ARPC Developed Compensation Models and Payment Formulas in BP Oil Spill Settlement
Washington, D.C.- ARPC, an expert services and business advisory consulting firm providing world-class analytical expertise and guidance to clients facing complex legal and business challenges, has announced today that the Company provided economic expertise in assessing and forecasting claims in the recent BP oil spill settlement. ARPC was hired by the Gulf Cost Claims Facility (GCCF), the third-party claims resolution organization formed to pay out billions of dollars set aside by BP in a trust fund to cover thousands of claims for damages.
ARPC formulated algorithms for compensating those who were affected by the oil spill for past losses as well as expected future losses. Hundreds of thousands of businesses and individuals were impacted across diverse industries such as travel and tourism, fishing, shrimping and oyster harvesting. ARPC experts assembled detailed economic data on each industry and built compensation models for the Claims Facility. Compensation algorithms were developed based on factors such as the number of anticipated claimants, the size of the losses claimed, the expected future duration of those losses, and the estimated total payments by the GCCF.
“There was enormous pressure to devise a mass tort compensation system that would balance seemingly conflicting objectives of providing payments quickly and consistently, yet maintaining fairness and fiscal prudence,” explained John Brophy, ARPC Partner. “Our team provided advice, frameworks and formulas for both actual losses suffered at the time of the disaster as well as estimations of future losses by different groups of claimants. As a result, we demonstrated sound principles that led to successful implementation of a compensation protocol,” he added.
In June of this year, global settlement negotiations began between BP and residual plaintiffs, which made it possible to wind down the GCCF’s operations.
Over the past 30 years, ARPC has been retained on many of the most significant mass tort cases in U.S. history. ARPC professionals bring together the requisite disciplines -- including economics, statistics, finance, epidemiological modeling, claims forecasting, computer programming, and insurance modeling -- to address the complex valuation and financial impact issues which commonly arise in these matters.