Louisiana Record

Monday, October 21, 2019

Court of Appeals denies Alabama radiology group’s claim for oil-spill damages

By Sam Knef | Feb 12, 2017

NEW ORLEANS — An Alabama radiology practice that was denied business-loss compensation by the claims program for the Deepwater Horizon oil spill has been denied again at the U.S. Court of Appeals for the 5th Circuit.

Alabama Coastal Radiology, comprised of 16 radiologists, had attempted to obtain compensation as a "Multi-Facility Business" under the business economic-loss framework of the Court Supervised Settlement Program, according to court documents.

BP, which took responsibility for the 2010 oil spill, has distributed millions of dollars in damages to affected entities under the CSSP.  

According to a per curiam order handed down Jan. 25, ACR provided services to Infirmary Health Services — which owns several hospitals at which the radiologists would interpret scans taken by the hospitals in "reading rooms" owned by the health-service company.

The 5th Circuit panel, comprised of Judges Grady Jolly, Patrick Higginbotham and Edward Prado, noted that ACR has no physical office and outsources its administrative tasks.

However, ACR submitted a claim for a reading room in a hospital in Mobile, Alabama, under the Multi-Facility Business Framework of the claims program, which requires that a business entity maintain facilities in more than one location and at least one in the Gulf Coast area.

"Facility,” according to the case background, is defined as "a separate and distinct physical location of a Multi-Facility Business at which it performs or manages its operations.”

An expanded definition of "facility" is that it must be a separate and distinct physical structure or premises, must be owned, leased or operated by the business entity and must be at which the business entity performs and/or manages its operations.

The CSSP denied ACR's claim, explaining that it failed to meet all three elements of the definition of "facility."

"ACR only has a contract to provide radiology services at the facilities … the claimant does not have an office space at the facilities for which they pay rent or lease expenses. . . . According to Policy 467, this claimant does not have the option of filing a separate claim for operations performed at one of the hospitals. The claim should be closed, as the claimant has filed a separate claim for a location that is not a facility," the CSSP explained in a denial summary.

After ACR was initially denied by the CSSP, it requested re-review. The CSSP denied the claim again after re-review, and also after ACR asked for reconsideration of the post-re-review denial notice.

It once again sought relief at an appeal panel, which affirmed the denial. The panel explained that “Claimant does not pay rent or lease expenses on the reading room …[and] [t]here is not evidence that claimant pays for janitorial services, electricity or other items a tenant normally has,” the order stated.

ACR then appealed to U.S. District Judge Carl Barbier of the Eastern District of Louisiana, who has overseen the Deepwater Horizon litigation. Barbier denied discretionary review of the decision by the appeal panel.

In its Jan. 25 order, the 5th Circuit panel held, “[B]ecause the district court’s denial of discretionary review does not result in a contradiction or misapplication of the settlement agreement, we hold that it is not an abuse of discretion and affirm.”

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