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BP Business Economic Loss Claim Appeal 2017-523:Chiropractor’s Additional/Supplemental Product Line Revenue Appropriately Included In Causation Calculation

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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 appeals the denial of its BEL claim for failure to satisfy any of the causation tests in Exhibit 4B. Claimant operates chiropractic clinics in south Louisiana. This claim is for the clinic in Crowley, Louisiana (Zone B). Claimant argues that the Settlement Program erroneously included revenue from sale of a protein supplement in the causation calculation. Removing this revenue, according to Claimant, would allow it to satisfy causation.
In September 2010, Claimant began to sell to its chiropractic patients. This product line was promoted by the Claimant on its website and on Facebook. On appeal, Claimant argues that it intended for this product line to be maintained separate from the chiropractic practice. Describing the supplement revenue as “not typically earned under the normal course of operations,” Claimant argues that it should have been excluded from the calculation pursuant to Policy 328 v.2.  Removal of this revenue, according to Claimant, would allow it to satisfy one or more of the Exhibit 4B tests.
In response, BP argues that Claimant incorporated the supplement sales into its primary business line, included the revenue on its P&Ls and reported the income on its tax returns. Citing Policy 373, BP argues that the protein supplement revenue was properly included because “all recurring revenue streams that are deemed to be within the businesses’ normal course of operation should be included in the analysis.”
In the Calculation Notes at Note 8, the program accountant clearly explained the basis for including the supplement revenue in the calculation:
Accounting Review noted that the P&L Other Income line item (Diet Food)” only has activity during the months of October 2010 through April 2011. The Claimant explained that the line item represents income from a product the clinic sold on a trial basis. The Claimant’s counsel provided correspondence stating that the owner decided to begin selling in September 2010. The protein sales and purchases were tracked in a separate bank account, but recorded within the same QuickBooks file as the chiropractic center. The Claimant decided to discontinue selling the in April 2011.
The revenue and expenses were included within the Schedule C for Claimant–See Additional Support appendix in this workbook for a reconciliation of the income reported on the P&Ls compared to the Schedule C’s. Accounting Review classified the P&L Other Income line item (Diet Food)” as Revenue.
Claimant’s decision to incorporate an additional product line into its chiropractic practice does not disqualify the additional revenue. In fact, Policy 373 v.2 provides the example of a restaurant that generates income from food sales and also receives income by renting an apartment attached to the building. The facts of this claim are analogous. The professional accounting vendors properly vetted this issue and resolved it. No error has been shown. Accordingly, the denial is upheld and Claimant’s appeal is denied.

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