A recent Law.com story, “Lawyers’ Fees Slashed by $2.2 Million in Suit Over Blue Cross Claims Practices” reports that New Jersey Superior Court Judge Stephen Bernstein reduced $2.2 million from the fee award to the plaintiffs lawyers.  The underlying case, Sutter v. Horizon Blue Cross Blue Shield of New Jersey, a class action bought on behalf of doctors who alleged the giant insurer denied legitimate claims and, when it did pay, paid slowly, increasing providers’ administrative costs.  The health insurer was prepared to pay $6.5 million in legal fees to class action lawyers when the case settled, but nine doctors groups objected to the deal, remanding the case to the Essex County judge who approved the settlement in 2007.  In 2007, Bernstein found 16.7 percent contingency fee rate fell within the range of reasonable attorney fees in class actions.  The appeals court said Bernstein should have used the lodestar method.

On remand, Bernstein found that the 5,056 hours expended by the lawyers was warranted, but rejected New Jersey law firm Mazie Slater Katz & Freeman’s argument that he should consider the firm’s effective rates – its traditional recovery rates for contingency work.  He approved a blended rate of $550 per hour for work by Eric Katz and partner David Mazie and $100 per hour for work by law clerks, for a total of $2.7 million.  He added a 35 percent multiplier for the difficulty of the case and the risk the firm took pursuing it and added the $600,000 in out-of-pocket costs expended.  The total: $4.3 million.