ID 100227611 v. BP Exploration & Prodn, I ( 2018 )

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
No. 18-30396 FILED
Summary Calendar November 28, 2018
Lyle W. Cayce
Clerk
CLAIMANT ID 100227611,
Requesting Party - Appellant
v.
BP EXPLORATION & PRODUCTION, INCORPORATED; BP AMERICA
PRODUCTION COMPANY; BP, P.L.C.,
Objecting Parties - Appellees
Appeal from the United States District Court
for the Eastern District of Louisiana
USDC No. 2:18-CV-1109
Before KING, SOUTHWICK, and ENGELHARDT, Circuit Judges.
PER CURIAM:*
Greater Baton Rouge Surgical Hospital claims economic losses from the
2010 Deepwater Horizon oil spill pursuant to a court-supervised class
settlement. The settlement program’s claims administrator denied the
Hospital’s claim because it determined the Hospital could not sufficiently
attribute its economic losses to the spill under the settlement’s prescribed
* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
No. 18-30396
formulae. An appeal panel affirmed the claims administrator’s decision. The
Hospital then sought discretionary review from the federal district court
overseeing the settlement, which entered an order denying review. The
Hospital now appeals that order.
For the reasons explained below, we conclude that the district court did
not abuse its discretion in denying review. Accordingly, we AFFIRM.
I.
This appeal arises from the April 2010 Deepwater Horizon oil spill in the
Gulf of Mexico. 1 In the wake of that disaster, BP entered into a court-
supervised settlement agreement with a class of plaintiffs who suffered
economic and property damage because of the spill. See In re Deepwater
Horizon I, 785 F.3d 986, 989 (5th Cir. 2015). Under the terms of that
settlement, a claimant submits its claim to the settlement program’s claims
administrator, who determines the claim’s validity. See id. The claims
administrator’s decision is subject to review by an appeal panel. See id. A
claimant who is unsatisfied with the appeal panel’s decision may then request
discretionary review from the federal district court supervising the settlement
program. See id.
To claim business economic losses under the terms of the settlement,
most claimants must show that their losses fit one of several patterns—as
detailed in the settlement agreement—that support an inference that the spill
caused the losses. Some claimants need only show a decline in revenues of a
certain magnitude during the compensation period and a subsequent rebound.
But the settlement agreement subjects claimants whose losses do not neatly
fit this pattern to additional requirements. Under the decline-only revenue
1We have recounted the details of that historic disaster in countless prior appeals and
thus do not repeat them here. See, e.g., Ctr. for Biological Diversity, Inc. v. BP Am. Prod. Co.,
704 F.3d 413, 418 (5th Cir. 2013).
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pattern, a claimant whose revenues declined at the time of the spill but did not
rebound thereafter must show (1) evidence of some extrinsic factor that
prevented the claimant’s revenues from rebounding and (2) a change in the
geographic makeup of the claimant’s clientele that temporally corresponded to
the spill. Under this latter requirement—the so-called customer mix test—the
claimant must show a 10 percent decline “in the share of total revenue
generated by” either nonlocal customers 2 or customers residing in one of the
three geographic zones most severely affected by the spill.
Greater Baton Rouge Surgical Hospital (the “Hospital”) is a now-defunct
outpatient surgical center. The Hospital submitted a business-loss claim to the
BP settlement program. The claims administrator found that the Hospital met
the first two requirements to show causation under the decline-only revenue
pattern but failed to meet the third. That is, the Hospital showed its revenues
sufficiently declined during the compensation period and attributed its failure
to recover to external factors (specifically, increased competition and declining
referrals). But the claims administrator determined that the Hospital failed
the customer mix test because it could not show a decline in revenues from
patients residing in the relevant geographic areas.
In the claims administrator’s eyes, the problem was that the revenue the
Hospital could tie to specific patients with known addresses did not match the
revenue the Hospital reported on its profit and loss statements (“P&Ls”). 3
Thus, the claims administrator attributed the additional revenue to unknown
patients and presumed all unknown patients during the compensation period
were either nonlocal patients or lived in the three most affected spill zones
2 The settlement agreement defines nonlocal customers as those residing more than
60 miles from the claimant’s place of business.
3 The settlement agreement requires all business claimants to submit monthly and
annual P&Ls detailing revenue categories and expense line items for the relevant periods.
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while all unknown patients during the benchmark period (the period before
the spill used to measure changes following the spill) were local customers not
from the three most affected zones.
The Hospital argued to the appeal panel that the revenues reflected on
its P&Ls did not correspond to patients it actually treated during the time
periods for which it recorded the revenues because of various accounting
idiosyncrasies unique to the healthcare industry. Thus, it argued that the
claims administrator should not have looked to its P&Ls when applying the
customer mix test. Instead, the Hospital pointed to extensive spreadsheets that
it submitted reflecting patient data and revenues it attributed to each patient.
The Hospital said these spreadsheets included all patients treated during the
relevant periods and showed the necessary geographic shift in its clientele to
satisfy the customer mix test.
The Hospital’s explanation failed to convince the appeal panel. Citing
the district court’s analysis of similar claims, it concluded that the revenues a
claimant reports on its P&Ls must correspond to the revenues the claimant
uses to calculate its customer mix. Further, it explained that because the
Hospital’s P&Ls evinced revenues that the Hospital’s customer-mix data did
not account for, the claims administrator properly attributed these revenues
to unknown patients and presumed those unknown patients did not reflect a
geographic shift.
The Hospital requested discretionary review from the district court. The
district court denied the Hospital’s request without elaboration. The Hospital
now appeals that order.
II.
Because the district court’s review of the appeal panel is discretionary,
we only reverse its orders denying review if it abuses its discretion. See
Claimant ID 100212278 v. BP Expl. & Prod., Inc., 848 F.3d 407, 410 (5th Cir.
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2017). That said, our cases have been somewhat inconsistent on the extent of
the district court’s discretion to deny review. On the one hand, we have said
that our “review is effectively de novo” when the district court is presented
“with purely legal questions” of how the settlement’s terms should be
interpreted. In re Deepwater Horizon II, 785 F.3d 1003, 1011 (5th Cir. 2015).
On the other hand, we have clarified “that it is ‘wrong to suggest that the
district court must grant review of all claims that raise a question about the
proper interpretation of the Settlement Agreement.’” Claimant ID 100212278,
848 F.3d at 410 (quoting Holmes Motors, Inc. v. BP Expl. & Prod., 829 F.3d
313, 316 (5th Cir. 2016)). But under either formulation, it is clear that the
district court generally does not abuse its discretion by “deny[ing] a request for
review that ‘involve[s] no pressing question of how the Settlement Agreement
should be interpreted or implemented, but simply raise[s] the correctness of a
discretionary administrative decision in the facts of a single claimant’s case.’”
Id. (second and third alterations in original) (quoting In re Deepwater Horizon
III, 641 F. App’x 405, 410 (5th Cir. 2016)); see also Deepwater Horizon I, 785
F.3d at 999 (warning that “to turn the district court’s discretionary review into
a mandatory review[] . . . would frustrate the clear purpose of the Settlement
Agreement to curtail litigation”).
To resolve this appeal, we need not demarcate the exact perimeter of the
district court’s discretion. To the extent that the Hospital argues the appeal
panel misinterpreted the settlement agreement, the Hospital’s arguments fail
even on de novo review. And to the extent that the Hospital argues the appeal
panel misapplied the settlement agreement to the facts of this case, we find no
abuse of discretion in the district court’s decision to let any potential errors lie.
The Hospital argues that the appeal panel misinterpreted the language
of the customer mix test by considering revenues represented by contractual-
adjustment line items in the Hospital’s P&Ls as revenues from unknown
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patients. This was improper, the Hospital insists, because under the terms of
the settlement agreement, the claims administrator must determine whether
the customer mix changed based on the revenue generated by customers alone.
Thus, the claims administrator should have excluded contractual-adjustment
revenue, because it is not revenue “generated by customers.” Even assuming
the Hospital is correct that the contractual-adjustment revenue is not
“generated by customers,” 4 its assertion that the customer mix test only
considers revenue “generated by customers” finds no support in the text of the
settlement agreement.
In relevant part, the customer mix test states that a claimant must
“demonstrate[] proof of a decline of 10% in the share of total revenue generated
by customers located in” the geographic zones most heavily affected by the spill
over the course of three consecutive months. Ignoring the postpositive modifier
“located in,” the Hospital appears to argue that the “total revenue” the claims
administrator must consider is the total only of “revenue generated by
customers.” This cannot be. The phrase “generated by customers” must modify
“share” instead of “total revenue”; otherwise, the customer mix test would leave
entirely unexplained exactly what “share” of the revenue must decline for the
test to be met. And even more fundamentally, the phrase “generated by
customers” is limited by the phrase “located in.” If the customer mix test
considered only the “total revenue generated by customers located in” the
affected zones, then there would be no broader set of revenue with which to
4 Although the economic realities of medical billing might obfuscate the specific source
of the revenues reflected in the Hospital’s contractual-adjustment line items, the Hospital
never explains where these revenues come from if not from its customers.
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No. 18-30396
compare this subset of revenue, rendering illusory the customer mix test’s
requirement that a “share” of the revenue decline. 5
The only way to reasonably interpret the customer mix test is that it
requires the claims administrator to compare the claimant’s “total revenue”
with its subset of revenue “generated by customers located in” the affected
areas and ask whether the latter—as a “share of the total”—declined 10
percent over the relevant period. There is simply no textual support for the
Hospital’s position that the revenue generated by customers in the affected
areas must be compared to the “total revenue generated by customers” as
opposed to the “total revenue” full stop. Accordingly, the appeal panel did not
misinterpret the terms of the settlement agreement.
The tougher question is whether the claims administrator properly
applied the customer mix test to the facts of the Hospital’s claim. The Hospital
argues, in essence, that the appeal panel should not have tried to compare its
revenues reported on its P&Ls with the customer-specific revenues it provided
to the claims administrator. The Hospital says the former was calculated on
an accrual basis whereas the latter was calculated on a cash basis; thus, it is
no surprise that different methods of accounting would produce different
revenues. Accordingly, it says that—contrary to its normal practice—the
claims administrator should not have looked to the revenues it reported in its
P&Ls.
Whatever the merits of the Hospital’s arguments, we conclude the
district court properly exercised its discretion in denying review. As the
Hospital itself argues, the Hospital’s dilemma stems from its “unique”
5 The Hospital’s argument makes even less sense when applied to the part of the
customer mix test dealing with nonlocal customers. In that recitation, the claimant must
“demonstrate[] proof of a decline of 10% in the share of total revenue generated by non-local
customers.” This language does not contain the “revenue generated by customers” phrasing
that the Hospital hangs its hat on.
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accounting requirements. The Hospital’s contention that the claims
administrator should have deviated from its normal practice by analyzing the
Hospital’s customer-mix data independent of the revenues it reported on its
P&Ls is thus the sort of “factbound attack on a decision about a single
claimant” that the district court need not review. Claimant ID 100217021 v.
BP Expl. & Prod., Inc., 693 F. App’x 272, 275 (5th Cir. 2017) (per curiam)
(unpublished). In the interest of judicial economy and fair and efficient
administration of the settlement agreement, we will not require the district
court to spend its limited time correcting all of the claims administrator’s
alleged accounting errors—at least not unless those errors represent “a
recurring issue on which the Appeal Panels are split [and] ‘the resolution of
the question will substantially impact the administration of the Agreement.’”
Claimant ID 100212278, 848 F.3d at 410 (quoting In re Deepwater Horizon IV,
632 F. App’x 199, 203-04 (5th Cir. 2015)). The Hospital points us to no other
instance in which the claims administrator made a similar alleged error.
Accordingly, we AFFIRM.
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