United States of America et al v. North East Medical Services

Filing 293

ORDER GRANTING MOTION FOR RELATORS' ATTORNEYS' FEES AND COSTS by Hon. Claudia Wilken granting 259 Motion for Attorney Fees. (jebS, COURT STAFF) (Filed on 2/17/2016)

IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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UNITED STATES OF AMERICA and
STATE OF CALIFORNIA ex rel. LOI
TRINH and ED TA-CHIANG HSU,

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Plaintiffs,

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No. C 10-1904 CW
ORDER GRANTING
MOTION FOR
RELATORS'
ATTORNEYS' FEES
AND COSTS

v.
NORTHEAST MEDICAL SERVICES, INC.,

(Docket No. 259)

Defendant.
________________________________/

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United States District Court
For the Northern District of California

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Loi Trinh and Ed Ta-Chiang Hsu (Relators) move for attorneys’

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fees and costs under 31 U.S.C. § 3730(d)(1) and California

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Government Code section 12652(g)(8).

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motion as outlined below, and awards $386,508.00 in fees and

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$2,745.92 in costs.

The Court grants Relators'

BACKGROUND

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This action arose out of a dispute concerning the scope of

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the financial reporting obligations owed by Defendant Northeast

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Medical Services, Inc. (NEMS) under the Medicaid Act.

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2010, Relators, two former NEMS employees, filed this qui tam

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action against NEMS.

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the United States of America and the State of California

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(collectively the Governments) under the False Claims Act, 31

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U.S.C. §§ 3729 et seq., and the California False Claims Act, Cal.

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Gov't Code §§ 12650 et seq.

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intervene in August 2012, Docket No. 17, and the State of

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California followed suit in January 2013, Docket No. 24.

In May

Relators asserted claims on behalf of both

The United States elected to

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Thereafter, the Governments filed their joint Complaint-In-

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Intervention against NEMS, in which they alleged that NEMS failed

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to disclose on its annual reconciliation requests all of the

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payments it received from the San Francisco Health Plan.

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No. 26.

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alleged, NEMS received roughly twenty million dollars in

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reconciliation payments between 2001 and 2010 to which it was not

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entitled.

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settlement to which the parties had agreed.

Docket

As a result of this failure to report, the Governments

On January 13, 2015, Magistrate Judge Beeler enforced a
Docket Nos. 223, 225

and 229.

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United States District Court
For the Northern District of California

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requires NEMS to pay the Governments eight million dollars plus

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interest, among other things.

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NEMS's motions to vacate Magistrate Judge Beeler's order and the

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judgment entered in this case.1

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The Court entered judgment on August 19, 2015, which

Docket No. 256.

The Court denied

Relators filed this motion timely on September 1, 2015.

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Docket No. 259; see also Docket No. 256; L.R. 54-5(a).

Relators

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timely filed their Bill of Costs the following day.

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256 and 263; Civ. L.R. 54-1(a).

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September 15, 2015, Docket No. 266, and Relators filed a reply on

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September 22, 2015, Docket No. 270.

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to file supplemental documentation, Docket No. 273, Relators’

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counsel filed a supplemental declaration with redacted timesheets

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attached, Docket No. 274.

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requirements of Civil Local Rule 54-5(b).

Docket Nos.

NEMS filed a response on

Following the Court’s order

Relators’ motion satisfies the

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The Court did, in fact, have the authority to enter
Judgment in this case, as explained in the order denying NEMS's
motions to alter, vacate or set aside judgment. See Docket No.
259 at 7.

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DISCUSSION

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Under both federal and state law, Relators are entitled to

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reasonable attorneys’ fees and costs.

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Cal. Gov't Code § 12652(g)(8).

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I. Attorneys’ Fees

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31 U.S.C. § 3730(d)(1);

Relators brought and prevailed in both federal and California

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state law claims.

The Court applies both state and federal law

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because both result in the same fee award.

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the Ninth Circuit, reasonable attorneys' fees are determined by

In California, as in

first calculating the "lodestar."

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United States District Court
For the Northern District of California

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Ketchum v. Moses, 24 Cal. 4th

1122, 1131 (2001) (citing Serrano v. Priest (Serrano III), 20 Cal.

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3d 25 (1977)); Morales v. City of San Rafael, 96 F.3d 359, 363

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(9th Cir. 1996).

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number of hours spent on litigating the case and multiplying it by

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a reasonable hourly rate of compensation for each attorney.

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Ketchum, 24 Cal. 4th at 1131-32; Morales, 96 F.3d at 363.

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may adjust the lodestar to address particular circumstances of the

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lawsuit.

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(citing Serrano III, 20 Cal. 3d at 49); Morales, 96 F.3d at 363-64

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(permitting adjustments "that are not already subsumed in the

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initial lodestar calculation").

The "lodestar" is calculated by compiling the

A court

Maria P. v. Riles, 43 Cal. 3d 1281, 1294 n.8 (1987)

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A. Hourly Rate

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Relators seek fees for two attorneys: James T. Diamond at a

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rate of $625.00 per hour and Xochitl Carrion at a rate of $285.00

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per hour.

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dispute the reasonableness of Relators' counsel's hourly rates."

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Docket No. 266 at 2 n.2.

Docket No. 260, Diamond Dec. ¶ 13.

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NEMS "does not

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Determining a reasonable hourly rate is a critical inquiry.
Jordan v. Multnomah Cnty., 815 F.2d 1258, 1262 (9th Cir. 1987)

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(citing Blum v. Stenson, 465 U.S. 886, 895 n.11 (1984)).

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applicant has the burden to produce evidence, other than the

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declarations of interested counsel, that the requested rates are

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in accordance with those prevailing in the community for attorneys

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of comparable skill and reputation.

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Ketchum, 24 Cal. 4th at 1132.

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hourly rate, the court may take into account: (1) the novelty and

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complexity of the issues; (2) the special skill and experience of

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United States District Court
For the Northern District of California

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counsel; (3) the quality of representation; and (4) the results

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obtained.

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Cir. 1988), vacated, 490 U.S. 1087, remanded to 886 F.2d 235

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(reinstating the original opinion).

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the initial lodestar calculation, and should not serve as

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independent bases for adjusting fee awards.

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363-64.

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labor required; (2) the preclusion of employment by the attorney

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due to acceptance of the case; (3) time limitations imposed by the

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client or circumstances; (4) the amount involved and the results

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obtained; (5) the "undesirability" of the case; and (6) awards in

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similar cases.

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(1983).

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The fee

Id. at 1263; see also

In establishing the reasonable

See Cabrales v. Cnty. of L.A., 864 F.2d 1454, 1464 (9th

These factors are subsumed in

Morales, 96 F.3d at

Other factors that can be considered are (1) the time and

Hensley v. Eckerhart, 461 U.S. 424, 430 n.3

The Court agrees with the parties that the proposed rates are

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reasonable for several reasons.

The requested rates are in

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accordance with comparable rates within the community for

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comparable work.

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false claims suits are complex, and Relators' counsel have handled

See Docket No. 261.

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Further, state and federal

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this years-long and highly-contested case with skill.

Finally, an

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eight million dollar judgment is an excellent outcome.

The Court

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proceeds using the agreed-upon rates.

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B. Hours Expended

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Under federal law, “the fee applicant bears the burden of

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submitting ‘evidence supporting the hours worked . . . .’”

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Fischer v. SJB-P.D. Inc., 214 F.3d 1115, 1121 (9th Cir. 2000)

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(quoting Hensley, 461 U.S. at 433).

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applicant to “show that the time spent was reasonably necessary

This requires the fee

and that its counsel made ‘a good faith effort to exclude from

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United States District Court
For the Northern District of California

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[the] fee request hours that are excessive, redundant, or

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otherwise unnecessary.’”

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Sealey, Inc. v. Easy Living, Inc., 743 F.2d 1378, 1385 (9th Cir.

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1984)).

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evidence supporting the fee award.

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182 Cal. App. 3d 553, 559 (1986) (concluding that the testimony of

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an attorney as to the number of hours worked sufficed); Weber v.

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Langholz, 39 Cal. App. 4th 1578, 1586-87 (1995) (holding that an

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applicant’s declaration with hourly rate, statement that all fees

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were connected to services, total amount of money, and a general

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description of the work done sufficed).

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law and California law, Relators have satisfied this burden.

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Relators’ counsel described the work performed and submitted

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redacted timesheets.

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¶¶ 7, 15-25; Docket No. 274.

Jordan, 815 F.2d at 1263 n.8 (quoting

California law also requires a fee applicant to submit
See, e.g., Martino v. Denevi,

Here, under both federal

Docket No. 259 at 8-112; Docket No. 260

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Page numbers refer to the docketed page numbers.

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Originally, Relators sought fees for Mr. Diamond for 595.7

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hours and for Ms. Carrion for 83.8 hours.

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Relators updated their request by reducing Mr. Diamond’s hours

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five percent to 565.7 hours in response to one of NEMS’s

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arguments, discussed below.

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requested fees for fifteen additional hours for Mr. Diamond’s work

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relating to the reply brief for this motion and other post-

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judgment work.

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Docket No. 259 at 11.

Docket No. 270 at 8.

Relators also

Id.

NEMS’s arguments in response to the motion relate to the
number of hours Relators’ attorneys worked.3

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United States District Court
For the Northern District of California

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that Relators are not entitled to fees stemming from a forfeited

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claim.

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contained two claims: the Medi-Cal claim in which the Governments

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ultimately intervened and a separate Medicare claim.

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Relators later notified the Court that the Governments’ Complaint-

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In-Intervention superseded their original complaint, and that

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Relators no longer intended to pursue the Medicare claim.

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No. 86 at 2.

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the forfeited claim.

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order for supplemental documentation, Relators submitted more

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detailed timesheets and a declaration noting which entries related

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to both claims and which entries related to the forfeited claim.

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Docket No. 274.

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entries were evenly split between the two claims.

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Docket No. 266 at 5-6.

First, NEMS argues

Relators’ initial complaint

Id. at 5.

Docket

Relators agree that they should not receive fees for
Docket No. 270 at 6.

Following the Court’s

Mr. Diamond declared that 45.2 hours worth of

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Id. ¶ 3.

He

NEMS argues that Relators have not provided enough
information to support their motion. Docket No. 266 at 3-5. The
Court need not discuss this argument because, ultimately, Relators
filed the billing records upon which the fee motion is based.
Docket No. 274.

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further declared that 7.9 hours worth of entries related to time

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spent solely on the forfeited claim.

Id. ¶ 4.

The Court agrees that fees should not be awarded for the

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forfeited claim.

The number of hours for which Mr. Diamond is

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entitled to claim fees is equal to the total number of hours

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claimed (610.7)4 minus half of the split time (22.6) and minus his

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time spent on the forfeited claim (7.9).

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award Mr. Diamond fees for 580.2 hours.

Thus, the Court will

Second, NEMS argues that the attorneys’ fees motion is

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unreasonable because it fails to disentangle how much time

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United States District Court
For the Northern District of California

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Relators' attorneys spent on a "theory of liability" from which

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the Governments purportedly shifted.

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According to NEMS, the Governments' Complaint-In-Intervention

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rested on a theory that NEMS failed to report all revenue

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received, but after summary judgment the Governments contended

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that NEMS had built the cost of third-party services into its

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rate.

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its argument that it must be able to separate time spent on

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different legal theories to rebut the fees motion.

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Id. at 6-7.

Docket No. 266 at 6-8.

NEMS cites no legal authority in support of

NEMS's premise is faulty under both federal and state

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attorneys' fees law.

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where a plaintiff brings multiple unrelated claims in a single

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lawsuit and is successful on some but not others, "no fee may be

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awarded for services on the unsuccessful claim."

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Conversely, a plaintiff's claims may "involve a common core of

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The Supreme Court explained in Hensley that,

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461 U.S. at 435.

This number is equal to the total number of hours
originally claimed, 595.7 hours, plus the supplemental hours for
reply briefing and post-judgment work, fifteen hours.

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facts or will be based on related legal theories."

Id.

In these

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instances, the lawsuit "cannot be viewed as a series of discrete

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claims.

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significance of the overall relief obtained by the plaintiff in

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relation to the hours reasonably expended on the litigation."

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Id.; see also Tutor-Saliba Corp. v. City of Hailey, 452 F.3d 1055,

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1063 (9th Cir. 2006); Webb v. Sloan, 330 F.3d 1158, 1168 (9th Cir.

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2003) (related claims "involve a common core of facts or are based

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on related legal theories") (emphasis in original).

Instead, the district court should focus on the

California

courts and courts calculating attorneys' fees under California law

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United States District Court
For the Northern District of California

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have adopted this approach.

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Jackson, 93 Cal. App. 4th 993, 1018-19 (2001) (adopting the

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Hensley approach to relatedness in the private attorney general

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context); Trulsson v. Cnty. of San Joaquin Dist. Attorney's

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Office, 2014 WL 5472787, at *4-*5 (E.D. Cal.) (applying the

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Hensley approach to relatedness to a state Fair Employment and

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Housing Act claim); Nguyen v. Wells Fargo & Co., 2015 WL 78738

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(Cal. App.) (describing this concept as the inquiry that applies

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in "cases of limited success" in California).

See, e.g., ComputerXpress, Inc. v.

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Here, Relators' claims and the Governments' claims involved a

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common core of facts, which alone suffices to demonstrate that the

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work performed was for a single related claim.

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legal theories were related; thus the Court need not decide

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whether the two legal theories NEMS describes are actually

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distinct.

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spent on the initial "theory."5

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Further, the two

The Court will not reduce attorneys' fees for hours

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The Court need not address Relators' other arguments in
response to NEMS's relatedness argument in the reply brief.
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In sum, the Court awards Relators’ counsel the following

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fees.

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Attorney

Hours

Rate

Total

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James T. Diamond

580.2

$625.00

$362,625

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Xochitl Carrion

83.8

$285.00

$23,883

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The Court need not adjust the award for any other reason.

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See Morales, 96 F.3d at 363-64.

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II. Costs

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Relators move for costs for fees to the Clerk and
interpreters.

The Court finds these costs reasonable.

United States District Court
For the Northern District of California

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CONCLUSION

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For the foregoing reasons, the Court awards to Relators’

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counsel $386,508.00 in fees and $2,745.92 in costs.

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pay this sum forthwith.

NEMS shall

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Dated: February 17, 2016

CLAUDIA WILKEN
United States District Judge

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