United States of America, et al v. Omnicare, Inc. et al

Filing 123

OPINION & ORDER....The Court awards MHA attorneys' fees and costs in the sum of $168,967.61. The Clerk of Court shall enter judgment for MHA in this amount. (Signed by Judge Denise L. Cote on 4/15/2015) (gr)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
--------------------------------------- X
:
UNITED STATES OF AMERICA, et al., ex
:
rel. Fox Rx, Inc.,
:
:
Plaintiffs,
:
:
:
-v:
OMNICARE, INC., NEIGHBORCARE, INC.,
:
PHARMERICA CORP., and MANAGED HEALTH
:
CARE ASSOC., INC.,
:
:
:
Defendants.
:
--------------------------------------- X

12cv275 (DLC)
OPINION & ORDER

For relator Fox Rx, Inc.:
Michael I. Leonard
LEONARD LAW OFFICES
203 N. LaSalle, Suite 1620
Chicago, IL 60601
Paul A. Traina
ENGSTROM, LIPSCOMB & LACK, PC
10100 Santa Monica Blvd., 12th Fl.
Los Angeles, CA 90067
Dennis J. Doody
120 White Plains Rd., Ste. 125
Tarrytown, NY 10591
For defendant Managed Health Care Associates Long Term Care
Network Inc.:
Daniel S. Ruzumna
Adam Blumenkrantz
PATTERSON BELKNAP WEBB & TYLER LLP
113 Ave. of the Americas
New York, NY 10036

DENISE COTE, District Judge:
Fox Rx, Inc. (“Fox”), a serial qui tam relator and former
Medicare Part D plan sponsor, has brought at least a half-dozen
actions under the False Claims Act, 31 U.S.C. § 3729 et seq.
(“FCA”), around the country against entities with which it once
worked.

This is one such action, which was dismissed on August

12, 2014.

See United States ex rel. Fox Rx, Inc. v. Omnicare,

Inc., 38 F. Supp. 3d 398 (S.D.N.Y. Aug. 12, 2014).

On August

24, 2014, defendant MHA Long Term Care Network (“MHA”) filed a
motion for attorneys’ fees and costs since January 10, 2014,
pursuant to 31 U.S.C. § 3730(d)(4).

On December 1, that motion

was granted for “an amount to be determined following the
submission of supporting documentation by MHA LTC.”

United

States, ex rel. Fox Rx, Inc. v. Omnicare, Inc., No. 12cv275
(DLC), 2014 WL 6750277, at *4-5 (S.D.N.Y. Dec. 1, 2014) (“Fees
Opinion”).

The parties having made submissions regarding the

amount of fees to be awarded, MHA is hereby awarded fees in the
amount of $168,967.61.

BACKGROUND
Familiarity with the facts of this case is presumed.

A

detailed factual background is provided in the Fees Opinion,
2014 WL 6750277, at *1-4.

For present purposes, it is enough to

state that Fox levied a number of claims against Omnicare under
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the FCA that were objectively frivolous, based variously on a
studied misunderstanding of MHA’s business, an obvious
misreading of a relevant agreement, and factual assertions with
no reasonable basis.

Fees Opinion, 2014 WL 6750277, at *4.

The

Court granted MHA’s motion for attorneys’ fees under an FCA
provision permitting such awards if the “claim of the person
bringing the action was clearly frivolous, clearly vexatious, or
brought primarily for purposes of harassment.”

31 U.S.C. §

3730(d)(4); see Mikes v. Straus, 274 F.3d 687, 705 (2d Cir.
2001) (court may award fees pursuant to § 3730 “upon a finding
that the . . . claims were objectively frivolous, irrespective
of plaintiff's subjective intent”).
MHA’s request for fees and costs totals $168,967.61.

This

amount encompasses:
(1)

239.4 hours of attorney time, billed by a partner and two
associates at the rates of $836/hour, $631.75/hour, and
$541.50/hour, respectively, totaling $167,962.48; and

(2)

$1,005.13 in costs, encompassing legal research,
conference call services, and other miscellaneous
expenses. 1

The work described above was performed between January 13, 2014
and October 23, 2014.
Fox has not challenged the reasonableness of the costs sought
and there is no independent reason to question them.
1

3

DISCUSSION
The starting point in determining an attorneys’ fees award
is calculating the “lodestar” number, which is the number of
hours reasonably expended on the litigation multiplied by a
reasonable hourly rate.

Stanczyk v. City of New York, 752 F.3d

273, 284 (2d Cir. 2014) (citation omitted).

In determining what

constitutes a reasonable hourly rate, courts look first to the
rates commonly charged by attorneys for similar work in the
district in which the court sits.

See, e.g., Simmons v. New

York City Transit Auth., 575 F.3d 170, 174 (2d Cir. 2009).

The

calculation of attorneys’ fees rests in the sound discretion of
the district court.

McDaniel v. Cnty. of Schenectady, 595 F.3d

411, 416 (2d Cir. 2010).
“[T]he fee applicant bears the burden of establishing
entitlement to an award and documenting the appropriate hours
expended and hourly rates.”
437 (1983).

Hensley v. Eckerhart, 461 U.S. 424,

To aid in calculating the lodestar, the fee

applicant must provide contemporaneous time records, affidavits,
and other materials to support its application for the amount of
reasonable hours expended.

McDonald ex rel Prendergast v.

Pension Plan of the NYSA-ILA Pension Trust Fund, 450 F.3d 91, 96
(2d Cir. 2006).

“Where the documentation of hours is

inadequate, the district court may reduce the award
accordingly.”

Hensley, 461 U.S. at 433.
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Fee requests should

also be reduced to exclude hours that are not “reasonably
expended,” such as those that are excessive or redundant.

Id.

at 434 (citation omitted).
Fox’s objections to the amount of costs and attorneys’ fees
MHA may be summarized as follows: (1) the hourly rates MHA
proposes are excessive; (2) the number of hours MHA proposes is
“unreasonable” and its documentation insufficiently detailed;
and (3) in any event, Fox has no ability to pay.

None has

merit.
I. Reasonable Hourly Rate
A reasonable hourly rate is “what a reasonable, paying
client would be willing to pay, given that such a party wishes
to spend the minimum necessary to litigate the case
effectively.”

Bergerson v. New York State Office of Mental

Health, Cent. New York Psychiatric Ctr., 652 F.3d 277, 289-90
(2d Cir. 2011) (citation omitted).

It must be “in line with

prevailing rates in the community for similar services by
lawyers of reasonably comparable skill, expertise and
reputation.”

McDonald, 450 F.3d at 96; see Simmons v. New York

City Transit Auth., 575 F.3d 170, 174 (2d Cir. 2009) (explaining
courts look first to the rates commonly charged by attorneys for
similar work in the district in which the court sits).

The

reasonable rate is ordinarily determined by “a case-specific
inquiry into the prevailing market rates for counsel of similar
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experience and skill to the fee applicant’s counsel,” which may
include taking “judicial notice of the rates awarded in prior
cases,” and consideration of the “evidence proffered by the
parties.”
2005).

Farbotko v. Clinton Cnty., 433 F.3d 204, 209 (2d Cir.

The burden is on the fee applicant to show “by

satisfactory evidence -- in addition to the attorney’s own
affidavits -- that the requested hourly rates are the prevailing
market rates.”

Id. (citation omitted).

MHA proposes three

rates for the work performed: $836/hour for a litigation
partner; $631.75/hour for an eighth-year associate; and
$541.50/hour for a fourth-year associate.

For the reasons

described below, all three are reasonable in the context of this
case.
MHA seeks fees for the work of Daniel Razumna (“Razumna”),
a partner at Patterson Belknap Webb & Tyler, LLC (“Patterson
Belknap”) specializing in complex commercial litigation.

He has

practiced law for over 20 years; before joining Patterson
Belknap in 2005, he spent nearly four years in private practice
and six years as a federal prosecutor in this District.

MHA

points to recent cases in the Southern District in which courts
have found reasonable partner rates as high as $870 per hour,
Themis Capital v. Democratic Republic of Congo, No. 09cv1652
(PAE), 2014 WL 4379100, at *7 (S.D.N.Y. Sept. 4, 2014),
reconsideration denied, No. 09cv1652 (PAE), 2014 WL 4693680
6

(S.D.N.Y. Sept. 22, 2014), and $815 per hour, Regulatory
Fundamentals Grp. LLC v. Governance Risk Mgmt. Compliance, LLC,
No. 13cv2493 (KBF), 2014 WL 4792082, at *2 (S.D.N.Y. Sept. 24,
2014).

In a declaration supporting MHA’s application, MHA also

cites a recent report from Pricewaterhouse Coopers indicating
that the average billing rate for non-IP New York City partners
in Ruzumna’s peer group is $942 per hour, well above the rate
requested here.
MHA also seeks attorneys’ fees for two Patterson Belknap
associates: Adam Blumenkrantz, an eighth-year associate, and
Aileen Fair, a fourth-year associate.

Blumenkrantz received his

J.D. in 2006 and has practiced law since that time, spending one
year as a law clerk on the United States Court of Appeals for
the First Circuit.

His proposed rate is $631.75 per hour.

Fair

received her J.D. in 2010 and has practiced law since that time.
Her proposed rate is $541.50 per hour.

Fox cites to no cases in

specific support of its claim that these associates’ rates are
unreasonable.

The Pricewaterhouse Coopers report cited by MHA

indicates that both associates’ rates are well below the market
average.
This case required MHA to interpret complex Medicare and
Medicaid regulations and various contracts.

Moreover, counsel

for MHA were required to expend considerable time and resources
contesting claims by Fox that were objectively unreasonable,
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even after clearly explaining to Fox, in January of 2014, that
Fox’s positions were untenable and that MHA and affiliated
entities were not appropriate subjects of litigation.
Opinion, 2014 WL 6750277, at *3-4.

See Fees

Counsel for defendants

demonstrated skill and patience throughout these proceedings.
In light of the prevailing rates in this District, the
attorneys’ legal experience, and the nature and caliber of work
performed here, the Court finds that the proposed rates of $836,
$631.75, and $541.50 per hour are fair and reasonable.
II. Reasonable Hours Expended
“Applications for fee awards should generally be documented
by contemporaneously created time records that specify for each
attorney[] the date, the hours expended, and the nature of the
work done.”

Matusick v. Erie Cnty. Water Auth., 757 F.3d 31, 64

(2d Cir. 2014) (citation omitted).

“Hours that are excessive,

redundant, or otherwise unnecessary are to be excluded” from the
tally.

Kirsch v. Fleet St., Ltd., 148 F.3d 149, 173 (2d Cir.

1998) (citations omitted).

If it finds excessive hours, a court

has “discretion simply to deduct a reasonable percentage of the
number of hours claimed as a practical means of trimming fat
from a fee application.”

Id.

Similarly, records or other

documentation that “are too vague to sufficiently document the
hours claimed” may also warrant a reduction in hours claimed.
Barclays Capital Inc. v. Theflyonthewall.com, No. 06cv4908
8

(DLC), 2010 WL 2640095, at *4 (S.D.N.Y. June 30, 2010) (citing
Kirsch, 148 F.3d 149, 172–73).

This may include the practice of

“block billing,” although block billing may be adequate if “the
reasonableness of the work performed can still be confirmed.”
Id. at *5; see also Merck Eprova AG v. Gnosis S.p.A., 760 F.3d
247, 266 (2d Cir. 2014) (affirming district court’s conclusion
that block billing was reasonable form of documentation).
Fox argues that MHA’s “reliance on vague descriptions and
‘block billed’ time entries” demonstrates the unreasonableness
of the hours requested. 2

The use of “block billing” here is

perfectly reasonable; the specific tasks in each “block” are
described with sufficient detail and clarity to confirm “the
reasonableness of the work performed.”

Barclays Capital Inc.,

2010 WL 2640095, at *4.
III. Inability to Pay
Fox also argues that, regardless of the reasonableness of
MHA’s proposed hourly rates and hours expended, it “has no
ability to pay” and therefore “there is little to be gained by
levying massive fees” against it.

2

Fox has not substantiated

Fox specifically points to the term “preparing” in relation to
specific documents as emblematic of the alleged vagueness.
While in certain cases “preparing” may not be enough to
substantiate a line-item claim for attorneys’ fees, this is not
such a case: read in context, the entries describing “preparing”
suffice to describe the work surrounding motion practice before
this Court.
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this claim beyond a citation to an equally unsubstantiated
statement in a letter previously submitted to the Magistrate
Judge in this action.

While it is true that “the relative

wealth of the parties” may play some part in weighing an award
of attorneys’ fees, Toliver v. Cnty. of Sullivan, 957 F.2d 47,
49 (2d Cir. 1992), it is equally true that bald assertions of
“economic disparities” do not suffice to warrant forbearing from
an award on equitable grounds.

See Gesualdi v. Laws Const.

Corp., 759 F. Supp. 2d 432, 447 (S.D.N.Y. 2010) (Cote, J.)
(noting that reducing fee award on these grounds not appropriate
where party “has not presented any evidence of its own financial
condition to justify” it), aff'd in part and vacated in part on
other grounds, 485 F. App'x 450 (2d Cir. 2012).

CONCLUSION
The Court awards MHA attorneys’ fees and costs in the sum
of $168,967.61.

The Clerk of Court shall enter judgment for MHA

in this amount.

Dated:

New York, New York
April 15, 2015
____________________________
DENISE COTE
United States District Judge

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