loss Claim Appeal 2015-1610: Rounding of Revenue Appropriate in Application of Policy 495’s Education Methodology


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 is a Zone C non-profit school, and was awarded $43,069 pre-RTP by the Settlement Program. BP appeals, asserting error on the part of the Claims Administrator due to a miscalculation of the Exhibit 4B V-test causation analysis, which BP argues should have precluded any award for this claim.

Claimant’s P&Ls were determined to be insufficiently matched, and Policy 495 was thus invoked. The “Educational Institutions Methodology” was appropriately applied. This methodology is a departure from the Annual Variable Margin Methodology, and, among many other aspects, has a detailed focus upon the timing of payments received for tuition payments, as those can vary widely, but always apply to a given academic period. As a consequence, matching issues arise when tuition fees are recorded and/or paid on a claimant’s P&Ls in months different from when the education is provided and expenses are incurred and/or recorded. According to its preamble, the Educational Institutions Methodology provides for allocation of revenues in order to better achieve sufficient matching of revenue and expenses.

The Educational Institutions Methodology provides the procedural framework for allocation of tuition income at Section 4 (a) iv, p. E3-4, as follows:

“CSSP Accounting Vendors will obtain support from the claimant with regard to the academic year or semester dates, but will exercise professional judgment to determine the appropriate months to allocate revenue to. For example: If a term commences on August 30, 2009, September 2009 will most likely be the first month to which revenue is allocated.”

BP complains that the rounding examples described in the Policy, which were followed and applied to these facts, unfairly cut in Claimant’s favor. BP asserts Claimant would have failed the Exhibit 4B V-test causation calculation if the program had not “rounded” two twenty-day months to count as full months for calculation purposes for the 2010 academic year. BP argues for a per diem analysis of the 2010 academic year as against the 2011 year, as opposed to calculation of the revenue by the month.

There is no “per diem” criteria cited by BP as the governing standard that should be applied here. A careful examination of the Contact Notes and the Accountant Compensation Calculation Schedules demonstrates an exhaustive analysis was conducted in considering this claim, with repeated demands upon Claimant’s private accountants and administrators for detailed information relating to the school calendar, non-tuition forms of income, defined academic periods, review reports of financials, accounting methodology, summer camp information, trust fund information, gifts, grants, fund raising, and more. This tsunami of financial and operational information was carefully organized and reviewed by the Program Accountants. The Policy 495 Educational Institutions Methodology criteria for determining the months to be included in a given school term were faithfully applied. An award was determined, and Exhibit 4B V-test causation found to be met. The Program Accountants exercised their professional judgment as called for by the Policy.

There was no error, and the Award is affirmed, with Claimant’s Final Proposal in like amount hereby selected.

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