County of Monmouth, New Jersey v. Florida Cancer Specialists, P.L. et al

Filing 82

ORDER deferring ruling on 80 --motion for preliminary approval of settlement; directing the County, by 4/26/2019, either to show cause why the motion should not be denied (not to exceed ten pages) or to withdraw the motion and file a revised settlement agreement and motion. Signed by Judge Steven D. Merryday on 4/4/2019. (BK)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
FORT MYERS DIVISION
COUNTY OF MONMOUTH,
NEW JERSEY
Plaintiff,
v.

CASE NO. 2:18-cv-201-FtM-23MRM

FLORIDA CANCER SPECIALISTS,
P.L., et al.,
Defendants.
____________________________________/
ORDER
The County of Monmouth, New Jersey, on behalf of a proposed class, sues
(Doc. 27) Florida Cancer Specialists and William N. Harwin, FCS’s president, under
Sections One and Two of the Sherman Act, 15 U.S.C. §§ 1–2. The parties agree to a
settlement. In accord with Rule 23, Federal Rules of Civil Procedure, the County
moves (1) for preliminary approval of the settlement, (2) for certification of the class
for the purpose of settlement, (3) for appointment as class representative, (4) for
appointment of Eamon O’Kelly of Robins Kaplan LLP as class counsel,1 and (5) for
approval of a notice to the settlement class members. (Doc. 80)

1

The motion requests appointment of Robins Kaplan, LLP as class counsel. (Doc. 80 at 8)
But only a lawyer, not a law firm, appears in court for a client. Sandyland Produce, LLC v. Tar Heel
Farms, Inc., 2007 WL 1080005, *1 n.1 (M.D. Fla. Apr. 9, 2007) (Glazebrook, M.J.) (“The Local
Rules contemplate that attorneys, not law firms[,] appear as counsel for parties.”); Infohand Company,
Ltd. v. Sprint Spectrum, L.P., 2005 WL 1862408, *1 (D. Kan. Aug. 3, 2005) (Waxse, M.J.) (“[L]aw
firms do not . . . appear[] on behalf of parties. Only individual attorneys may enter . . . their
appearance.”). Because Eamon O’Kelly signs the motion (Doc. 80 at 30) and submits a declaration
(Doc. 80-2), the motion is construed as requesting appointment of Eamon O’Kelly as class counsel.

BACKGROUND
The County alleges that FCS and 21st Century Oncology, a competitor, agreed
not to compete in “Southwest Florida” and to refer patients to each other exclusively.
Allegedly, FCS agreed to offer in Southwest Florida only “medical oncology
services” and to refer Southwest Florida patients to 21st Century for “radiation
oncology,” and 21st Century agreed to offer in Southwest Florida only “radiation
oncology services” and to refer Southwest Florida patients to FCS for “medical
oncology.”2 (Doc. 27 at ¶ 33) FCS moved to dismiss the amended complaint. (Doc.
47)
After three mediation conferences, the parties agree to a settlement.
(Doc. 80-1) FCS denies wrongdoing but “decide[s] to [settle] in order to avoid
further expense, inconvenience, and the distraction of burdensome and protracted
litigation and to obtain releases . . . .” (Doc. 80-1 at 2–3) FCS will pay the class no
more than $7,187,500. (Doc. 80-1 at ¶¶ 26–27) In return, class members who fail to
opt out of the settlement will release FCS (and Harwin) from claims “relating to the
subject matter” of this action, including claims under the Sherman Act, the Florida
Antitrust Act, the Florida Deceptive and Unfair Trade Practices Act, the federal and
Florida False Claims Acts, and “any waivable laws governing whistle-blowing or
2

The amended complaint defines Southwest Florida as Manatee, Sarasota, Charlotte, Lee,
and Collier Counties. (Doc. 27 at ¶ 12) The amended complaint defines “medical oncology” as
“the diagnosis and treatment of cancer with medicine, including chemotherapy, hormonal therapy,
biological therapy, and targeted therapy.” (Doc. 27 at ¶ 3) The amended complaint defines
“radiation oncology” as “the treatment of cancer with therapeutic radiation.” (Doc. 27 at ¶ 3)
According to the County, both medical oncology services and radiation oncology services are submarkets of the oncology services market. (Doc. 27 at ¶ 3)

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retaliation, or any other state or federal, equitable, contract[,] or tort law . . . .”
(Doc. 80 at 13; Doc. 80-1 at ¶ 20) The release excludes “individual claims arising in
the ordinary course of business for any alleged medical malpractice or breach of
contract related to FCS’s Oncology Services.” (Doc. 80-1 at ¶ 20)
The settlement agreement defines the class as:
[A]ll persons or entities that paid for all or a portion of the cost of
Oncology Services in Southwest Florida to 21st Century or FCS, or
any current or former subsidiary or affiliate of 21st Century or FCS,
during the period from and including January 1, 2010 until the date of
final approval of this Agreement. Excluded from the Settlement Class
are Defendants, the officers, directors, and employees of any
Defendant, the parent companies, subsidiaries and affiliates of any
Defendant, the legal representatives and heirs or assigns of any
Defendant, any federal government entities and instrumentalities of
the federal government, and states and their subdivisions, agencies,
and instrumentalities.
(Doc. 80-1 at ¶ 8) FCS agrees to provide the proposed class counsel with a list of the

insurers, patients, and entities that since 2010 have paid FCS for oncology services in
Southwest Florida, and 21st Century “has agreed in principle” to provide the
proposed class counsel with a list of the insurers, patients, and entities that since 2010
have paid 21st Century for oncology services in Southwest Florida. (Doc. 80-2
at ¶ 13) The proposed class counsel will mail a notice (Doc. 80-3) to each prospective
class member, “publish[] [the notice] once in a suitable publication published in
Southwest Florida,” and post the notice on a website. (Doc. 80-1 at ¶ 16)
On an unspecified date, the proposed class representative will move for a
service award and the proposed class counsel will move for an attorney’s fee.

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The parties agree to deduct both awards from the $7,187,500 settlement fund, and
FCS agrees to “take no position” on either motion. (Doc. 80-1 at ¶ 37)
DISCUSSION
Under Rule 23(e)(2), a settlement warrants preliminary approval if the
settlement is “fair, reasonable, and adequate.” In 2018, the Supreme Court approved
an amendment to Rule 23 that enumerates the considerations to guide an evaluation
of a class action settlement’s fairness:
(A) the class representatives and class counsel have adequately
represented the class; (B) the proposal was negotiated at arm’s length;
(C) the relief provided for the class is adequate, taking into account;
(i) the costs, risks, and delay of trial and appeal; (ii) the effectiveness
of any proposed method of distributing relief to the class, including
the method of processing class-member claims; (iii) the terms of any
proposed award of attorney’s fees, including time of payment; and
(iv) any agreement required to be identified under Rule 23(e)(3); and
(D) the proposal treats class members equitably relative to each other.

However, the amendment does not displace considerations announced by the
Eleventh Circuit. Fed. R. Civ. P 23(e)(2) advisory committee’s note to 2018
amendment; see also Grant v. Ocwen Loan Servicing, LLC, No. 3:15-cv-1376-J-34-PDB,
2019 WL 367648, at *4–5 (M.D. Fla. Jan. 30, 2019) (Howard, J.) (reviewing both
Rule 23(e)(2) and considerations under Bennett v. Behring Corp., 737 F.2d 982
(11th Cir. 1984)). The Eleventh Circuit allows a settlement under Rule 23(c) if:
there was no fraud or collusion in arrive at the settlement and . . . the
settlement was fair, adequate, and reasonable, considering (1) the
likelihood of success at trial; (2) the range of possible recovery; (3) the
point on or below the range of possibility recovery at which a
settlement is fair, adequate, and reasonable; (4) the complexity,
expense, and duration of litigation; (5) the substance and amount of

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opposition to the settlement; and (6) the stage of proceedings at which
the settlement was achieved.

Bennett, 737 F.2d at 986.
The parties’ settlement resulted from three mediation conferences with a courtappointed mediator. The case is complex, and both parties, represented by
experienced counsel with a formidable knowledge of the facts and the law, express
strong belief in the merits of their respective positions. The agreed $7,187,500
payment, which falls within a mid-range between the recovery estimates by the
parties’ consultants after the parties exchanged data, “adequate[ly]” accounts for,
among other considerations, the costs, risks, and delay of continued litigation.
(Doc. 80 at 11, 23)
Additionally, Rule 23(c)(2)(B) requires the “best notice that is practicable
under the circumstances”:
The notice must clearly and concisely state in plain, easily understood
language: (i) the nature of the action; (ii) the definition of the class
certified; (iii) the class claims, issues, or defenses; (iv) that a class
member may enter an appearance through an attorney if the member
so desires; (v) that the court will exclude from the class any member
who requests exclusion; (vi) the time and manner for requesting
exclusion; (vii) the binding effect of a class judgment on members
under Rule 23(c)(3).

The notice adequately describes the action, defines the class, explains the claims,
states that a class member may appear through an attorney, and explains both the
nature of exclusion from the class and the binding effect of a judgment if a class
member fails to opt out of the settlement.

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Although the settlement agreement and motion for preliminary approval
appear reasonable and tailored to Rule 23, “obvious deficiencies” in both the
settlement agreement and in the notice plan caution against granting preliminary
approval. O’Connor v. Washington PJ, Inc., No. 2:16-cv-608-FtM-99MRM, 2017 WL
6762436, at *3 (M.D. Fla. Dec. 13, 2017) (McCoy, M.J.) (collecting cases and stating
that preliminary approval is an “initial evaluation” that a court should grant unless
“a proposed settlement is obviously deficient”).
The Settlement Agreement Releases Claims Lacking an
“Identical Factual Predicate”
A class can release a settling defendant from an unpleaded claim, but the
unpleaded and released claim “must be ‘based on the identical factual predicate as
that underlying the claims in the settled action.’” In re Literary Works in Elec. Databases
Copyright Litig., 654 F.3d 242, 247–48 (2d Cir. 2011); In re Prudential Ins. Co. Am. Sales
Practice Litig., 148 F.3d 283, 325 n.82 (3d Cir. 1998) (“the weight of authority holds
that a federal court may release claims which are not in the complaint provided that
they are based on the ‘same factual predicate’”). An overly broad release of liability
is a substantive defect that can warrant denying preliminary approval of a class action
settlement. 4 Newberg on Class Actions § 13.15 (5th ed. 2014).
Under the settlement agreement, a class member who fails to opt-out of the
settlement will release “any . . . federal or False Claims Act” claim against FCS.
(Doc. 80-3 at ¶ 20) However, the County’s complaint includes no allegation of a
violation of the False Claims Act, which bears at most a tangential relation to this
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action. In 2017, two whistle-blowers, who are not parties in this action, voluntarily
dismissed without prejudice two False Claims Act claims against FCS after the
United States declined to intervene.3 That complaint alleged that FCS had violated
the False Claims Act by seeking reimbursement from Medicare and Medicaid for two
medical treatments notwithstanding that FCS unlawfully performed one treatment
and unnecessarily administered the other. By contrast, the County in this action
alleges that an agreement between FCS and a competitor to divide a product market
allowed both firms to charge their patients supracompetitive prices. Far from an
“identical factual predicate,” the False Claims Act action and this antitrust action
share only a common defendant.4 Also, the County’s action, unlike the False Claims
Act action, includes no allegation of employment retaliation, which are also released
under the settlement agreement. The settlement agreement’s expansive release might
render the settlement agreement unfair and unreasonable.
The Settlement Agreement and the Notice Provide
Insufficient Information about the Claims Process
The notice directs class members to file a claim in order to obtain a recovery
from the settlement fund. (Doc. 80-3 at 5–6) But the parties fail to submit a draft

3

United States ex rel. Dill, 2:16-cv-87 (M.D. Fla. 2017) (Merryday, J.).

4

The False Claims Act action included a count for violation of the federal anti-kickback
statute, 42 U.S.C. § 1320A-7B(b). The anti-kickback count “incorporates by reference” an allegation
that FCS had a “gentleman’s agreement” with 21st Century. 2:16-cv-87 (Doc. 12 at ¶¶ 121, 176)
That “gentleman’s agreement” underlies the County’s antitrust action. (Doc. 27 at ¶ 32) But the
counts for violating the False Claims Act in the False Claims Act action expressly decline to
incorporate the “gentleman’s agreement” allegation, which unquestionably lacks relevance to the
False Claims Act claims. 2:16-cv-87 (Doc. 12 at ¶ ¶ 160, 168)

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claim form. 4 Newberg on Class Actions § 12.21 (explaining that a settlement
agreement “normally” describes the claiming process and the claim form, which
receive court approval as part of the notice to the class). “There is nothing inherently
suspect about requiring class members to submit claims forms in order to receive
payment.” Saccocio v. JP Morgan Chase Bank, N.A., 297 F.R.D. 683, 696 (S.D. Fla.
2014) (Moreno, J.). But a claiming requirement effectively creates an “opt in”
settlement, which not only excludes from recovery a class member who fails to act
but also binds that class member to the judgment. Further, a claiming requirement is
often unnecessary if — as with FCS — a defendant possesses the records necessary to
provide a satisfactory, inexpensive, and accurate distribution of the settlement fund.
De Leon v. Bank of America, N.A. (USA), No. 6:09-cv-1251-Orl-28 KRS, 2012 WL
2568142, at *19 (M.D. Fla. Apr. 20, 2012) (Spaulding, M.J.) (“When the defendant
already holds information that would allow at least some claims to be paid
automatically, those claims should be paid directly without requiring claim forms”);
In re Checking Account Overdraft Litig., 830 F. Supp. 2d 1330, 1351 (S.D. Fla. 2011)
(King, J.) (approving a settlement that paid over 13 million settlement class members
without a class member “fill[ing] out any claim form or . . . tak[ing] any action
whatsoever”); 4 Newberg on Class Actions § 12.18 (explaining that avoiding a claiming
process is “optimal where possible” and that requiring a class member to file a claim
if claiming is unnecessary might be “a red flag . . . of a bad settlement”). Also, class
members respond to claims at notoriously low rates. De Leon, 2012 WL 2568142,

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at *14; Sylvester v. Cigna Corp., 369 F. Supp. 2d 34, 52 (D. Me. 2005) (Singal, J.);
4 Newberg on Class Actions § 12.17. Accordingly, a burdensome claims process can
result in denial of preliminary approval. De Leon, 2012 WL 256142, at *19,
report and recommendation adopted, 2012 WL 2543586 (M.D. Fla. July 2, 2012)
(Antoon, J.); 4 Newberg on Class Actions § 13.15 (“courts have rejected preliminary
approval when the proposed settlement contains substantive defects such as . . .
unjustifiably burdensome claims procedures”); Manual for Complex Litigation § 21.66
(Fed. Judicial Cntr. 2004) (directing a court to consider “the fairness and
reasonableness of the procedure for processing individual claims under the
settlement” and warning against a settlement that “impose[s] such strict eligibility
conditions or cumbersome claims procedures that many members will be unlikely to
claim benefits”). The parties fail to explain the need for claim filing and fail to offer
assurance that the claiming process will not unduly burden class members.
Additionally, the settlement agreement states that “The Settlement Fund shall
be . . . distribute[d] to authorized claimants.” (Doc. 80-3 at ¶ 35(e)) But the
settlement agreement fails to explain how the parties will identify an “authorized”
claim, and neither the notice nor the settlement agreement states a deadline to file a
claim. Often, parties settling a class action hire a settlement administrator to oversee
the claiming process. Whitehead v. Advance Stores Co., No. 5:16-cv-250-Orl-37PRL,
2017 WL 2404922, at *2–3 (M.D. Fla. Jan. 9, 2017) (Dalton, J.) (appointing and
confirming the responsibilities of a settlement administrator); 4 Newberg on Class

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Actions §§ 12.20, 12.23; Manual for Complex Litigation § 21.661 (“The settlement
administrator . . . may be charged with reviewing the claims and deciding whether to
allow claims that are late, deficient in documentation, or questionable for other
reasons”). Although the notice appears to contemplate a settlement administrator
(Doc. 80-3 at 5), neither the notice nor the settlement agreement name a settlement
administrator, state the settlement administrator’s duties, or explain how the parties
will pay a settlement administrator.
Finally, a notice to class members should include enough information to allow
a class member to estimate the likely individual recovery after deducting for expenses
and the attorney’s fee. Grunin v. Int’l House of Pancakes, 513 F.2d 114, 122 (8th Cir.
1975); In re Lease Oil Antitrust Litig. (No. II), 186 F.R.D. 403, 429–30 (S.D. Tex. 1999)
(Jack, J.) (recognizing that a class member’s recovery might ultimately depend on the
number of valid claims filed but approving the notice because “the class member is
notified of the formula for allocation”); Manual for Complex Litigation § 21.312
(“The notice should . . . explain the procedures for allocating and distributing
settlement funds . . . [and] provide information that will enable class members to
calculate or at least estimate their individual recoveries, including estimates of the
size of the class”). The settlement agreement states only that “[t]he distribution of
the Settlement Fund shall be administered pursuant to a plan of allocation prepared
by Plaintiffs’ Counsel and subject to the approval of the Court.” (Doc. 80-1 at ¶ 34)
No plan of allocation appears. A class member’s decision to file a claim, opt out of

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the settlement, or take no action might reasonably depend on whether the class
member will recover pro rata, recover based on the extent to which that particular
class member overpaid for oncology services, or perhaps recover by some other
allocation or formula. 4 Newberg on Class Actions § 12.15. But the notice lacks
sufficient information to permit a class member to estimate the class member’s
recovery.
The “Clear Sailing Provision” Might Warrant Scrutiny
A “clear sailing provision” prohibits a defendant from opposing a class
counsel’s petition for an attorney’s fee. “These agreements are troubling because
they demonstrate that class counsel negotiated some aspect of their fee agreement
with the defendant when counsel’s ethical obligation is to the class, not to its own
fees.” 4 Newberg on Class Actions § 13.9. Although a “clear sailing provision” does
not necessitate a finding of unfairness, a “clear sailing provision” might suggest that
the settlement agreement demands closer scrutiny to ensure that the settlement is not
the product of collusion, Montoya v. PNC Bank, N.A., No. 14-20474-CIVGOODMAN, 2016 WL 1529902, at *18 (S.D. Fla. Apr. 13, 2016) (Goodman, M.J.).
A “clear sailing provision” is particularly disfavored if coupled with a reversion,
which returns residue in the settlement fund to the defendant. Sylvester, 369 F. Supp.
2d at 45–46.
The parties’ settlement agreement includes a “clear sailing provision.”
(Doc. 80-1 at ¶ 37) The notice states that “no money will be returned to the Settling

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Defendants” and expresses a “possib[ility] that any money remaining after claims are
paid will be distributed to charities, governmental entities, or other beneficiaries
approved by the Court.” (Doc. 80-3 at 5) Additionally, a court-appointed mediator
assisted in the settlement, which offers some assurance against a possibility of
collusion among counsel. Nevertheless, neither the settlement agreement nor the
motion confirm that result. To dispel any inference of collusion between counsel, the
parties should confirm whether the settlement agreement prohibits a reversion.
The Parties Fail to Explain Adequately the Publication Notice
In addition to mailing notice to individual class members, the parties intend to
“publish[] [the notice] once in a suitable publication published in Southwest
Florida.” (Doc. 80-1 at ¶ 16) But no copy of the notice that the parties will publish
in a newspaper appears.
Also, the parties offer a needlessly vague plan to publish notice “once in a
suitable publication in Southwest Florida.” The settlement class is dispersed over at
least six thousand square miles. Although the five counties constituting “Southwest
Florida” are contiguous, publication in Lee County’s The News-Press is unlikely to
reach a class member in Sarasota County, and publication in Collier County’s Naples
Daily News is unlikely reach a class member in Manatee County. Alternatively, “a
suitable publication published in Southwest Florida” might mean a national
newspaper, which might be unconducive to notifying this particular class. Lord v.
First Am. Title Ins. Co., 281 F.R.D. 58, 61 (D. Me. 2012) (Singal, J.) (approving

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publication in specified local newspapers and rejecting publication in a national
newspaper); Dillard v. City of Foley, 926 F. Supp. 1053, 1059 (M.D. Ala. 1995)
(Thompson, J.) (approving publication of a notice “in one local paper weekly for four
weeks and in another local paper weekly for three weeks”).
CONCLUSION
“Courts are not permitted to modify settlement terms or in any manner to
rewrite the agreement reached by the parties.” Holmes v. Continental Can Co.,
706 F.2d 1144, 1160 (11th Cir. 1985). Accordingly, a ruling on the County’s motion
(Doc. 80) is DEFERRED.5 No later than APRIL 26, 2019, the County either must
show cause6 why the motion should not be denied in light of the deficiencies
identified in this order or must withdraw the preliminary approval motion and file a
revised settlement agreement and preliminary approval motion.
ORDERED in Tampa, Florida, on April 4, 2019.

5

The deferral includes a ruling on the County’s request for class certification for settlement
purposes, for appointment as class representative, and for appointment of Eamon O’Kelly as class
counsel.
6

A show cause response to this order may not exceed ten pages.

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