A West Virginia federal judge has granted preliminary approval to a class settlement worth up to $151 million with American Water Works Co. and Eastman Chemical Co. This will end claims from a 2014 coal-processing spill in the Elk River. U.S. District Judge John T. Copenhaver Jr. had rejected the settlement in July, citing issues with tiered compensation structure that was proposed for businesses that were closed or partially closed by health officials after the spill and other concerns. The parties submitted an amended class settlement on Aug. 25 addressing the judge’s concerns.

For the tiered business compensation structure, which the judge previously said “generates unfairness” to businesses with higher annual revenues, the parties split businesses into two categories: those with an annual revenue of $1 million or less, and those making more than that. The parties said:

Businesses with annual revenue up to and including $1,000,000 receive an estimated base payment of $1,875 plus 4 percent of an amount equal to their 2013 gross revenue – so that the formula for computing the payment is the same for all eligible businesses. Businesses with annual revenue in excess of $1,000,000 receive an estimated uniform payment of $41,8755 – which is the amount that the above formula yields for a business with an annual revenue of $1 million.

The judge had also objected to the proposed deal’s review and appeals process for claims disputes, which the parties addressed by creating a “more robust” appeals process that allows claimants to appeal to an independent reviewer if they’re dissatisfied with a decision from the settlement administrator, according to the Aug. 25 filing.

The judge’s third concern was a system of fixed base payments for certain medical claims. The proposed payments ranged from $50,000 to $500,000, which the judge said failed to account for differences between claims. The parties changed the formula for medical claims from a fixed base payment to a payment equal to four times past medical costs, plus an additional $5,000 for each night spent in a hospital related to the diagnosis or treatment of an injury or illness.

Judge Copenhaver had expressed concern that some of the proposed agreement’s provisions would cause delays of claims payments until all appeals have been resolved or appeals periods expired. The parties added new provisions for the appeals process and an early funding into escrow accounts in the event that there are any appeals.

The class action had been prompted by a January 2014 incident in which a Freedom Industries coal-cleaning mixture containing primarily 4-methylcyclohexane methanol, also known as MCHM, leaked from one of its storage tanks on the banks of the Elk River in West Virginia, just upstream from a municipal drinking water intake. The spill left residents and businesses in a nine-county area in the state without a potable water source from which to drink, bathe, or wash dishes for at least five days.

The Plaintiffs are represented by Van Bunch of Bonnett Fairbourn Friedman & Balint PC, Kevin W. Thompson of Thompson Barney Law Firm, Stuart Calwell, Alex McLaughlin and D. Christopher Hedges of The Calwell Practice LC, Anthony J. Majestro of Powell & Majestro PLLC, Benjamin L. Bailey of Bailey & Glasser LLP, and Marvin W. Masters of The Masters Law Firm LC.

The case is Good et al. v. American Water Works Co. Inc. et al., (case number 2:14-cv-01374) in the U.S. District Court for the Southern District of West Virginia.

Source: Law360.com

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