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BP Business Economic Loss Claim Appeal 2016-2408: Education Methodology Triggered By Training Academy’s Unadjusted Financials

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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


Claimant, is an occupational training academy in Houma, Louisiana. The Settlement Program denied this claim because Claimant did not satisfy the causation requirements of Exhibit 4B. Claimant appeals, asserting the Education Methodology was arbitrarily applied to Claimant’s financials, resulting in the Denial. Claimant argues that based on the factors unique to the Claimant’s business, the revenues were improperly allocated on a typical academic calendar year basis, and that based on the nature of Claimant’s revenue streams, use of the Education Methodology is the wrong application of Policy 495 for Claimant. Claimant interprets its financials as reflecting a “perpetual business” that generates revenue and expenses on a weekly basis, and the revenue is earned consistently throughout the year, i.e. not with one month earning substantially more or less than the other, such as the first month of a semester.
In this claim, the Settlement Program accountants analyzed Policy 495’s matching triggers. Claimant’s unadjusted financials triggered three criteria for applying Policy 495. First, Claimant’s total variable expenses exceeded 25% of its annual variable expense in five months between July, 2007 and October, 2009. Secondly, Claimant’s variable profit margins ranged from 99.94% (August 2009, November 2008) to negative 122.02% (July 2007), a range well above the 50-point threshold set forth in Policy 495’s Criterion 6. Finally, Claimant had twenty-three months in the available Benchmark and Compensation Years where the variance between the month’s percentage of annual revenues as compared to that same month’s percentage of annual variable expenses exceeded 8%. It should be noted that these percentage swings belie Claimant’s assertion that it is a “perpetual business” that generates revenue s and expenses on a regular basis.
The Settlement Program appropriately determined that Policy 495 should apply, utilizing the Education Methodology, given the nature of Claimant ’s business and
its NAICS code. Accordingly, Claimant’s appeal is denied, and the Denial of theClaims Administrator is hereby upheld.

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