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Judges Uses Recommendation of Attorney Fee Expert in Insurance Coverage Case

May 18, 2012 | Posted in : Fee Expert / Member

A recent New Jersey Law Journal story, “Firm Wins $2.3M in Fees in Suit Over Insurance Coverage of Eating Disorders,” reports that Nagel Rice, LLP was awarded $2.3 million in attorney fees and expense for its work toward a $1.18 million settlement over insurance coverage for eating disorder treatments.  U.S. District Judge Faith Hochberg in Newark made the award to Nagel Rice based the recommendation of attorney fee expert Douglas Wolfson, who arrived at an adjusted lodestar of $1.57 million and an allowance of $112,505 for expenses.

That sum was reached after the deduction of $73,405 from records submitted by Nagel Rice for work that it admitted was excludable or what Wolfson found duplicative or related to its dispute with Mazie, Slater, Katz & Freeman.  Nagel Rice requested a lodestar multiplier of 1.4, citing the case’s complexity and amount of relief obtained, and Hochberg granted it, bringing the fee award to $2,196,580.  With expenses, the total comes to $2,309,086.

Fee expert Wolfson praised Nagel Rice’s efforts to pursue the litigation in an efficient manner, noting that of 32 depositions, only one was attended by two attorneys from the firm.  “Counsel’s avoidance of an excessive presence at depositions is in keeping with the best interests of the profession,” Wolfson said.  He gave careful attention to many instances when the firm’s attorneys conferred with each other.  But he concluded that such entries “simply reflected the fact that the suit was complicated, involving many complex issues…necessitating constant oversight by senior attorneys.”

The settlement, in Drazin v. Horizon Blue Cross Blue Shield of New Jersey, represents the spoils of a battle Nagel Rice waged with Mazie Slater.  The firms are the remnants of the former Nagel Rice & Mazie, which broke into two in a partnership dispute in 2006.  The firms each brought a series of nearly identical class actions against insurers over restrictions on eating disorder coverage, and hostility between the firms prevented consolidation of the cases.  The Drazin settlement provides $1.2 million in reimbursements from past denied claims, allows future claims to receive parity with treatment for biologically based mental disorders.

Hochberg instructed Wolfson to deduct time for fees or expenses that were incurred as part of the conflict between the firms and that did not confer a benefit on the class.  Mazie Slater sought 50 percent of the fees from the settlement, but Hochberg ruled the firm was not entitled to attorney fees.  She said it played no role in the recovery obtained for the class.  Mazie Slater has appealed that decision to the U.S. Court of Appeals for the Third Circuit.