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Tom Young
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BP Claims Appeal Panelists: To remand or not to remand

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The BP Deepwater Horizon Property & Economic Damages Settlement was negotiated and specifically written to provide business economic loss (BEL) claimants with multiple opportunities to qualify for the maximum amount of compensation due under the terms of the Agreement. The program was explicitly designed to be “claimant-friendly” and “non-contentious.” Such attributes were the price BP agreed to pay in order to receive full and final releases from hundreds of thousands of businesses across the Gulf that were devastated by the company’s disaster.

Specifically, Section 4.3.8 requires that:

“The Claims Administration Vendors shall evaluate and process the information in the completed Claim Form and all supporting documentation under the terms in the Economic Damage Claim Process to produce the greatest Economic Damage Compensation Amount that such information and supporting documentation allows under the terms of the Economic Damage Claim Framework.” (emphasis added)

Nowhere in the 1,200 page Settlement document is BP afforded similar benefits. In essence, as to the treatment of a claimant by the Claims Administrator and/or the Appeals Panelists, if the claimant is “the runner,” then the proverbial “tie” goes to same, not BP.

BP appeals 21% of the time

BP increasingly appeals any and all BEL claim awards over a certain amount (typically $25,000). Such awards are appealed after the neutral, unbiased Claims Administrator has subjected the BEL claimant’s profit & loss statements and other supporting evidence to the causation requirements and compensation formulas described in the Settlement Agreement (as modified by Policy 495). The Claims Administrator should, according to Section 4.3.8 cited above, do so with an eye toward “producing the greatest Economic Damage Compensation Amount that such information and supporting documentation allows under the terms…”.

Surprisingly, British Petroleum tends to throw a fit over the compensation awarded under these protocols, even though BP’s tony Manhattan attorneys negotiated these very exacting terms and processes. The resultant frivolous appeals filed by BP and thus assigned to designated Appeals Panelists must be viewed in a light most favorable to the claimant. This means that the claimant, and not BP, must receive the benefit of the doubt.

A devious practice

Despite the fact that the Rules Governing the BP Appeals Process require appellant BP to address each and every appealable issue in the company’s opening salvo, known as the Notice of Appeal, BP routinely abuses the process by introducing new evidence at the Final Proposal stage, which procedurally forecloses the appellee claimant’s opportunity to respond and rebut. Such practice violates both the spirit and letter of the Settlement Agreement.

Since the baseball arbitration protocol is used in the claims appeal process, the Appeal Panel is required to choose the most reasonable proposal. However, the Appeal Panel should remand a claim to the Settlement Program for further scrutiny where “the information in the record is not sufficient to support either the claimant or BP’s Final Proposal” as per Rule 17(d)(5) of the Rules Governing the Appeals process. Naturally, when BP improperly raises a new issue at the Final Proposal stage, the Appeal Panel should ignore the assertion, or at the very least allow the claimant to respond, perhaps through remand or by the application of Rule 19 of the Rules Governing the Appeals Process.

On a superficial level, claimants naturally tend to support remand as an alternative to the adoption of BP’s Final Proposal, while opposing remand where the Appeal Panelists would otherwise be adopting the Final Proposal of the claimant. This is one of those circumstances, however, where what is good for the claimant should not necessarily be the same for BP. The invocation of the “claimant-friendly” nature of the program is appropriate.

One of the cornerstones of the Settlement Agreement, as noted above, is that the claimant would be provided with notice, information, assistance and opportunities to receive the greatest possible compensation to which he or she is entitled under the terms of the Settlement Agreement.

According to a brief filed by Class Counsel:

There was no corresponding intent, or agreement, nor is there any corresponding language, which ensures that such rights and opportunities be afforded to BP.

When, consistent with the “baseball” construct, the Claimant’s Final Proposal is, in the eyes of the Appeal Panelist or Panel, a better, fairer and more appropriate result than BP’s under the terms of the Settlement Agreement, the Claimant should be awarded his or her Final Proposal.

Similarly, when the Claimant has had a full and fair opportunity to respond to the arguments advanced and/or any extrinsic evidence submitted by BP – and/or the ultimate determination by the Appeal Panelist or Panel – and BP’s Final Proposal is, in the eyes of the Appeal Panelist or Panel, a better, fairer and more appropriate result than the Claimant’s, consistent with the “baseball” appeal construct, the Claimant should frequently be awarded BP’s Final Proposal (if any).

However, when BP has advanced some new argument, or submitted some new purported “evidence” – and/or the Appeal Panelist or Panel makes a new denial or determination – the Claimant must have some reasonable right and opportunity to respond.

In some cases, this opportunity may have been afforded within the appeal process itself (See Rule 19). But, in the case of any doubt, the Claim should be remanded, to afford the Claimant an opportunity to supplement, explain further, or otherwise respond.

Particularly when the Settlement Program has deemed the evidence sufficient, and issued an Eligibility Determination; but then BP argues, and the Appeal Panelist or Panel is inclined to agree, that the evidence is not sufficient; yet that insufficiency could theoretically be cured; the Claimant must be afforded the opportunity to amend or supplement the Claim.

1 Comment

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  1. J. Johnson says:
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    Tom, you have a direct email or can send me an email (don’t know if you have access to the emails put in the email address bar above this comment bar or not)?

    Thanks.

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