February 23, 2021
A recent Law 360 story by Nathan Hale, “Hospital Whistleblower’s $1M Fees Award Falls Short of Goal,” reports that a whistleblower whose complaint against now-defunct hospital chain Health Management Associates Inc. helped the federal government secure more than $260 million to settle fraud charges will receive less than one-twelfth of his $12 million attorney fees request but may get more for himself, a Florida federal judge ruled. Fort Myers-based U.S. District Judge John E. Steele's award of $952,480 to relator Bradley Nurkin, who was previously chief executive officer of the HMA-owned Charlotte Regional Medical Center, ended Nurkin's lengthy fight with HMA over how much Nurkin should recover under the fee-shifting provision of the False Claims Act.
"The Supreme Court has stated that 'a request for attorney's fees should not result in a second major litigation.' That ship sailed long ago in this case," Judge Steele said. In a 51-page order, the judge rejected HMA's argument that he should eliminate the fees award as a sanction against Nurkin for alleged "grossly excessive" or "outright fictitious" billing estimates, but also rejected several of Nurkin's arguments for how to calculate the proper amount.
"While the court will make reductions to the requested attorney fees and expenses, it will not do so as a sanction under its inherent authority," the judge said. But the court also rejected the position taken by Nurkin and his lead counsel Edward Sanders that any award should go directly to Nurkin's attorneys.
"If Nurkin owes Sanders fees for services not encompassed by the FCA representation, then obviously he may use any of his resources, including these awarded fees, to pay his obligations. However, this award of attorney fees does not belong to Sanders, but to Nurkin, as the relator," Judge Steele said.
"By all accounts, the recovery made by the government attributable to Nurkin's case was excellent. The resulting dollar amount of Nurkin's share was substantial enough to result in a contingent attorney fee which was ample and did not need to be supplemented to arrive at a 'reasonable' amount," the judge added, explaining why this case was not one where the award belongs to the relator's counsel.
Nurkin, who received just under $15 million of the $93.5 million the government attributed to his specific case from the 2018 settlement — it had consolidated eight cases against HMA as a multidistrict litigation — already has paid his attorneys one-third of that amount, more than $4.9 million, under a contingency fee contract, according to the order. In his motion, he presented the court with three figures based on it awarding fees using either a contingency fee basis, a lodestar or and enhanced lodestar method.
His request under the contingency fee basis came out the highest at more than $11.9 million, which represented 15% of the $79.5 million recovered by the government after paying Nurkin his share, but Judge Steele said the U.S. Supreme Court has ruled that courts should use the lodestar method to calculate a reasonable attorney fee in FCA cases.
Judge Steele also pointed out that Nurkin's contingency fee request, based on an expert witness's suggestion, would be grossly excessive, coming out to an hourly rate of $2,581 based on the number of hours he estimated his lawyers worked on the case — on top of the nearly $5 million they already received from him. Under the lodestar method, in which a court determines a prevailing market billing rate and then multiplies that by a reasonable number of hours expended on the case, Nurkin requested $4.1 million and also suggested applying a multiplier of 2.23 for an "enhanced lodestar" request of $9.2 million.
Judge Steele rejected Nurkin's argument for $894 as a reasonable hourly rate, which he based on the case having been transferred to the District of Columbia, where it was settled, and instead found it should be based on Fort Myers, where it was first filed and the majority of his attorneys' work was performed.
The court instead concluded on a rate of $400 an hour for Sanders and co-counsel Robert Branning and $300 for Bethany Johnson, a younger attorney who helped prepare the application for attorney fees. Judge Steele declined the HMA's request to reduce the hourly rate for work that a larger firm would have assigned to an associate, saying he would make any needed adjustments on the number of hours allowed.
On that front, Judge Steele broke down Nurkin's total request of 4,618.55 hours into the periods spent prior to filing the complaint, litigating prior to the government's intervention, after government intervention and on the attorney fee application, looking at specific tasks within those periods. In total, the court approved 2,391.2 hours. In terms of the time spent preparing the attorney fee application, the judge allowed 40 hours out of 457.8 asserted by Nurkin.
Judge Steele also denied Nurkin's request for a multiplier, saying he found the lodestar calculation "takes into account all factors which may be properly considered in this case." The judge also declined to award prejudgment interest on the fees award. He awarded $7,232.70 in cost and expenses. While far from the high point of Nurkin's request, Judge Steele's award still was several times the $229,544 suggested by HMA, according to the order.