By Amanda Bronstad, From The National Law Journal

Attorneys worry that claims-accounting shift will freeze out many of their clients.
Plaintiffs lawyers have turned to the courts to fight changes to the $9.2 billion Deepwater Horizon settlement that they warn will leave out thousands of businesses suffering oil-spill losses.
Professor David Logan of Roger Williams University School of Law in Rhode Island.
Lead plaintiffs attorneys petitioned the U.S. Court of Appeals for the Fifth Circuit last month to reverse changes to the way claim amounts are calculated. Those accounting changes were put into place after that court agreed with BP PLC that the claims administrator was using an accounting method that could have paid thousands of businesses with no oil-spill losses.”What turns out to be a technical accounting question that no one really had on the horizon three years ago now is basically a sink-or-swim issue for a significant number of claimants,” said David Logan (left), a professor at Roger Williams University School of Law.
The deadline is June 8 to file claims against the settlement, which resolves economic damages incurred by businesses along the Gulf of Mexico following the 2010 spill. BP declined to comment about the accounting change.
As of March 31, claims ­administrator Patrick Juneau had paid nearly $5 billion on more than 84,000 claims for economic damages, according to court papers. The settlement compensates Gulf Coast businesses that didn’t suffer physical damages from oil but say they have lost money, such as seafood producers, restaurants, tourism shops and boat operators that volunteered in cleanup efforts. The specific identities of those companies making claims for economic losses, including law firms that might be ­filing on their own behalf, remain confidential. Some 60,000 claims remain under review. Of those, at least 20 percent could see their damages significantly reduced or eliminated under the new policy, according to a lawyer familiar with the case, speaking anonymously.
OPT-OUT
Brent Coon of Brent Coon & Associates
On April 16, another plaintiffs lawyer, Brent Coon (left) of Brent Coon & Associates in Beaumont, Texas, who has more than 10,000 oil-spill clients, cited the policy in asking the court to allow class members to opt out of the settlement originally approved in 2012. “It’s been made so onerous now that most people can’t qualify,” he said.
The plaintiffs’ complaints reflect a shift from the past three years, during which BP complained that some businesses received “windfall” payments based on “fictitious losses.” In a flurry of appeals before the Fifth Circuit, BP argued that the settlement required claimants to prove the spill directly caused their financial losses. The court rejected BP’s position, and the U.S. Supreme Court denied its petition for review last year.
But BP won a small but significant debate over how to calculate business losses — the issue now at the heart of the plaintiffs attorneys’ appeal. In 2013, the Fifth Circuit ruled, 2-1, that Juneau’s method was “completely disconnected from any reasonable understanding of calculation of damages.” Under the old method, businesses reported revenues during a three-month period after the spill and subtracted expenses incurred during that period. The changes now require a business to subtract ­expenses actually related to those revenues, regardless of when they were incurred.
Lead plaintiffs lawyers objected, arguing that the policy requires additional documentation and accounting calculations that specifically harmed businesses like construction, farming, education and professional services including law firms that attribute drops in work to the spill. On March 31, U.S. District Judge Carl Barbier sided with BP; plaintiffs lawyers have appealed that ruling.
Co-lead plaintiffs counsel Steve Herman of Herman Herman & Katz in New Orleans, wrote in an email to The National Law Journal that the new system “strays from the settlement agreement’s mandate that all claimants be treated equally.” Coon said the change is one of hundreds Juneau has implemented while determining how much claimants get paid. But it’s significant enough to wipe out awards for thousands of his clients, many of them in the Florida Panhandle. “It’s more nails in the coffin for the claimants, but it’s probably the last nail for many of them.”
BP, meanwhile, isn’t done with its own challenges. In an appeal that goes before the Fifth Circuit on June 3, the company seeks to recover hundreds of millions of dollars paid to businesses under the old accounting method. BP has challenged Barbier’s Sept. 24 order refusing its restitution request. “Hundreds of millions of dollars were wrongly paid out because of a misinterpretation of the settlement agreement that has since been overturned,” BP spokesman Geoff Morrell wrote in an email to the NLJ.
In another appeal, BP seeks to reverse Barbier’s refusal last year to grant access to information about businesses “for identifying and preventing the payment of improper, duplicative and fraudulent claims,” Morrell wrote. The Fifth Circuit heard oral arguments on April 7.
“The more they go back and change the rules and add issues to be considered in the administrative process, the less likely they’ll get the closure they’re looking for,” Logan said of the Fifth Circuit, which for the most part has upheld the settlement.
IMAGE: DAMAGES Businesses that lost money to oil spill can seek compensation.
DAMAGES: Justin Sullivan / Getty Images via iStockphoto.com
For more on this story go to: http://www.nationallawjournal.com/id=1202725934899/Its-Plaintiffs-Turn-to-Attack-BP-Deal#ixzz3Zq4Ar1I1