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BP Business Economic Loss Claim Appeal 2016-1998: Under Policy 495 CA Must Re-Allocate Income To The Months In Which Work Was Performed

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.

The Claims Administrator awarded negative $2,695.31 to this landscape business in Biloxi, Mississippi (Zone A). The program accountant reallocated some revenue from 2009 to 2008 but declined Claimant’s request to reallocate a payment of $41,804.80 received in January of 2009. That payment is the subject of Claimant’s appeal.
Claimant was hired to provide landscaping and irrigation for the construction of a in 2008. Claimant argues that the work was performed and the project completed by November of 2008 but that the reviewing accountant erroneously refused to reallocate the $41,804.80 payment to the months in which the work was performed. Claimant submitted a number of documents in an effort to show that the work was performed in 2008. These included correspondence and a punch list from the prime contractor. Claimant argues that the absence of any landscaping items on the punch list supports its contention that the work was complete by the end of 2008.
In the Reconsideration Analysis, the program accountant rejected this documentation, stating:
We have reviewed the Reconsideration request regarding (1) the
revenue recorded in January 2009 belongs to November 2008
(amount of $41,804.80), and (2) 2009 Only Benchmark Period. This
Post-Reconsideration Eligibility Notice includes (1) no changes were
made to the revenue recorded in January 2009 as the supporting
documentation does not show that the job was actually performed in
November 2008 given the following:
Exhibit A – These documents only show the instructions for a project
to be completed with a budgeted schedule. However, this budgeted
schedule does not indicate when the work was actually performed.
Exhibit B – This email only relates to one specific part of landscaping,
not the project as a whole.
Exhibit C – This list of ‘punchwork’ does not include anything
specific to the landscaping and irrigation, and the exclusion of an
item from a list of work to be performed is not sufficient evidence to
prove a specific date. Furthermore, the invoice previously provided
for the $41,804.80 contains January dates next
to 2 items on the invoice, but no reference to November 2008.
Additionally, (2) no changes were made to the selection of the ‘2009
Only’ Benchmark Period as all available benchmark periods were
reviewed and it was determined ‘2007/2008/2009′ was the Optimum
Benchmark Period.
In a supplemental appeal memorandum, Claimant also submitted the Declaration of the President of the prime contractor on the project attesting that the job was completed in November of 2008.
After declining to reallocate this payment, the reviewing accountant applied Policy 495 which triggered three of the matching criteria. The AVM methodology was then utilized to restate the financials. The result was a failure to satisfy the causation requirements of Exhibit 4B.
Claimant argues that the accountant was unduly restrictive in his evaluation of the supporting documentation. Claimant argues that with reallocation of the $41,804.80 to the months in which the work was performed, none of the Policy 495 criteria would have been triggered, thereby obviating application of the AVM methodology. In response, BP argues that Claimant’s invoices for the project are dated in January of 2009 and the revenue was recorded in that month. BP also makes the argument that the documentation submitted by the Claimant is insufficient to show that the work was actually performed in 2008. BP does not argue that the work was performed in 2009, only that the documentation does not prove that the work was done in 2008.
De novo review of the record discloses no evidence that any work on the project was performed in January of 2009. In literally hundreds of appeals, BP has taken the opposite position from the argument it advances here – that revenue recorded in a given month should be reallocated across the months in which the work was actually performed. The District Court has upheld this position and appeal panels are bound by it. Indeed, Policy 495 instructs the reviewing accountants to make these reallocations before applying the matching criteria:
Contemporaneous P&LS submitted by the claimant will be restated
if in analyzing and processing a claim, the CSSP Accounting Vendors
identify either an error (as previously defined) or a mismatch of
revenue and variable expenses which can be explained and supported
by appropriate documentation. If matching issues remain after such
restatements, revenue and/or variable expenses shall be allocated as
per one of the methodologies set forth in Attachments B through H.
While the accountant did not have the benefit of the contractor’s Declaration, he failed to properly consider the documentation submitted by the Claimant. This panelist is at a loss to understand the vendor since he did reallocate other 2009 revenue to 2008 as shown by the Calculation Notes. The only legitimate inference that can be drawn from the documents submitted is that the work was performed in 2008 and the Declaration verifies this fact. Thus, the Claimant’s financials contained “a mismatch of revenue and variable expenses which can be explained and supported by appropriate documentation” as envisioned by Policy 495. Under these circumstances, the vendor accountant’s failure to properly apply Policy 495 by reallocating this revenue was error.
For the foregoing reasons, it is necessary that this claim be remanded to the Claims Administrator. The vendor accountant shall restate Claimant’s P&Ls for 2008 and 2009, reallocating the $41,804.80 payment across the months in which the work was performed. If matching issues remain after such restatement, the accountant, consistent with Policy 495, shall utilize the AVM or other appropriate methodology to achieve sufficient matching.

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