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BP Business Economic Loss Claim Appeal 2017-1032:Start-Up Dental Practice Fails Customer Mix Prong of Decline-Only Revenue Test

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 Start-Up BEL claim of this dental practice in Clearwater, Florida, (Zone C) upon a finding that the Claimant failed to satisfy the Customer Mix prong of the Decline-Only Revenue Pattern test. On appeal, Claimant argues that the Settlement Program misclassified valid customer addresses, including those with Post Office Box addresses, erroneously applied a matching analysis to the customer data, and issued a Denial Notice rather than an Incompleteness Notice.
The record shows that Claimant provided detailed Customer Mix data which it later supplemented. In analyzing the data, the vendor accountant excluded customers with incomplete addresses and Post Office Boxes. The accountant also identified revenue variances between Claimant’s P&Ls and the Customer Mix data. Claimant argues that many of the incomplete addresses were typographical errors that should have been corrected by the Settlement Program. As to the Post Office Box addresses, Claimant argues that the accounting vendor should have resorted to alternate sources for these customers’ residential addresses.
The Customer Mix test requires the Claimant to demonstrate an aggregate of 10% increase in the share of total revenue generated by customers located in Zones A-C over the same period of three consecutive months from May 2011 to April 2012, compared to the same three month period from May 2010 to April 2011. Contrary to Claimant’s argument, Policy 345 v.3 requires the revenue of customers whose addresses are considered unknown to be excluded from the Claimant’s share of
revenue. However, revenue generated from customers whose addresses are considered unknown will be included in the Claimant’s share of revenue generated by non-local customers. A claimant will still be able to satisfy the Customer Mix test by demonstrating the required percentage change in revenue derived from customers in Zones A-C or customers located within 60 miles of the claimant’s business location.
Accurate physical addresses are required under the Start-Up BEL framework in Exhibit 7. For example, the Settlement Program is required to measure the distance between the Claimant’s location and each customer location (residence). Policy 345 likewise provides that Post Office Box addresses do not provide the requisite customer location information.
The Calculation Notes reflect that the vendor accountant carefully and meticulously reviewed the Customer Mix data and properly excluded those with incomplete or unverifiable addresses. The Claimant provided 2 sets of customer mix data. Accounting Review utilized the most recently provided set of data, which was provided with the Reconsideration Request. Items show the differences between the customer mix data and P&Ls. Those months missing customer mix data (less than what was in the P&Ls) were designated with 1 mile Zone D for May 2011 – April 2012 to exclude from the Benchmark Period and 100 miles and Zone A for May 2010 – April 2011 to include in the Compensation Period. Those months with customer mix data greater than the P&L’s (negative amounts) were designated with 1 mile and Zone D for May 2010 – April 2011 to include in the Compensation Period and 100 miles or Zone A for May 2010 – April 2012 to
exclude from the Benchmark Period. Other items are P.O. Box and incomplete addresses not verified by the mapping tool.
For causation testing purposes under Policy 345 v.3, these items were designated with Zone D for May 2011 – April 2012 to exclude them from the Benchmark Period and Zone A form May 2010 – April 2011 to include them in the Compensation Period.No abuse of the program accountant’s professional judgment or misapplication of the Administrator’s approved policy has been demonstrated. Although Claimant’s customer lists are more detailed than similar documentation seen in other claims, Claimant’s data does not satisfy the requirements of the Settlement Agreement. Accordingly, the denial is upheld.

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