A recent New Jersey Law Journal story, “Court Approves $33M Horizon Deal, Including $11M in Fees,” reports that a federal judge in New Jersey has approved a $33 million settlement in a class suit against Horizon Blue Cross Blue Shield of New Jersey, lodged by chiropractors claiming the company improperly "bundled" payments to claimants—a deal that includes an $11 million fee award to class counsel.

Lawyers from Buttaci Leardi & Werner and Zuckerman Spaeder, "dedicated more than four thousand hours to this litigation, a substantial investment of time and resources for attorneys who do not belong to large firms and who normally use hour fee arrangements," U.S. District Judge William Martini of the District of New Jersey said.

The class "has been represented by highly qualified counsel, who prevailed on several critical motions, including class certification," and "a contingency fee of 33.33 percent is fairly standard for the size of the settlement and the type of lawsuit," Martini added.

According to the decision, the suit involved a class of about 9,500 New Jersey-based chiropractors who filed claims for service with Horizon.  The action was filed in December 2011—nearly two years after the New Jersey Department of Banking and Insurance found that the insurer's bundling of claims payments violated the state Unfair Claims Settlement Practices Act, and ordered the practice to stop.  The action sought to recover on insurance claims that predated the department's April 2010 order.

In June 2015, Martini granted the plaintiffs' motion for class certification—which Horizon appealed, unsuccessfully, to the U.S. Court of Appeals for the Third Circuit.

After two years of settlement talks, including mediation sessions with U.S. Magistrate Judge Mark Falk of the District of New Jersey, the parties reached a deal earlier this year that establishes a $33 million common fund.  Last June, Martini preliminarily approved the accord, according to the decision.

Apart from the $11 million fee award, sums also were set aside from the roughly $91,000 in litigation costs and service awards of $45,000 each to three lead plaintiffs.  As of Oct. 6, the settlement had garnered no objectors and only two opt-outs, the decision said.

Martini, in granting final approval, referenced the factors from the Third Circuit's 1975 decision in Girsh v. Jepson—noting, among other points, the class member support for the settlement and the "enthusiastic reaction of the Association of New Jersey Chiropractors."

Class counsel estimated there were, in total, $92 million in unpaid claims to Horizon, noted Martini, who said the insurer has historically paid 47 percent of chiropractic claims.

"These figures suggest that plaintiffs would recover $43 million in reprocessed claims were they to succeed at trial," but that "estimation assumes that all class members could readily produce the documentation of claims (some dating back 11 years) that Horizon would require for processing," Martini said.

As for the fees, Martini called $33 million "a large settlement," but "not so large as to require deviation from the standard percentage-of-recovery analysis."

Class counsel's bills indicate they spent 4,153 hours on the case and, based on hourly rates, would have amassed $2.52 million in fees, according to the decision.  That means the $11 million award includes a lodestar multiplier of 4.3, which is "not unreasonable" and "consistent with the considerable risks that counsel faced in taking on this litigation," Martini said.

"Courts in the Third Circuit have approved lodestar multipliers at least as high as 6.96," he added, pointing to a 2005 decision out of the Eastern District of Pennsylvania, In re Rite Aid Corp. Securities Litigation.

John Leardi of Buttaci Leardi—a three-lawyer firm based in Princeton—said the lack of dissent among the class members "speaks to what a great settlement it was."

"Certainly it's a small shop.  All our lawyers, the name is on the door," Leardi said of the firm.  "It's meaningful to see [the settlement] come to fruition ... but I don't think that's any different from any other plaintiffs attorney that comes from a smaller shop."