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BP Business Economic Loss Claim Appeal 2016-1173: Claimant’s Award Remanded to Determine if Revenue Included from Out-of-Zone Facilities


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.

BP appeals a BEL award in the amount of $559,213.44 pre-RTP to a water inspection and testing enterprise.  Its sole preserved basis of appeal is that the Program vendors failed to adequately look into possible out-of-zone facilities operated by Claimant whose finances should not have been included in the computation of an award.

In support, BP points to the familiar definition of “facility” found at Exhibit 5 of the Settlement Agreement and then lists various references that call into question whether Claimant may in fact have operated multiple facilities. First, BP cites Claimant’s website wherein it reports having a location in Atlanta and satellite offices in  **. Secondly, BP points to Claimant’s financials, where it separately allocates such traditional facility expenses as “rent,” “utilities” and “telephone” and refers to Policy 467, which uses the itemization of separate expenses as a criterion in determining whether a separate facility exists. BP lastly asserts that the record reflects that in making this determination, the Program relied solely upon a brief and irrelevant representation by Claimant’s accountant that its “sole office location” was in Destin, but that it kept track of expenses at other locations “for tracking purposes.” It proposes either $0 or a remand to look further into the out-of-zone facility issue.
In response, Claimant asserts that the record showed dialogue between its representatives and the Program concerning this issue, and that thereafter the
Program accountants applied their professional discretion in deciding that the only Claimant facility was located in Destin. As to the representations made on its website, Claimant noted that its Atlanta location did not exist in 2010 and that references to “satellite offices” actually meant “areas” that Claimant operated in. It further argued that many of the allocated expenses were simply reimbursements to employees who lived in those areas.

Out of an abundance of caution, this panelist requested a Summary of Review seeking the Program’s explanation as to how it applied the Settlement Agreement and Policy 467 viz-a-viz the separately listed expenses for other locations referred to in Claimant’s financials. In due course, a brief response was received wherein the Program stated that it performed no additional outreach or analysis concerning Claimant’s possible maintenance of more than one facility “other than” Claimant’s statement at Question 2 in Section A of its Claim Form and a referenced contact note on this issue. The Claim Form reference is an obvious typo, since Question 2 of Section A inquires solely about Claimant’s EIN number. In all probability, the Program was referring to Question 2 of Section B, wherein Claimant answered “No” to the question inquiring if it maintained more than one separate physical location. The contact note reference appears to be the same one already mentioned by BP, dated September 17, 2015, wherein Claimant’s accountant, in answer to an inquiry concerning expenses listed for other locations and calling for “a detailed explanation in reference to operations conducted as (sic) these sites”, the entire response was : “No, the Claimant’s sole office location is Destin, Fl 32541. For tracking purposes, the Claimant separated various expenses by the location or regions that the Claimant provided services too (sic).”

Of course, this response does little to answer the question as to other possible facilities, be they “offices” or not. The record shows no follow-up to this representation, falling far short of the “detailed explanation” that had been solicited from Claimant. This panelist is well cognizant of the professional discretion granted by Policy 495 and elsewhere to Program vendors in making judgment calls on certain issues. With all due respect, however, this panelist feels strongly that it would be in derogation of its charge to conduct a de novo review of the record were it to affirm the Program’s findings on this important issue based upon the paucity of supporting data
and analysis in this record. Accordingly, this panelist feels constrained to remand this matter so that the Program may engage in a more intense and detailed analysis and outreach with Claimant concerning the possibility that during relevant times it operated more than one facility,some of which may have been out-of-zone in nature. If it finds that such was the case, then a recalculation of the award would be in order to exclude financials emanating from any out-of-zone facilities.

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