Jacobs v. CDS, PA et al
Filing
74
MEMORANDUM DECISION & ORDER - IT IS ORDERED that Plaintiff-Relators Renewed Motion for Reasonable Attorneys Fees and Costs (Dkt. 71 ) is GRANTED in part and DENIED in part. The motion is granted to the extent that the Court will award plainti ffs $79,904 in fees and $1,130.57 costs. The motion is DENIED to the extent it seeks additional sums. Signed by Judge B. Lynn Winmill. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (cjs)
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO
UNITED STATES OF AMERICA ex rel.
DR. JEFFREY JACOBS,
Case No. 4:14-cv-00301-BLW
MEMORANDUM DECISION &
ORDER
Plaintiff,
v.
CDS, P.A. d/b/a POCATELLO
WOMEN’S HEALTH CLINIC;
POCATELLO HOSPITAL, LLC, d/b/a
PORTNEUF MEDICAL CENTER, LLC,
a Delaware limited liability company;
LHP POCATELLO, LLC, a Delaware
limited liability company,
Defendants.
INTRODUCTION
Before the Court is Plaintiff-Relator Dr. Jeffrey Jacobs’ Renewed Motion for
Reasonable Attorneys’ Fees and Costs (Dkt. 71). Plaintiff seeks $106,532 in attorneys’
fees and $1,130.57 in costs. For the reasons explained below, the Court will award the
full amount of costs but will reduce the attorneys’ fees to $79,904.
BACKGROUND
In July 2014, Dr. Jeffrey Jacobs filed this action on behalf of the United States
pursuant to the qui tam provisions of the False Claims Act, 31 U.S.C. § 3724 et. seq.
MEMORANDUM DECISION & ORDER - 1
Jacobs alleged that the Pocatello Women’s Health Clinic and the Portneuf Medical
Center submitted patient claims to the Medicare and Medicaid programs, falsely
certifying that such claims were in compliance with the Stark Act, 42 U.S.C. § 1395nn
and the Anti-Kickback Act, 42 U.S.C. § 1320a-7b. According to Dr. Jacobs, the medical
center and the women’s health clinic engaged in a scheme to illegally shift the clinic’s
overhead costs to the medical center as a reward to the clinic for its referrals to the
medical center.
In January 2017, Dr. Jacobs filed a Chapter 7 bankruptcy petition, and shortly after
that the United States decided not to intervene in this action. See In re Jacobs, No. 1700018-TLM (Bankr. D. Idaho); Notice of Election to Decline Intervention, Dkt. 53. The
bankruptcy trustee did not intend to litigate this action on behalf of the bankruptcy estate;
he was prepared to abandon the estate’s interest in this action, which would have allowed
Dr. Jacobs to pursue it on his own.
When defendants learned of a potential abandonment, they indicated a willingness
to settle. See Ex. B to Casperson Dec., Motion to Approve Compromise, Dkt. 65-4, at 6.
In late 2017, defense counsel and the bankruptcy trustee reached an agreement. See
Settlement Agreement, In re Jacobs, Case No. 17-00018-TLM, Dkt. 41-1 (Bankr. D.
Idaho). Defendants agreed to pay $69,087 to the United States. See id. ¶ 1. Of this
amount, the United States would keep $51,816 and the remaining $17,271 would be paid
to Dr. Jacobs’ bankruptcy estate. The settlement agreement did not obligate defendants to
pay attorneys’ fees incurred in this action, but Dr. Jacobs did not release that claim either.
Id. ¶ 2. Instead, the settlement agreement provided that this Court would retain
MEMORANDUM DECISION & ORDER - 2
jurisdiction to enforce the terms of the settlement agreement, “including but not limited to
any claim by Relator for attorneys’ fees. See id. ¶ 13; see also Joint Stipulation of
Dismissal, Dkt. 63, ¶ 5 (“The Court will retain jurisdiction over the Parties to the extent
necessary to enforce the terms and conditions of the Settlement Agreement, including but
not limited to any claim by Relator for attorney’s fees.”).
Shortly after the settlement agreement was finalized, Dr. Jacobs asked the Court to
award attorneys’ fees and costs. See Dkt. 65. The Court denied the motion, without
prejudice, because the bankruptcy trustee had not yet abandoned any claim to attorneys’
fees. See June 7, 2018 Order, Dkt. 69, at 4-5. Jacobs reports that the trustee has now
abandoned any claim to attorneys’ fees. See Dkt. 71-1, at 1. Accordingly, he renews his
motion for attorneys’ fees. He asks the Court to award $106,532 in attorneys’ fees and
$1,130.57 in costs.
DISCUSSION
1.
Plaintiff’s Entitlement to Attorneys’ Fees
It is undisputed that the prevailing plaintiff in a declined qui tam action is entitled
to receive “an amount for reasonable expenses which the court finds to have been
necessarily incurred, plus reasonable attorneys’ fees and costs.” 31 U.S.C. § 3730(d)(2).
Here, Dr. Jacobs settled the claim with defendants, so there is no question that his
attorneys are entitled to a fee award.
The calculation of a reasonable fee award involves a two-step process. Fischer v.
SJB–P.D. Inc., 214 F.3d 1115, 1119 (9th Cir. 2000). First, the court calculates the
presumptive fee award, also known as the “lodestar figure,” by taking the number of
MEMORANDUM DECISION & ORDER - 3
hours reasonably expended on the litigation and multiplying it by a reasonable hourly
rate. Id. (citing Hensley v. Eckerhart, 461 U.S. 424, 433 (1983)). Second, in “appropriate
cases” the court may enhance or reduce the lodestar figure based on an evaluation of the
factors set forth in Kerr v. Screen Extras Guild, Inc., 526 F.2d 67, 69–70 (9th Cir.1975),
that were not taken into account in the initial lodestar calculation. Intel Corp. v. Terabyte
Intern., Inc., 6 F.3d 614, 622 (9th Cir.1993) (citation omitted). 1 The Ninth Circuit has
cautioned that there is a “strong presumption” that the lodestar figure represents a
reasonable fee and that adjustment upward or downward is “the exception rather than the
rule.” D’Emanuele v. Montgomery Ward & Co., 904 F.2d 1379, 1384 (9th Cir. 1990).
A. The Lodestar Calculation
1) A Reasonable Hourly Rate
To determine a reasonable hourly rate, the district court looks to hourly rates
prevailing in the relevant legal community for similar work performed by attorneys of
comparable skill, experience, and reputation. Ingram v. Oroudjian, 647 F.3d 925, 928
(9th Cir. 2011) (per curiam). The “relevant legal community” is generally the forum in
which the district court sits. Mendenhall v. NTSB, 213 F.3d 464, 471 (9th Cir. 2000).
Plaintiff’s complaint was filed in the Eastern Division of the District of Idaho. Thus, the
The Kerr factors are (1) the time and labor required; (2) the novelty and difficulty of the
questions involved; (3) the skill required to perform the legal services properly; (4) the preclusion of other
employment by the attorney due to acceptance of the case; (5) the customary fee; (6) whether the fee is
fixed or contingent; (7) time limitations imposed by the client or the circumstances; (8) the amount
involved and the results obtained; (9) the experience, reputation, and ability of the attorneys; (10) the
“undesirability” of the case; (11) the nature and length of the professional relationship with the client; and
(12) awards in similar cases. Kerr, 526 F.2d at 70.
1
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relevant legal community is Pocatello, Idaho. See Alliance for Property Rights & Fiscal
Responsibility v. City of Idaho Falls, No. 4:12-cv-146-BLW, 2013 WL 551028, at *5 (D.
Idaho. Feb. 12, 2013).
Four attorneys worked on this case for plaintiff, at the following rates: DeAnne
Casperson ($300 per hour); Amanda E. Ulrich ($275 per hour); and D. Andrew Rawlings
($175 per hour); and Ryan Dustin ($225 per hour). The Court’s task is to determine an
appropriate market rate for these attorneys. See Blum v. Stenson, 465 U.S. 886, 895 n.11
(1984). “To inform and assist the court in the exercise of its discretion, the burden is on
the fee applicant to produce satisfactory evidence – in addition to the attorney’s own
affidavits – that the requested rates are in line with those prevailing in the community for
similar services by lawyers of reasonably comparable skill, experience and reputation.”
Id. The Ninth Circuit has noted that “[a]ffidavits of the plaintiffs’ attorney[s] and other
attorneys regarding prevailing fees in the community, and rate determinations in other
cases ... are satisfactory evidence of the prevailing market rate.” United Steelworkers of
Am. v. Phelps Dodge Corp., 896 F.2d 403, 407 (9th Cir.1990).
Plaintiff submit two affidavits in support of their rates; one from counsel DeAnne
Casperson and another from attorney James Holman. Both attorneys state that the billing
rates set out above are in line with the prevailing market rates in Southeastern Idaho.
Additionally, this Court previously awarded $300 per hour for Ms. Casperson’s time in
an employment case. See Williams v. Madison County, Case No. 4:12-cv-00561-JCC–
CWD, 2015 WL7853911 (D. Idaho Dec. 3, 2015).
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Defendants do not challenge Mr. Rawlings’ or Mr. Dustin’s billing rates, but they
argue that Ms. Casperson’s and Ms. Ulrich’s rates should be reduced by $25 per hour.
Defendants say a reduction is appropriate because this litigation is not particularly
complex and because these attorneys lacked experience litigating False Claims Act cases.
The Court is not persuaded. First, this is a complex case, notwithstanding
defendants’ suggestions to the contrary. Second, although these attorneys may have
lacked experience in precisely this sort of complex litigation, they have significant
experience in complex litigations within the employment arena, including whistleblower
claims. Accordingly, based on the information provided in counsel’s affidavits, the Court
finds that the rates charged by counsel are within the prevailing market rates for
Southeastern Idaho for this type of work. Thus, the Court will use the following hours
rates in the calculating the lodestar figure: $300 per hour for Ms. Casperson; $275 per
hour for Ms. Ulrich; $225 per hour for Mr. Dustin; and $175 per hour for Mr. Rawlings.
2) Time Spent on the Litigation
The next question is whether the time spent on this litigation, a total of 402.2
attorney hours, is reasonable. See Casperson Supp. Aff., Dkt. 71-2, ¶ 7.
Defendants argue that counsel’s hours should be reduced for time counsel spent
engaging defendants in a discovery dispute. Defendants say that plaintiffs were pursuing
unnecessary discovery and that their follow-on efforts to compel production from
defendants were largely unsuccessful. Defendants thus ask the Court to eliminate time
spent on discovery from late November through early March.
MEMORANDUM DECISION & ORDER - 6
The Court has reviewed the briefing on that discovery dispute and agrees that
some reduction is appropriate. As explained in the Court’s ruling on plaintiff’s motion to
compel, plaintiffs pursued discovery that exceeded the substantive and temporal bounds
of the complaint. See Aug. 3, 2016 Order, Dkt. 48. The dispute unnecessarily increased
the litigation costs. The Court has reviewed counsel’s time entries, and it appears that
counsel was immersed almost completely in discovery efforts from early December 2015
through late March 2016. Defendants do not isolate any specific entries; they essentially
just ask the Court to eliminate all time billed during those months. The Court is not
inclined to cut the hours so drastically but will instead very conservatively estimate that
21 hours of the time billed during that period was excessive. The Court will divide that
reduction across the three attorneys’ billing rates – 7 hours apiece charged to Rawlings,
Ulrich, and Casperson. (Mr. Dustin did not begin billing on this case until much later.)
Defendants also challenge two minor time entries, asserting that that these obvious
errors likely mean there are other, latent errors.
First, defendants note that on February 18, 2016, Ms. Ulrich block-billed 2.0 hours
to various tasks, including time spent attending a discovery conference with the Court.
Ms. Casperson billed 2.8 hours on the same day, but all of that time was billed to
attending the discovery conference. Ms. Casperson says she is confident she spent 2.8
hours on this action on February 8, 2016 but assumes she must have omitted some of the
tasks she performed that day from her time entry. She agreed to omit .8 hours to resolve
the issue. The Court finds this solution acceptable.
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Defendants also report that counsel’s time entries for November 9, 2016 are
questionable because on that date, counsel billed 12 minutes to drafting a proposed order.
Defense counsel says this proposed order had already been submitted to counsel and the
Court, so billing for time after the fact is an obvious error. The Court is not convinced.
The Court received the draft proposed order on November 9, 2016 – the same day
counsel billed time to preparing it – and counsel did not bill time for that task on any
other day. As such, there does not appear to be any irregularity in the November 9, 2016
entry, much less one that would call into question counsel’s entire billing records.
Given the deductions explained above, the Court finds that 380.4 of the 402.2
hours billed to this matter, accounting for $99,880 in fees, are reasonable. The final
lodestar calculation looks like this:
Attorney
DeAnne Casperson
Amanda Ulrich
D. Andrew Rawlings
Ryan S. Dustin
Total
Hours Billed
181.3
168.3
30.6
15
402.2
Hours
Allowed
173.5
161.3
23.6
15
380.4
Hourly
Rate
$300
$250
$175
$225
Total
$52,050.00
$40,325.00
$4,130.00
$3,375.00
$99,880.00
B. Reductions for Partial Success
The lodestar figure is presumptively the correct award. Nevertheless, reductions
or enhancements may be appropriate in exceptional cases.
In Hensley v. Eckerhart, the Supreme Court held that the lodestar amount may be
adjusted downward depending on the “results obtained.” 461 U.S. 424, 434 (1983).
When the prevailing party achieved only a “partial or limited success,” the lodestar figure
“may be an excessive amount” because “the most critical factor is the degree of success
MEMORANDUM DECISION & ORDER - 8
obtained.” Id. at 436 (emphasis added). Moreover, when the district court “reduce[s] the
award to account for the limited success[,] [t]he court necessarily has discretion in
making this equitable judgment.” Id. at 436-37. As the Hensley Court explained, “There
is no precise rule or formula for making these determinations. The district court may
attempt to identify specific hours that should be eliminated, or it may simply reduce the
award to account for the limited success.” Id. at 436-37.
Here, both sides claim victory. Defendants say they only had to pay a “trifling”
amount to settle the case, which they viewed as nothing more than a nuisance case.
Plaintiff, on the other hand, says it was a significant victory to get anything at all in this
case, given that the parties had not completed discovery or dispositive motions.
The truth is somewhere in the middle. The money defendants paid to settle –
nearly $70,000 – is not a trifling amount, but defendants correctly note that there is a
significant gap between what plaintiff wanted to achieve and what he did achieve. In that
regard, plaintiff has not disputed defendants’ assertion that “[t]he damages Plaintiff
recovered here are a tiny fraction of the damages he sought, which would have been a
multiple of the total value of every allegedly tainted claim for reimbursement submitted
to federal healthcare programs by the Medical Center between 2010 and 2013.”
Response, Dkt. 67, at 12-13. Likewise, defendants admitted no wrongdoing, and report
that no policy change was required by the settlement. In short, plaintiff achieved a limited
success, and the Court finds that this is one of those rare cases where a reduction to the
lodestar amount is appropriate. After taking into account the policy considerations on all
sides – i.e., the encouragement of whistleblowers, whether the suit had a positive impact,
MEMORANDUM DECISION & ORDER - 9
the cost of litigation, and judicial economy – the Court finds that a 20 percent reduction
to the lodestar figure is appropriate. Accordingly, the Court will award $79,904 ($99,880
x .80 = $79,904).
Finally, the Court will clarify that this 20 percent reduction for limited success was
not taken into account into the initial lodestar calculation. Typically, if the district court
plans to reduce a fee award for limited success, the Ninth Circuit prefers that the district
court reduce the hours claimed and the rate sought instead of adjusting the lodestar figure
after it has already been calculated. See Corder v. Gates, 947 F.2d 374, 378 (9th
Cir. 1991) (“Since consideration of limited success is presumably subsumed within the
initial calculation of hours reasonably expended at a reasonable hourly rate, district courts
should not ordinarily make a separate adjustment for limited success.”) (citation and
quotation marks omitted). But although a separate lodestar reduction for limited success
is generally “disfavored,” such an adjustment is permissible so long as the court
“partition[s] its ‘lodestar’ analysis from consideration of ... degree of success” and
“account[s] for ... limited success only once.” See id. Here, the unadjusted lodestar does
not account for plaintiff's limited success. Although some time was deducted for time
plaintiff spent pursuing discovery as well as a minor adjustment plaintiff’s counsel agreed
to, those deductions are entirely unrelated to the limited success plaintiff achieved here.
Accordingly, this separate lodestar adjustment raises no risk of double-counting. See
Cabrales v. L.A. Cnty., 864 F.2d 1454, 1465 (9th Cir.1988) cert. granted, judgment
vacated, 490 U.S. 1087 (1989) and opinion reinstated, 886 F.2d 235 (9th Cir.1989)
(“Mathematically, it is inconsequential whether the lodestar figure itself is adjusted for
MEMORANDUM DECISION & ORDER - 10
lack of success or whether the reasonable hours component of the lodestar is adjusted for
lack of success. What matters is that the district court did not ‘count’ for lack of success
twice.”).
2.
Costs
Defendants do not contest plaintiffs’ request for $1,130.57 in costs. This sum will
therefore be added to the award.
3.
Payment to Attorney
Finally, defendants do not take any position as to whether the fees should be paid
directly to Jacobs, or to his attorneys. Given that Dr. Jacobs has assigned his right to
receive fees to his attorneys, the Court will order that defendants pay the award to the
attorneys.
ORDER
IT IS ORDERED that Plaintiff-Relator’s Renewed Motion for Reasonable
Attorneys’ Fees and Costs (Dkt. 71) is GRANTED in part and DENIED in part. The
motion is granted to the extent that the Court will award plaintiffs $79,904 in fees and
$1,130.57 costs. The motion is DENIED to the extent it seeks additional sums.
DATED: November 30, 2018
_________________________
B. Lynn Winmill
Chief U.S. District Court Judge
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