12 Fla. L. Weekly Supp. 960b
Attorney’s fees — Insurance — Personal injury protection — Amount — Contingency risk multiplier — Where PIP action was contingency case that could be lost, attorneys take care in accepting such cases, finding competent attorney willing to handle high volume of very contentious cases is no easy task, PIP practice is specialty that precludes other opportunities, and medical provider has lasting relationship with counsel, contingency risk multiplier of 1.5 is appropriate — Expert witness fee, costs and prejudgment interest are awarded
MILLENNIUM DIAGNOSTIC IMAGING CENTER as assignee for MARCELLO MENDEZ, Plaintiff, vs. UNITED AUTOMOBILE INSURANCE COMPANY, Defendant. County Court, 11th Judicial Circuit in and for Miami-Dade County. Case No. 02-349 SP-24. July 11, 2005. Charles D. Edelstein, Sr. Judge. Counsel: Richard Shuster, Shuster & Saben, LLC, Miami, for Plaintiff. Nicole Malick, United Automobile Insurance Company.
I. Introduction
In one sense, this is a garden variety PIP case. Months of litigation over a modest amount in controversy ultimately ending in a lawyer’s fee claim of over $19,000 and — this does not include defense attorney fees and costs. This case began in early 2002 and concluded in September 2004. The undersigned was not the trial judge in the case but heard the attorney’s fee issues on December 21, 2004. This case is one of a handful the undersigned has kept under advisement for over 45 days in a judicial career spanning many years and in sitting in all but the probate division of the circuit court and in all aspects of the county court.
II. Plaintiff’s Contentions
The plaintiff has presented expert testimony to support its view, shared by many plaintiff’s lawyers, that some defendant insurance companies share business practices designed to prolong litigation and wear out opposing counsel in order to get a cheap settlement or delay payment until no other means to do so has “surfaced other than bankruptcy.” Given the long delay in reaching final resolution, and all loopholes plaintiff’s experts say the defense exploits, PIP cases are risky and the plaintiffs’ counsel have to fund cases for years. This being the case, they urge, a multiplier is in order. PIP cases with multipliers from 1.2 and beyond are cited. Since most are county court cases, appeals are to the circuit court and given the limits of court of appeals’ jurisdiction, there are few searching, in depth opinions for the county court trial judge to rely upon.
III. Defendant’s Contentions
Defense counsel in this case asserts, well, plaintiffs’ seem to have no trouble finding lawyers to take their cases, witness the plaintiff in this case who has a stable of lawyers. And there is no risk since plaintiff wins most of their cases. So they argue, no multiplier is warranted. They deny that their business practices are anything more than vigorous defenses to often fraudulent litigation. The Florida Department of Financial Services Target Market Conduct Report of United Automobile Insurance Company, December 22, 2003 pg. 10-11 says the Company reports a 95% fraud rate.
IV. State of Florida Regulatory Agencies Weigh in
The Market Report at page 11 asserts that the State Division of Fraud has acknowledged that they believe at least 80% of these claims are fraudulent. Eighty per cent is a shocking claim especially when made by Florida State Agency. If true, this is a vast burden on the driving public who must carry PIP and who pay the premiums some cannot afford. For many Floridians, no car, no job.
Those who have legitimate claims, face many obstacles in obtaining the policy benefits. According to the Market Report, for the period 1996 through 2002, United reported a total of 29,069 new claims opened and 15,029 were closed without payment. The Office of Insurance Regulation reports United’s payment of 5,899 claims in the year by year payment history:
“Year Paid 1996 1,625 1997 1,222 1998 960 1999 912 2000 737 2001 355 2002 88”
V. The Trial Judges’ Dilemma
County court judges in many parts of the state bemoan the inability of the court system to deliver what the legislature intended in creating the PIP statutory scheme. See Nationwide v. Pinnacle, 753 So.2d 55 (Fla. 2000). Payment was to be swift in mostcases, and protracted litigation the exception. Yet three day jury trials in PIP cases with a few hundred or thousand dollars in controversy are hardly rare. The volume of protracted PIP litigation is mind boggling. A printout listing of all the cases in which this defendant is a party in Miami-Dade County alone amounts to 755 pages and shows over 9814 cases it defends. The line by line listing of one case per line stands a robust 6 inches tall. The vast majority of these cases have been filed in 2002 or later and involve small claims jurisdictional amounts in controversy.
The lawyers’ fees incurred by both sides must amount to millions in total. What of the public’s confidence in the courts and counsel when cases with so little in controversy take so long and at such cost? And what would the taxpaying public say when it realized that the county court’s energy in civil cases was not like Judge Judy or Judge Brown dealing with the disputes of ordinary people but rather went to the PIP wars.
Facing these facts, what is the trial judge to do? The answer is clear, the fact finding processes available in small claims and county civil cases are simply not up to the task. Even if fully litigated in the framework of a circuit court matter with big money at issue, we may be left with dueling experts and partisan fact gathering and presentation. For most litigation, these are time honored and largely successful means of fact finding. For the case at bar, they are inadequate.
Repairing PIP litigation is for the legislature, guided by a well funded, timely and impartial report written by action oriented consultants and academically based researchers. An internal evaluation by the legislature’s staff, is by itself, only a beginning. Partisan hearings held without quality data and thoughtful suggestions will not suffice.
Careful, in depth analysis of a scientifically selected sample of PIP cases from all circuits is the first step. What were the time periods from stage to stage in these cases? What pleadings, memos of law, discovery motions and responses were filed? How much is repetitive boilerplate which swell files, adds hearing times fruitlessly? Howwere cases disposed, by settlement, verdict or confession of judgement and when in the process were they resolved, after months or years of sparring or promptly? What steps can taken to reduce unnecessary litigation without sacrificing due process?
From a review of medical records by impartial experts, to what extent were claims baseless or grossly exaggerated? To what extent are the parties’ medical experts grossly partial or just expressing opinions honestly held? Is there a better system of medical case oversight or peer review that can reduce unwarranted claims while preserving speedy recovery when claims reflect substantial harm?
From a review of claims filed and paid, premiums charged, premiums invested; from a review of the organization, structure and operation of defendant companies and their lawyers, what are the economics of PIP insurance industry and do they contribute to frustrating the legislature’s intent? If they do, what steps can assure efficient and profitable operations in this important industry?
Clearly then, experts from the legal, medical, business, economic and financial worlds need to study and make suggestions to bring practices in line with our legislature’s policies and our citizens’ needs.
Interviews with knowledgeable persons, reviews of existing court, attorney, financial and other records coupled with observation of the cases in action are but some of the tools for the researcher.
The Market Report referred to above is but a starting point in the inquiry. It took a sample of 100 cases. It does not indicate the size of the universe sampled, all 318,760 casesfiled in 2001, 2002 and first half of 2003 or was it a subset of them? Given the resources of the Department, more extensive research is probably beyond their means.
VI. The Ruling in This Case
This court is presented with the attorney’s fees issues and does not have the luxury of waiting till the research is done, findings made and adopted or rejected.
1. According to the pleadings and orders, this action sought coverage and payment forservices rendered by Plaintiff to Mr. Mendez. The Defendant denied coverage based upon material misrepresentations, denied the services were reasonable, necessary or related to the accident, which it alleged did not happen at all. Plaintiff ultimately prevailed on summary judgement.
2. The parties stipulated that the reasonable and customary hourly rate for Plaintiff’s counsel Mr. Richard Shuster, Esq. is $275.00. Applying Florida Bar Code of Ethics 4-1.5 and applicable case law, the Court finds that rate appropriate.
3. Plaintiff claimed that 69.4 hours was reasonable expended by Mr. Shuster. The Defendant offered its expert who concluded that 58.2 hours was reasonable. The expert contested 44 of the 394 separate line item amounts. After review the Court’s recollection and notes from the hearing, the Court finds that 61 hours were reasonably expended. Multiplying the hours expended with the hourly fee, the base fee is $16,775. In addition the court finds that the reasonable number of hours for Chris Carrazana, Esq. was 1.5 hours at a stipulated rate of $225.00 per hour for a total of $337.50 and reasonable number of hours for the paralegal was 1.8 hours at stipulated rate of $75.00 per hour for a total of $135.00. The total base fee is therefore $17,247.50.
4. As a PIP action, it is contingency fee arrangement with the statute and not the recovery as the determining factor in fee setting.
5. Unfortunately for the trial bench of Florida, our Supreme Court did not determine where PIP actions fit in the Court’s categorization scheme. In its initial intent, the Legislature might have picked category one, public policy enforcement cases. The undersigned having heard many PIP cases, in three circuits and having reviewed the file in this case and considered the arguments of counsel finds that this case fits best in category 2, a contract action.
6. Applying the factors set forth in Quanstrom, Rowe and Florida Bar Code of Ethics 4-1.5 the court finds:
(a) PIP are contingency cases which plaintiffs could can and have lost. They are not a sure thing. Looking at the case at bar, at its inception, it was no exception.
(b) Office overhead is often over 50% of gross and given the passage of time from filing to payment, the lawyers for plaintiffs take care in accepting these cases. Just to note in passing, Fla. R. Jud. Admin. 2.085(e)(1), small claims cases (the bulk of PIP cases) are to be closed in 95 days and civil cases in 12 or 18 months.
(c) Given the sudden appearance of new law schools in Florida, finding a lawyer is not a problem. Finding a competent one who is willing to handle a high volume of very contentious cases is no easy task and goes a long way in justifying a multiplier. Given the rich imagination of the PIP bar, somehow new issues arise despite years of voluminous litigation.
(d) PIP practice, especially in Miami-Dade is usually a specialty and often precludes other opportunities.
(e) The idea behind PIP was to get medical bills paid promptly so that there would be a pool of providers who would render medical services to people without medical insurance or the personal ability to pay. Since over 45 million Americans have no health insurance and many more millions have policies with big deductibles and limited coverage and since many of them live in Florida, without PIP its either no medical care or at the County hospital at taxpayer expense.
(f) Plaintiffs in PIP case generally file many cases with the same lawyer and develop a lasting relationship with their counsel. The lawyer who wants to stay in business keeps that much in mind in client relations. This case is no exception.
7. Based upon all the foregoing and the testimony of Plaintiff’s and Defense experts, the Court finds that a multiplier is required in this case and that the appropriate multiplier is 1.5.
8. Plaintiff’s counsel is entitled to an attorney’s of $ 25,871.60.
9. Based upon counsels’ stipulation and the testimony of Plaintiff’s expert, Scott Joniff, is entitled to an expert witness for 3.5 hours of effort at a rate of $300.00 per hour for a total of $1,050.00.
10. The Court awards taxable costs of $372.00.
IT IS ORDERED AND ADJUDGED that Plaintiff’s counsel shall recover from Defendant, United Automobile Insurance Company of the sum of $27,293 for attorney’s fees, costs and expert witness fees together with prejudgement interest of $4,639.00, which shall bear interest at 7% a year from the date of this order, for whichsum let execution issue.
* * *
