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BP story on fraud DW Horizon spill settlement from 60 minutes
Posted on 5/6/14 at 11:20 am
Posted on 5/6/14 at 11:20 am
So based on the model that BP agreed to in settlements it seems BP now thinks there is fraud committed as businesses who may or may not have suffered losses are being compensated. As I see it its buyers remorse and not sure if there the ability to renegotiate or tweak the compensation model. Is there fraud being committed – you bet when you have at total settlement of $20B there will be fraud and I bet there is an economist that can predicate the rate will x%. But if a business meets the criteria that fits compensation maybe BP should have been more diligent in developing the compensation model, I would suggest they hire better economists/modellers. Any thoughts from a Gulf perspective and it seems very petty by BP to try and renege on an agreement (flawed or not). Am I surprised BP is trying this tact – nope large business will always try an exploit any legal wrangling they can. Now they are suspending payments. I didnt see the 60 minutes story but question is based on Times Pic article and 60 minutes transcript.
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Posted on 5/6/14 at 11:44 am to OntarioTiger
Tactic- cast a wide net, as far as plaintiffs included in the settlement, then try to throw out, frustrate, dissuade, as many of the ones in the net as possible.
It's amazing that no one talks about the many ways that the settlement is unfair to potential claimants. There is unfairness on both sides (which is typical in class settlements) but we only hear about BPs bitching and moaning about the settlement.
It's amazing that no one talks about the many ways that the settlement is unfair to potential claimants. There is unfairness on both sides (which is typical in class settlements) but we only hear about BPs bitching and moaning about the settlement.
Posted on 5/6/14 at 11:50 am to OntarioTiger
there's a ton of fraud. Being able to prove it will be an uphill battle.
The problem is, those who suffered the most real damages (the commercial fishermen and oil field workers) are the ones who would have the most trouble proving that they had actually been harmed thanks to most fishermen dealing in cash.
Of those individuals (not corporations or hotel owners or state tourism boards) who were paid the most money in damages had many many fraudulent claims. As usual, though, the lawyers were the only ones who really made any money off of this disaster.
The problem is, those who suffered the most real damages (the commercial fishermen and oil field workers) are the ones who would have the most trouble proving that they had actually been harmed thanks to most fishermen dealing in cash.
Of those individuals (not corporations or hotel owners or state tourism boards) who were paid the most money in damages had many many fraudulent claims. As usual, though, the lawyers were the only ones who really made any money off of this disaster.
Posted on 5/6/14 at 12:28 pm to OntarioTiger
The list of people/businesses filing for damages that he cited during that interview definitely backed BPs claim to FRAUD on a massive scale.
Posted on 5/6/14 at 12:41 pm to kingbob
quote:
fishermen dealing in cash.
I do not feel bad for fishermen who have been defrauding the government. If they had tax returns proving themselves then there was no problem collecting from BP.
The best article on BPs strategy is here:
How BP Decided to Fight The Settlement
Posted on 5/6/14 at 12:44 pm to CITWTT
quote:
The list of people/businesses filing for damages that he cited during that interview definitely backed BPs claim to FRAUD on a massive scale.
I don't think you know much about the BP Settlement. The settlement payout isn't based on type of business or name of business. It was based on whether your financial statements met certain characteristics and your business is located in a certain area.
They basically said all businesses were hurt due to this based on a trickle down effect. If the oil industry is hurt in Louisiana then all business will feel some impact. BP didn't want to go through the pain of figuring this out so they came up with a broad calculation which everyone agreed upon.
After the criminal cases were settled in federal court BP went back on everything.
Posted on 5/6/14 at 1:03 pm to lsu13lsu
quote:
lsu13lsu
Can't read the article. Does it mention that BP is arguing lack of subject matter jurisdiction because claimants do not have to show causation that their damages were caused by BP?
Posted on 5/6/14 at 1:25 pm to lsu13lsu
Exactly what is posted above.
BP settlements are based on whether you meet the payout requirements. One is income over certain periods of time before, during, after the spill. You can cherry pick those time frames. Another is your location relative to the coast. I know for a fact the BP wanted to allow claims in the entire state of LA, not specifically hold the claims within X distance from the coast. That last part has produced a lot of the "fraud" claims that BP is saying. Ironic thing is it was their plan that got implemented and they are now ticked off they screwed it up.
Also, there is fraud and waste that I know went on.
BP settlements are based on whether you meet the payout requirements. One is income over certain periods of time before, during, after the spill. You can cherry pick those time frames. Another is your location relative to the coast. I know for a fact the BP wanted to allow claims in the entire state of LA, not specifically hold the claims within X distance from the coast. That last part has produced a lot of the "fraud" claims that BP is saying. Ironic thing is it was their plan that got implemented and they are now ticked off they screwed it up.
Also, there is fraud and waste that I know went on.
Posted on 5/6/14 at 1:32 pm to eng08
For your reading pleasure: LINK
ETA: I think BP will win this based on:
504 U.S. 555
Lujan v. Defenders of Wildlife
ETA: I think BP will win this based on:
504 U.S. 555
Lujan v. Defenders of Wildlife
This post was edited on 5/6/14 at 1:37 pm
Posted on 5/6/14 at 1:33 pm to eng08
BP agreed to the settlement terms and even defended it in court - and is now trying to back out of it. They knew or should have known what they were getting themselves into from the get go. It sounds like, at best, their beef is with their own lawyers and executives that crafted the original settlement terms and conditions.
Posted on 5/6/14 at 1:40 pm to DeltaDoc
quote:
BP agreed to the settlement terms and even defended it in court - and is now trying to back out of it. They knew or should have known what they were getting themselves into from the get go. It sounds like, at best, their beef is with their own lawyers and executives that crafted the original settlement terms and conditions.
Their attorneys are either very stupid or geniuses. The court may have agreed to a settlement that it does not have the constitutional power to enforce. I'll try to find the key parts to that Lujan case that prove my point. I would argue that the trial court erred in approving a settlement that does not show causation. I'm no fan of BP either, my folks live on the gulf coast.
Posted on 5/6/14 at 1:48 pm to lsu13lsu
quote:
The settlement payout isn't based on type of business or name of business. It was based on whether your financial statements met certain characteristics and your business is located in a certain area.
But different industries get different multipliers depending on the different zones.
Once it is determined that a claimant meets causation their claim is worked up and compensation calculated. Once compensation is calculated it is multiplied by a certain percentage based on what zone and industry the claimant falls in.
Ex.) Tourism -
Zone A %2.5
Zone B & C $2.0
Zone D %1.25
Non-tourism and Non-seafood Business
Zone A %1.5
Zone B %1.25
Zone C & D %.25
Sorry no link
EDIT: I will not say that I have seen fraud, but I will say that unless BP knew when they came up with the settlement framework that they could get it thrown out, then they signed a very dumb agreement. No way in hell were most non seafood companies in north Louisiana materially affected by the oil spill, but hey, if you can show enough of a loss in a three month period in 2010 and show enough gain in that same period in 2011 why not get some free money right?
This post was edited on 5/6/14 at 1:57 pm
Posted on 5/6/14 at 1:55 pm to Five0
I think the primary issue is that one of the fundamental premises of class settlements is lack of adjudication, ie, proving up the case, else why bother? That premise is based on economic efficiency to both the parties and the courts. To allow BP to cherrypick certain claims to require adjudication despite the claims otherwise meeting the criteria of the settlement is plainly unfair - they would receive the benefits of class settlement (universal resolution) without taking the risk that is involved (claims that may not prevail under full adjudication).
Posted on 5/6/14 at 2:50 pm to DeltaDoc
Deltadoc, I'm not argueing that they are correct. I completely agree with you.
BP's lawyers were told that the settlement plan was a bad design (by the attorneys argueing for the plaintiffs) they said "we know it will have some unintended payouts, but we want to show our goodwill to the state of LA." It wasn't until they blew through their big pot of $ that they decided to backtrack on their agreement.
BP's lawyers were told that the settlement plan was a bad design (by the attorneys argueing for the plaintiffs) they said "we know it will have some unintended payouts, but we want to show our goodwill to the state of LA." It wasn't until they blew through their big pot of $ that they decided to backtrack on their agreement.
Posted on 5/6/14 at 2:59 pm to weisertiger
Some of big claims they say are fraud are from farming areas in north la.
If they sold their crop in September in 2009, in November in 2010, then in September in 2011 you use the months of Aug, Sept and Oct for the claim. It then shows a huge loss in 2010 and the formula creates a large payout.
BP created the formula and agreed to the areas it applies to, they clearly did not think it all the way through.
If they sold their crop in September in 2009, in November in 2010, then in September in 2011 you use the months of Aug, Sept and Oct for the claim. It then shows a huge loss in 2010 and the formula creates a large payout.
BP created the formula and agreed to the areas it applies to, they clearly did not think it all the way through.
Posted on 5/6/14 at 3:33 pm to OntarioTiger
quote:
So based on the model that BP agreed to in settlements it seems BP now thinks there is fraud committed as businesses who may or may not have suffered losses are being compensated.
BP shouldn't even exist anymore as a company I have no sympathy for anything that happens to them.
Posted on 5/6/14 at 3:43 pm to SpidermanTUba
quote:
BP shouldn't even exist anymore as a company I have no sympathy for anything that happens to them.
Amen! The government should just take the entire company and confiscate all its assets, even if it wasn't the CEO, Board Members or shareholders who gave those order. Take it all and redistribute to others, or start a government-run oil company! I'm with you, brother!
Posted on 5/6/14 at 5:19 pm to eng08
quote:
Also, there is fraud and waste that I know went on.
Everyone knew fraud and waste would happen. It was discussed in court by all parties. It was agreed that it was a necessary evil to get this taken care of swiftly and quickly.
BP agreed to it. It wasn't some complex agreement either. It was clear from the beginning that businesses that couldn't prove they were related to the oil and gas industry would file claims.
Posted on 5/6/14 at 5:24 pm to weisertiger
quote:
But different industries get different multipliers depending on the different zones.
Your zone cannot be fraudulent. You have an address for your business and it has to agree to your tax returns. That is pretty straight forward.
There are not that many different industries and it is pretty obvious if you are tourism related or seafood related.
I don't think many have read the settlement but it is pretty freaking straight forward. BP knew every business in Louisiana would be potential claimants.
Posted on 5/6/14 at 5:27 pm to eng08
quote:
BP's lawyers were told that the settlement plan was a bad design (by the attorneys argueing for the plaintiffs) they said "we know it will have some unintended payouts, but we want to show our goodwill to the state of LA."
eng08, you understand this entire situation and summed it up right here. This settlement agreement wasn't complex. Everyone knew it was a bad deal for BP and even told BP that. BP wanted to do it. BP knew Pizza Restaurants in Shreveport would be filing if they met the criteria but they said let's do it.
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