Judge Carl Barbier has affirmed the four matching methodologies for BP claims filed by educational institutions, construction companies, agriculture businesses, and professional service companies such as law firms. The Plaintiffs’ Steering Committee (PSC) sought to overturn these methodologies, which were proposed by Claims Administrator Patrick Juneau in Policy 495. Juneau promulgated Policy 495 in response to the Fifth Circuit Court of Appeals’ Oct. 2, 2013, decision requiring the Claims Administrator to match corresponding variable expenses with revenue when calculating Business Economic Loss (BEL) claims.
The original BEL calculation methodology compared a business’ pre-spill variable profit with its post-spill variable profit in 2010 as itemized on a claimant’s monthly profit and loss statements. This was previously used to calculate BEL claims for all claimants regardless of industry. Policy 495 was then issued to address any purported mismatching of revenue and expenses and concluded that matching would be best accomplished by utilizing different frameworks for business claimants in different industries. While the Annual Variable Margin (AVM) methodology kept revenue as reported on a claimant’s profit and loss statement and reallocated expenses based on that revenue, the methodologies for the construction, educational institution, agriculture and professional services required revenue and expenses to be reallocated accordingly.
The PSC recognized this policy would affect the calculation and compensation of BEL claims as compared to the original Settlement frameworks and, they filed a Motion to Alter or Amend Policy 495, arguing the matching policy altered the causation and calculation frameworks set forth in the Settlement Agreement. The PSC requested that Judge Barbier limit the matching triggers and policy to cash basis claimants, apply the AVM methodology to all insufficiently matched claims, and discard the other matching frameworks. Judge Barbier ultimately decided to uphold Policy 495 as proposed by the Claims Administrator.
As this issue of the Jere Beasley Report went to print, the Claims Administrator has begun to reevaluate claims under all five of the matching frameworks. The processing of all BEL claims has picked up in recent months and will continue as the Claims Administrator must review more than 100,000 BEL claims that have been filed.
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