Fee Dispute Hotline
(312) 907-7275

Assisting with High-Stakes Attorney Fee Disputes


News Blog

Federal Circuit to Hear $184M ACA Attorney Fee Award Dispute

April 1, 2022 | Posted in : Class Fee Objector, Contingency Fees / POF, Fee Award, Fee Award Factors, Fee Calculation Method, Fee Dispute, Fee Issues on Appeal, Fee Request, Fees & Judicial Discretion, Historic / Landmark Case, Hourly Rates, Lodestar, Lodestar Crosscheck, Lodestar Multiplier, Practice Area: Class Action / Mass Tort / MDL, Settlement Data / Terms

A recent Law 360 story by Dorothy Atkins, “Quinn Emanuel ACA Clients Urge Fed. Circ. To OK $184M Fees” reports that a group of health care plan insurers represented by Quinn Emanuel Urquhart & Sullivan LLP have urged the Federal Circuit to affirm class counsel's $184 million attorney fee award for settlements totaling $3.7 billion that resolve litigation over so-called risk corridor payments under the Affordable Care Act.  In a 73-page response brief, the insurers argued that objections raised by Kaiser and United Healthcare health plan insurers largely ignore "key facts" that U.S. Court of Federal Claims Judge Kathryn C. Davis relied upon in determining that Quinn Emanuel's fee request was reasonable.

The insurers said Judge Davis awarded fees based on her finding that Quinn Emanuel "pioneered" a novel claim at great risk to itself and achieved a 100% recovery for the class.  She also found that the firm filed the first complaint by several months and drafted the first substantive brief on the issue, so she didn't abuse her discretion in awarding 5% in fees, the brief said.

The insurers added that the objectors' appeal focuses "myopically" on the lodestar multiplier, which is the number of times the firm's hourly rate would be multiplied to get the total fee award.  The objectors criticize the fee award for awarding the firm what comes out to an $18,000 hourly rate, but a percentage-of-the settlement fund is the appropriate method of determining fees, the brief said.  "Indeed, it would be nonsensical to treat hourly rates as the only legitimate means of determining reasonable compensation, especially when the competitive legal market for bringing these very claims proves otherwise," the brief said.

The multimillion-dollar fight over fees and the trip to the Federal Circuit is the latest chapter in litigation that Quinn Emanuel-represented Health Republic Insurance Co. initially launched in 2016, accusing the federal government of unlawfully reneging on a commitment to shield ACA insurers from heavy financial losses.  The certified opt-in class of health care plans accused the federal government of failing to make required "risk corridor" payments under the ACA, and Quinn Emanuel's suit purportedly sparked a firestorm of parallel litigation across the country — two of which ended up before 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.  Although 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 objectors 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, and no more.

They told the trial court that Quinn Emanuel had little to do with the litigation that ended up at the Supreme Court, and the firm was trying to walk away with an award that would work out to an astronomical hourly rate of $18,000. Class members also signed on to the suit with a guarantee that the proposed 5% fee award would be subject to a lodestar cross-check, the objectors said, which the firm had eschewed.  But in September, Judge Davis granted the fee request, saying despite the "at times hyperbolic" motions for fees, Quinn Emanuel did show "foresight" in focusing on a successful legal theory months before other parties jumped on that bandwagon.

The objectors appealed the judge's ruling and told the Federal Circuit in their opening brief in January that Judge Davis abused her discretion by failing to cross-check the fee request.  The objectors argued that a reasonable hourly-rate multiplier for the firm's work should be in the lower single digits, and certainly not the 18 to 19 multiplier that would apply to reach the $184 million fee award.

"The effective multiplier of more than 18 the Claims Court awarded is astronomical and unjustified," the objectors said in their opening brief.  "In holding that a multiplier exceeding 18 would be reasonable (if it were to conduct a lodestar crosscheck, which it didn't do), the Claims Court cited three cases with high multipliers, though it did not provide any discussion as to why these cases were germane."  The insurers fired back, arguing the lower court appropriately rejected the lodestar method, particularly since adopting it would create "warped incentives, whereby attorneys are not rewarded for achieving outstanding results, and instead are rewarded for litigating inefficiently."