Two weeks ago, the United States Supreme Court allowed payments to resume to companies affected by the BP Deepwater Horizon Disaster. Such payments had been halted since an appeals court issued an injunction in October 2013.
While this was good news for long suffering Gulf Coast businesses, in reality it will take some time for the Claims Administrator to restart the payment process. Complicating matters is a court edict requiring the application of new accounting rules, the implementation of which will require a herculean administrative effort.
The new procedures, known as Policy 495, require special treatment for claims supported by P&L’s which have expenses that are not “sufficiently matched” to their corresponding revenues. Seven tests are to be applied to determine whether any particular P&L is “sufficiently matched.” If found deficient, the claim will be reviewed in accordance with the requirements of Policy 495.
While all Business Economic Loss claims (BEL) will be subjected to Policy 495’s seven tests, claims submitted by construction, professional services (lawyers, accountants, architects, engineers, etc), agriculture and educational entities will receive specialized treatment. Processing protocols for these types of entities have yet to be developed. Hence, payments made to such businesses will likely suffer additional delays.
The eighty-eight pages of Policy 495 are too numerous to discuss in this article, suffice it to say that claims subjected to the protocol will likely decrease in value (although the odd claim may actually increase). While we oppose the implementation of Policy 495 in its current form (Class Counsel has filed a motion with Judge Barbier to Reconsider the policy’s reach), we support the Claims Administration’s efforts to sort through the requirements to reach an efficient and expeditious conclusion to this compensation program.