August 5, 2020
NALFA and NALFA member and attorney fee expert John D. O'Connor of O'Connor & Associates in San Francisco were quoted in Portland Business Journal. The news article, by Elizabeth Hayes, “Former Portland Insurer’s Law Firm Asks for $184M in Legal Fees” reports on Quinn Emanuel’s attorney fee request in the health insurers Obamacare reimbursement case. Below is a copy of the article:
Health Republic went out of business after it took a $20 million hit when the government didn't pay it in full under the risk corridors program. In February 2016, when Lake Oswego-based Health Republic Insurance was winding down its operations, it made an audacious move. The small Consumer Operated and Oriented Plan, which had just 15,000 customers, took on the federal government.
Health Republic filed the first of what would become multiple lawsuits brought by insurers across the U.S. over the federal “risk corridors” program. The cases sought to require the government’s to make good on its promise to compensate health plans that lost money on Affordable Care Act plans.
The shortchanging cost Health Republic $20 million and dealt a fatal blow to the company and dozens of other insurers. Portland-based Moda Health took an even bigger hit than Health Republic, at $250 million, and followed Health Republic’s lawsuit with one of its own. Moda's suit worked its way to the U.S. Supreme Court, which in April ruled that the government owed U.S. insurers $12 billion.
Now Health Republic’s law firm, Chicago-based Quinn Emanuel Urquhart & Sullivan LLP, is seeking $184 million in attorney fees for the 183 clients it represented in the two class action suits it filed. Both are related to the risk corridors but didn’t go to the Supreme Court. The firm argues, however, that it filed a first-of-its-kind lawsuit. It “did not remain idle" while the other, non-class action cases, moved forward, but submitted multiple amicus briefs focusing on the “negative economic and societal impact that would result if the government failed to honor its commitments.” Justice Sonia Sotomayor used that reasoning in her majority opinion, saying “the government should honor its obligations.
Quinn Emanuel, which specializes in complex litigation, represented Health Republic and the other insurers in the class actions on a contingency basis, meaning it would receive a fee only if they win the cases. Quinn Emanuel’s “stellar performance” resulted not only nearly $4 billion for its insurer clients, but 100 percent industrywide recovery, the firm argues in its 40-page motion for attorney’s fees filed last week in the U.S. Court of Federal Claims.
It is asking for 5 percent of the judgments in its two class actions, which it argues would be “one of the lowest percentage rates ever awarded to class counsel, even in cases with multi-billion-dollar recoveries, such as this.”
If approved, the amount would still be one of the largest fee requests for a single law firm in U.S history, according to the National Association of Legal Fee Analysis. There have been much larger fee awards, including those in the Enron lawsuit, but they are generally split between multiple firms. John O’Connor, a San Francisco attorney and attorney fee expert, said it’s hard to say if the court will approve Quinn Emanuel’s request. The percentage is low, but the total amount would represent an unusually high multiple of the firm’s average hourly rate of around $1,000.
The firm put in about 10,000 hours, translating to an hourly average rate of $18,500, if the award is granted. “You can’t say it’s totally ridiculous,” O’Connor said. “Nor can you say it’s a slam dunk that they should get it. The thing they have going for them is it’s such a small slice of the pie.” Quinn Emanuel emphasizes in its brief that it and Health Republic took on a “substantial risk” in suing the government. Stephen Swedlow, a Quinn Emanuel partner, did not respond to a request for comment.
In an ironic twist given the eventual outcome, Moda CEO Robert Gootee apparently agreed. When former Health Republic CEO Dawn Bonder told Gootee she was going to file the lawsuit, he responded that she was “making a ‘bold’ choice and that he would not even consider doing so on behalf of Moda, as he thought the lawsuit had no chance of success,” according to Quinn Emanuel’s recent brief.
Moda spokesman Jonathan Nicholas declined to comment on the conversation. “Moda did not have any contingency fee arrangement with our law firm,” he said. “Robert insisted from the very outset that a core, fundamental right was at issue here, and he determined that our company would go all in — and all alone – in an effort to see that our judicial system, at its highest level, could indeed right a wrong!”