After more than five years in operation, the Deepwater Horizon Economic & Property Damages Settlement Program (Settlement Program) has nearly finished its review of economic claims. Since it opened in June 2012, approximately 390,000 claims were filed and nearly $10.2 billion has been paid to 115,000 eligible claimants.
Claims Administrator Patrick Juneau originally hoped to complete the claim processing by the end of this year. However, a recent ruling by the Fifth Circuit Court of Appeals may briefly delay that goal while the Settlement Program adjusts to implement the decision.
The Fifth Circuit’s order again changed the way in which Business Economic Loss (BEL) claims are calculated under the settlement agreement. In October 2013, the Fifth Circuit ruled that certain BEL claims had to be calculated under industry-specific methodologies to ensure that the financial statements used in those calculations were “sufficiently matched.” In other words, both the revenue and expenses incurred to generate that revenue had to be reported in the same month. Policy 495, enacted to accomplish this matching, set forth five different calculation methodologies based on industry – construction, education, professional services, agriculture, and one catch-all category titled the Annual Variable Margin Methodology (AVMM).
On May 22, 2017, the Fifth Circuit overturned all but the AVMM, reasoning that the four other matching categories were not consistent with the terms of the settlement agreement because they infringed on a claimant’s right to choose its own compensation period. The order also prevents the Settlement Program from moving, smoothing, or reallocating revenues unless to correct errors. This ruling does not apply to claims that have been paid or that were closed after all appeals of a denial were exhausted.
This ruling was a win for the Plaintiffs’ Steering Committee, which argued that only AVMM should be used to accomplish matching. Now, all claims will either be calculated under AVMM or under the settlement’s original calculation methodology if the Settlement Program determines a claimant’s financial records are sufficiently matched. The review of claims could actually pick up because these two calculation methodologies are much simpler than those that are no longer valid.