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Category: Contingency Fees / POF

Court Can’t Bar Injured Workers’ Attorney Fees, PA Justices Told

September 24, 2021

A recent Law 360 story by Matthew Santoni, “Court Can’t Bar Injured Workers’ Atty Fees, Pa. Justices Told,” reports that a worker told the Pennsylvania high court that he should be allowed to seek attorney's fees from PennDOT after he won a workers' compensation case, arguing the lower court improperly shut the door on injured workers getting their employers to pay legal bills.  Arguing before the Supreme Court of Pennsylvania, an attorney representing injured PennDOT worker Vincent Lorino said Commonwealth Court Judge P. Kevin Brobson's opinion misstated that workers' compensation judges "shall" deny fees when an employer's challenge of a worker's claim for benefits is reasonable, when the law says "may."

"I was surprised at how blunt and direct Judge Brobson's opinion was, when it said 'despite the General Assembly's use of the word may, this court has always interpreted Section 440' this way," said George Badey of Badey Sloan & DiGenova.  "You can't do that, respectfully.  The courts can't do that."  Badey asked the justices to rule that Lorino could still ask for PennDOT to pay his legal fees and that the lower court had run afoul of the Statutory Construction Act in substituting its own wording for the legislature's.

According to court records, Lorino sprained his lower back and hip on the job in 2016 and started getting regular steroid injections that allowed him to return to work.  PennDOT, which was covering his medical costs but providing no missed-work benefits, sought to terminate the medical payments in 2017 and offered a doctor's opinion that Lorino's work-related injury had fully healed.  A workers' compensation judge reversed PennDOT's denial in 2018 but ruled that Lorino had to pay his own legal bills because PennDOT's challenge to his claim had been reasonable.  On appeal to the Commonwealth Court, Judge Brobson said in August 2020 that the workers' compensation judge was right and that the courts had always interpreted that section of the law as denying fees unless the challenge was unreasonable.

In the argument to the high court, Badey said courts had to interpret the law as it was written and could not change the wording.  He said siding with his client would affect only a narrow group of workers like him who were still working and not getting wage benefits that could be split with an attorney as part of a contingency fee agreement.  Chief Justice Max Baer pressed Badey on whether reopening the possibility of fees would just shift the debate to whether an employer's challenge was reasonable, which would be up to the workers' compensation judge's discretion.

Quinn Emanuel Gets $185M in Attorney Fees in $3.7B ACA Win

September 16, 2021

A recent Law 360 story by Dave Simpson, “Quinn Emanuel Gets $185M Fee From $3.7B Win in ACA Suits,” reports that a U.S. Court of Federal Claims judge granted Quinn Emanuel Urquhart & Sullivan LLP's request for $185 million in fees stemming from two class actions against the federal government over so-called risk corridor payments under the Affordable Care Act, which resulted in a nearly $3.7 billion total win.  Judge Kathryn C. Davis said that despite the "at times hyperbolic" motions for fees, the law firm did show "foresight" in focusing on a successful legal theory months before other parties jumped on that bandwagon.  She granted its request for 5% of the winnings.

"At the end of the day, what is more important is that class counsel's legal theory resulted in a huge award to the classes here," Judge Davis said.  Quinn Emanuel was the first firm in the country to file a lawsuit on behalf of a qualified health plan insurer accusing the federal government of unlawfully reneging on a commitment to shield ACA insurers from heavy financial losses.

Health Republic Insurance Co. sued the government in 2016 and in July 2020 won a judgment for $1.9 billion alongside a subclass of insurers.  Common Ground Healthcare Cooperative sued the government in 2017 over similar claims and won a $1.7 billion judgment.  Those cases set off a firestorm of parallel litigation across the country, alleging similar claims.  Two of those cases ended up at the U.S. Supreme Court.  In April 2020, the justices reversed Congress' denial of $12 billion in "risk corridor" funding, which the ACA dangled as an incentive for insurers during the law's first three years of operation.

While Quinn Emanuel didn't work on those cases directly, the firm argued in its request for fees in July 2020 that the Supreme Court "adopted the exact legal theory Quinn Emanuel set forth in the initial Health Republic complaint and which it advocated at every step."  But in August 2020, objectors like Kaiser Foundation Health Plan Inc., UnitedHealthcare Insurance Co. and others argued that class counsel was entitled to just $8.8 million after a lodestar cross-check.

They said that Quinn Emanuel had little to do with the litigation that ended up at the Supreme Court, and argued that the firm was trying to walk away with an award that would work out to an hourly rate of $18,000 per attorney.  Class members signed on to the suit with a guarantee that the proposed 5% fee award would be subject to a lodestar cross-check, the motion said, which the firm had eschewed.

Quinn Emanuel shot back in September 2020 that the $8.8 million award proposed would discourage attorneys in the future from taking on similarly ambitious cases.  The percentage model, which the insurers agreed to when choosing to join the class instead of pursuing individual claims, is favored by the courts for exactly this reason, the firm said.  According to the firm, despite the dozens of companies signing on to the fee objection, most of them Kaiser or United entities, almost 90% of the class members have not objected.

Judge Davis sided with the firm.  "These are not cases in which class counsel merely rode the coattails of other innovative litigators," she said.  The 5% fee is well below market value, and the objectors propose what would amount to a .22% fee, she said.  Further, the firm allocated 10,000 billable hours and might not have been paid for any of it had the outcome gone differently, the judge said.

Florida Supreme Court: No Interest on Attorney Fees

September 9, 2021

A recent Law 360 story by Carolina Bolado, “Fla. High Court Won’t Add Interest To Atty Fee Calculations,” reports that the Florida Supreme Court ruled that prejudgment interest should not be added to a judgment when determining if the judgment triggers a party's entitlement to attorney fees under the state's proposal-for-settlement statute.  In a 5-2 decision, the high court opted to stand by its precedent and found that prejudgment interest accrued after CCM Condominium Association Inc. made a settlement offer to Petri Positive Pest Control Inc. should not be included in the "net judgment" for the purposes of calculating whether CCM can be awarded attorney fees under the statute.

The court relied on its 2002 ruling in White v. Steak & Ale of Florida, which defined the plaintiff's total recovery as including only attorney fees, costs and prejudgment interest accrued up to the date of its settlement offer.  When considered against the text of the offer-of-judgment statute, the White ruling is not clearly erroneous, and the formula set out in that decision has been consistently applied by district courts around the state in the two decades since to exclude amounts that were not present on the date an offer is made, according to the opinion.

"We simply do not have a definite and firm conviction that this court's prior interpretation of the offer of judgment statute and the terms 'judgment,' 'judgment obtained,' and 'net judgment entered' is wrong," the high court said.  The ruling is a win for Petri, which was fighting CCM's attempt to recover attorney fees after prevailing in a dispute over a contract for termite extermination.  Under Florida's offer-of-judgment statute, a judgment needs to exceed a prior settlement offer by more than 25% to trigger an entitlement to attorney fees.

In this case, CCM had offered to settle its negligence and breach of contract suit against Petri for $500,000, but that offer was rejected.  After a trial in November 2016, a jury awarded CCM $551,881 in damages.  The trial court entered a judgment of $636,327, which included the jury's damages award plus $84,446 in prejudgment interest.  CCM then moved to recover attorney fees based on that figure, which exceeded its settlement offer by more than 25%.

Petri objected, pointing to the White decision, but the trial court disagreed and awarded CCM $73,579 in post-offer attorney fees and costs.  On appeal, the Fourth District Court of Appeal ruled that the prejudgment interest should not be included based on Supreme Court precedent, though the Fourth District said it would reach the opposite conclusion based on its own interpretation of the term "judgment entered" in the offer-of-judgment statute.

In a dissenting opinion, Chief Justice Charles T. Canady said the majority's result is "detached from the text of the statute."  "A fair reading of the text of the statute cannot support the interpretation articulated in the statements from White relied on by the majority," Justice Canady said.  "As the Fourth District explains, the authorities cited in White to support its discussion that is relevant to post-offer fees, costs and interest are cases interpreting a different statute, … which provides for the award of prevailing party fees to an insured in litigation against an insurer."

Petri's attorney, Thomas Hunker, told Law360 the language of the statute left much to the court's interpretation, but ultimately the court reached the right decision with an interpretation that is fair to the party receiving the offer.  "A contrary holding would've required an impossible amount of speculation on what might occur later in litigation, which would be unfair to a party who faces the prospect of sanctions when trying to evaluate whether or not to accept or reject a statutory proposal for settlement," Hunker said.

Class Counsel Win Reduced Attorney Fees of $152M in Antitrust Case

August 30, 2021

A recent Reuters story by Mike Scarcella, “Class Lawyers Win Reduced Fee of $152M in Sutter Case,” reports that a California judge has slashed a requested legal fee award in an antitrust settlement with Sutter Health, approving $152.3 million in compensation for class counsel, after concluding the plaintiffs' lawyers had claimed "unreasonably high" hours for their work.  Judge Anne-Christine Massullo of San Francisco Superior Court gave final approval to the $575 million settlement as she awarded fees to five law firms that represented plaintiff labor unions and employers, in an order released.

Sutter Health in 2019 first agreed to the settlement resolving claims that anticompetitive practices led to higher healthcare costs in northern California.  The awarded legal fee marked about 26% of the settlement, in line with compensation in other class actions, Massullo wrote.  Massullo said her award accounted for the "risk presented by this litigation" and also "the novelty and complexity of the issues."  The plaintiffs' lawyers had asked for $172.5 million in fees.

Massullo's order awarded $11.5 million in fees to the California attorney general's office, which sued Sutter in 2018.  The state's complaint was consolidated with the private litigation, which began in 2014.  Massullo said the state attorneys and class lawyers "demonstrated a high level of skill in providing high quality of representation in this case."  Still, the judge raised concerns about the number of hours -- 194,642 -- that class lawyers claimed in their request for fees.  Massullo said the claimed hours compared to "93.6 years of work, or more than 7 years of work for 13 attorneys."

Declarations from plaintiffs' attorneys involved in the case "do not, except at a high level and very generally, permit assessment of the extent to which the five firms that constitute class counsel unreasonably duplicated efforts," Massullo said.  Still, she said she was "satisfied that this litigation was a monumental undertaking" that required a "vast number of hours."

Attorneys Seek $3.6M in $14M John Hancock ERISA Settlement

August 26, 2021

A recent Law 360 story by Rachel Stone, “Lawyers Seek $3.6M Cut of $14M John Hancock 401(K) Deal,” reports that attorneys from Nichols Kaster and Block & Leviton have asked a Massachusetts federal judge to award them $3.6 million for their work securing a $14 million settlement for John Hancock Life Insurance workers who said the company steered their retirement savings into shoddy proprietary funds.  Named plaintiffs Jennifer Baker and Jean Greenberg filed a memorandum that said a $3.5 million fee request, which represents a quarter of the settlement value, was less than class counsel typically get in similar Employee Retirement Income Security Act cases.

"The requested fee of 25% of the settlement is not only reasonable, but substantially less than the one-third fee award consistently granted in ERISA cases," according to the memorandum.  In addition to $3.5 million in attorney fees, the memorandum asked the court for nearly $39,000 in costs and more than $85,000 in expenses incurred while litigating the case.

The settlement agreement, which the parties struck in June, resolved claims alleging the insurer packed its 401(k) plan with proprietary funds and siphoned inflated administrative costs from its employees who only had the option of investing in John Hancock funds.

The class representatives emphasized that their counsel worked through 5,000 documents produced by John Hancock and its benefits committee as well as forking over 4,000 documents of their own during the pre-settlement discovery process.  "Class counsel have expended significant time and effort prosecuting this action and achieving the settlement on behalf of the class," the memorandum said, adding that ERISA class actions are complex and the plaintiffs' lawyers had worked on a contingent fee basis.