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BP Business Economic Loss Claim Appeal 2016-2072: Conversion of Claimant’s P&L’s Not Appropriate Under Policy 318

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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.

The Claims Administrator denied the BEL claim of this retailer of office supplies in Cullman, Alabama (Zone D).  After restating the financials, Claimant was unable to meet any of the causation tests in Exhibit 4B. Claimant appeals, arguing that under the circumstances of this claim, the financials did not need to be restated and that
in doing so, the program accountant exceeded his professional judgment.
Claimant’s P&Ls utilize a 4 week – 4week -5 week reporting period rather than traditional calendar months. This approach divides each quarter into two 4 week periods and a single 5 week period. In reliance on Policy 218, the program accountant restated the financials, converting them to a traditional calendar month basis.
This conversion resulted in the failure to pass causation.
BP responds that the Settlement Agreement contemplates that P&Ls must reflect calendar month data. BP also argues that under Policy 218, program accountants are permitted to convert 13 period revenue and expense statements into 12 month P&Ls. Claimant responds that its 4-4-5 week methodology is not a 13 month fiscal
period, merely an alternative method for maintaining financial data for a 12 month cycle. Claimant also urges that nothing in Exhibits 4B or 4C requires use of calendar month financials and argues that its method accurately allows for the analysis of comparable months in the Benchmark and Compensation Periods.
De novo review demonstrates that the program accountant’s reliance on Policy 218 was misplaced. Policy 218 permits the conversion of 13 month fiscal year financials to 12 month data by the vendor accountants. Here, Claimant’s financials divide the year into four 13 week quarters (4-4-5) but remain nothing in Exhibits 4B or 4C
requires use of calendar month financials and argues that its method accurately allows for the analysis of comparable months in the Benchmark and Compensation Periods.
De novo review demonstrates that the program accountant’s reliance on Policy 218 was misplaced. Policy 218 permits the conversion of 13 month fiscal year financials to 12 month data by the vendor accountants. Here, Claimant’s financials divide the year into four 13 week quarters (4-4-5) but remain on a 12 month basis. Thus, the issue presented is whether the accountant had a valid basis for converting the P&Ls, independent of Policy 218. BP cites a prior appeal panel decision in which the conversion of 4-4-5 week financials was upheld in partial reliance on Policy 218. In that case, the panel determined that this was an appropriate exercise of the vendor accountant’s discretion. Here, the program accountant’s sole stated reason for converting the financials was Policy 218. However, this panelist finds no support in the text of Policy 218 for the conversion of Claimant’s P&Ls under the circumstances of this claim. Neither the Administrator nor BP offers any other valid basis for the conversion and de novo review discloses none.
There is a finding herein that Claimant is entitled to have this claim calculated using the original P&Ls. Accordingly, the denial is overturned and the claim remanded to the Claims Administrator for that purpose.

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