MANATEE -- Businesses wanting to file damage claims related to the Deepwater Horizon disaster are encouraged to file this year, well before the April deadline.
The deadline for the federal class action settlement claims for the 2010 BP oil spill is April 22, 2014, but a top attorney and accountant in the Sarasota area encouraged business owners at a Lakewood Ranch Business Alliance event to get their paperwork in order now. Attorneys and accountants could cut off accepting cases this fall in order to take care of existing clients.
The class action claim is one type of claim available for businesses, and is considered the more mainstream of the claims, said attorney William Robertson, chief executive officer of Kirk Pinkerton P.A. in Sarasota. This claim is for businesses that can show a downturn in business related to the oil spill and a rebound period following the initial downturn.
Attorneys representing the class-action suit and BP came up with a compensation formula that businesses have to follow. The claims are then sent to an independent Deepwater Horizon claims center.
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"The claims that are easy to prove are those where you have a canceled reservation for a destination wedding on the beach," said Robertson, a leading BP class-action attorney in this area. "From a legal standpoint, how do you prove if your business was down during this time that it was down because of the oil spill?"
His firm is also representing the city of Sarasota, seeking
a $15 million claim, as well as Bradenton Beach. The firm set up BPClaimsLawFirm.com to help determine eligibility.
Various businesses qualify for the class action settlement, including non-profits, churches and real estate brokers.
Banks, trust funds, gambling venues are among the businesses that are excluded from the settlement. Real estate value losses are available in the Panhandle, but not in the Tampa Bay area.
Unlike the governmental claims, the class action claims do not have a cap on the amount that can be collected, he said, with exception of the Seafood Compensation Program. BP once claimed that it would end up paying $7.8 billion in settlements, but, according to an Associated Press report, has said the cost is much more than that, but couldn't provide a reliable number.
"BP is obligated under the settlement agreement to pay every legitimate claim that qualifies and meets the matrix under the settlement agreement, which they agreed to, until April 22, 2014," Robertson said.
Figuring out how much can be recovered is based on four geographic zones. Businesses in Zone A, mainly on barrier islands, don't have to use a financial causation test, and can recover as much as eight times their losses. Zones B and C have to show a 5 percent revenue loss with a 10 percent rebound, while Zone D needs to show a 15 percent revenue loss. Each of the zones has a multiplier of how much losses can be recovered.
The claim zones are somewhat arbitrary, Robertson noted. Locally, Longboat and Lido keys are in the Zone A, while Siesta Key was placed in Zone B.
To determine the financial loss, businesses should have records of 60 months worth of gross revenues from January 2007 to December 2011 in Excel format, said Byron Shinn, president of the Shinn & Co. accounting firm.
"They want to see a balance," Shinn said.
Documents also should show the internal accounting method of contemporaneous records, he said. Businesses should be able to get all of the needed data from their existing accountants, he said.
Because the appetite to recoup money is high, it could lead to some unsavory situations where books are cooked by accountants who are not enrolled, or unlicensed attorneys, Shinn warned.
"When this started, it was the wild west. Before this class action suit was settled, we had a lot of non-CPAs throwing together information, they were doctoring numbers. BP figured it out real quick," said Shinn, who was enlisted as an expert witness to identify the bad accounting in some of the oil spill cases.
BP argued that the fraud was widespread and asked for payments to be temporarily haulted, but a federal judge denied the request on Friday, the AP reported. U.S. District Judge Carl Barbier said he was troubled by the allegations but didn't see any reason to take the "drastic step" of shutting down the program without evidence of widespread fraud.
Filing a false claim or doctored claim could lead to federal prosecution, Shinn added.
"Any client who wants to do this without an attorney, I guarantee you're going to have a problem," Shinn said.
Robertson predicts that law firms specializing in suing for negligence will run ads asking businesses to litigate if their claim was not properly processed or prepared by an unlicensed attorney.
One of the key reasons to have a licensed attorney and certified accountant, Robertson said, is that if BP decides to appeal the claim, which it has been doing for anything over $25,000, then the claim representative has to write an appellate brief and reexamine the numbers.
Charles Schelle, business reporter, can be reached at 941-745-7095. Follow him on Twitter @ImYourChuck