12 Fla. L. Weekly Supp. 771b
Attorney’s fees — Insurance — Personal injury protection — Amount — Hourly rate — Complexity of case is not factor to be considered in determining reasonable hourly rate since it is presumed that attorney with greater efficiency and skill will more efficiently prosecute claim, and attorney’s skill and experience should be considered in determining whether hours claimed for case were reasonably necessary — Hours expended — Duplication of effort — Reasonable number of hours expended by each of two attorneys representing insured is determined based on expert testimony — Contingency risk multiplier — Fact that many PIP lawsuits do not require contingency risk multiplier does not negate applicability of multiplier where attorneys agreed to represent insured with risk of non-payment unless there is recovery and no ability to mitigate risk of non-payment, and insured could not obtain competent counsel but for fee multiplier — Amount of contingency risk multiplier for second attorney retained during course of litigation is determined from likelihood of success at outset of second attorney’s representation — No merit to argument that multiplier is inappropriate because initial complaint was subject to dismissal for lack of standing and lack of damages where insurer confessed judgment and paid claims at issue instead of pursuing summary judgment and section 57.105 sanctions — Standard for determining likelihood of success is not subjective standard but constellation of facts attorney should have known existed at moment attorney agreed to pursue claim — Where chances of success were even at outset of first attorney’s representation and less than even at outset of second attorney’s representation, appropriate contingency risk multipliers are 1.5 and 2.0, respectively — Prejudgment interest and costs, including paralegal fees and expert witness fees, are awarded
MYRNA B. BALAUAT, Plaintiff, vs. METROPOLITAN PROPERTY AND CASUALTY INSURANCE CO., Defendant. County Court, 9th Judicial Circuit Orange County. Case No. CCO 00-8945. March 15, 2005. C. Jeffery Arnold, Judge. Counsel: Beth Moriarty, Maitland. Douglas Bills-Redon, Winter Park, for Plaintiff. Glenn Klausman, Altamonte Springs, for Defendant.
FINAL JUDGMENT ON ATTORNEY FEES AND COSTS
Plaintiff, Myrna Balauat, filed suit on August 8, 2000, against Defendant, Metropolitan Property and Casualty Insurance Company. The initial Complaint alleged a breach of the insurer’s obligation to pay PIP benefits due to the insurer reducing the medical bills of the Jewett Orthopaedic Clinic and the Center for Diagnostic Imaging. Attached as an exhibit to the Complaint were the two “Explanation of Benefits” forms from Metropolitan explaining the bill reductions were based upon database information the charges were excessive for the geographic region.
At the time Balauat initiated treatment at both the Jewett Orthopaedic Clinic and the Center for Diagnostic Imaging, she executed documents assigning to her health care providers the right to obtain the PIP benefits at issue. When Balauat filed this PIP benefits lawsuit she had not obtained reassignments from the health care providers.
Eight months after the lawsuit was filed, Metropolitan filed a Motion For Summary Judgment asserting:
1. Balauat lacked standing to file the lawsuit as she had assigned the PIP benefits at issue to the health care providers; and
2. Balauat had no damages as affidavits from the health care providers stated they accepted the database bill reductions; and
3. Balauat had received $10,000 in PIP benefits and that sum was the limit of Metropolitan’s contractual obligation under Balauat’s insurance policy.
The Defendant’s Motion For Summary Judgment was scheduled for hearing on June 6, 2001. On May 21, 2001, attorney Klausman filed a Notice of Appearance as co-counsel and took the deposition of the Metropolitan corporate representative with knowledge of the validity of the database reductions. The corporate representative’s deposition revealed the need for additional discovery and the Defendant’s Motion For Summary Judgment was continued.
Additional discovery requests were propounded to Metropolitan and Balauat attempted to schedule depositions of additional Metropolitan personnel. While these discovery requests were pending Metropolitan issued payment of all the claims in dispute, plus statutory interest. Additionally, Metropolitan paid other reductions, plus statutory interest, to other providers of medical treatment to Balauat.
Thereafter, attorney Bills-Redon and attorney Klausman filed motions for attorney’s fees and affidavits of time. Metropolitan agreed the payment of the claims in dispute entitled both attorneys to reasonable attorney’s fees.
At issue before the Court is the reasonable hourly rate for each of the Plaintiff’s attorneys, the reasonable number of hours each attorney expended for the benefit of Balauat, whether a contingency fee risk multiplier is appropriate, and, if so, the appropriate multiplier.
HOURLY RATE:
In Bell v. U.S.B. Acquisition Company, Inc., 734 So.2d 403 (Fla. 1999), the Supreme Court noted the determination of an attorney’s reasonable hourly rate should be based upon the factors enumerated in the Florida Bar Code of Professional Responsibility1 except the time and labor required, the novelty and difficulty of the question involved, the results obtained, and whether the fee is fixed or contingent.2 The factors to be considered are:
1) the skill requisite to perform the legal service properly;
2) the preclusion of other employment by the attorney due to the acceptance of the case;
3) the customary fee for legal services of a comparable or similar nature;
4) the significance of, or amount involved in, the subject matter of the representation;
5) the time limitations or demands imposed by the client or the circumstances;
6) the experience, reputation, diligence, and ability of the lawyer and the skill, expertise, or efficiency of effort reflected in the services provided;
7) the nature and length of the professional relationship with the client.
Both sides presented expert testimony concerning the reasonable hourly rate for attorney Bills-Redon and attorney Klausman. Attorney Don McKeever testified on behalf of attorney Klausman. Attorney McKeever testified he considered each of the seven factors enumerated above. Based upon these seven factors, Attorney McKeever testified attorney Klausman’s hourly rate should be in the range of $350 to $400 per hour. Attorney McKeever testified he considered the hourly rate received by other attorneys in this legal marketplace for comparable services and he considered attorney Klausman’s 25 years litigation experience and attorney Klausman’s reputation.
Attorney Mike Bell testified as the expert witness for Metropolitan. He testified he was familiar with attorney Klausman and had litigated his first case with attorney Klausman many years ago. He testified attorney Klausman’s fair hourly rate for this case should be $250. Attorney Bell testified he considered the nature and complexity of this litigation in determining the $250 per hour rate. He testified that no PIP litigation case requires an attorney with an hourly rate greater than $250.
Based upon Bell v. U.S.B. Acquisition Company, Inc., at page 407, the complexity of the case is not a factor in determining counsel’s reasonable hourly rate. A $400 per hour attorney is a $400 per hour attorney on a simple PIP benefits claim. It is presumed that an attorney with greater experience and skill will more efficiently prosecute a claim and the Court should consider that attorney’s skill and experience in determining whether the hours claimed were reasonably necessary.3
Attorney Klausman should not be penalized by receiving an hourly rate for a less skilled and experienced attorney, when at appears attorney Klausman’s skill, experience, and expertise resulted in Metropolitan’s decision to pay these claims in full. This case had been litigated for more than nine months before attorney Klausman filed his Notice of Appearance. Ten days before his appearance Metropolitan’s attorney forwarded a letter to Balauat’s attorney stating Metropolitan had no interest in discussing settlement of this case. Less than thirty days after attorney Klausman’s appearance, Metropolitan’s attorney forwarded another letter advising Metropolitan wished to settle the case.
Based upon the seven factors enumerated above, the Court finds the reasonable hourly rate for attorney Klausman is $325.00
Attorney Keith Lefevre testified as to the reasonable hourly rate for attorney Douglas Bills-Redon and attorney Bell testified for Metropolitan as to this rate. Based upon the record before the Court and the seven factors enumerated above, the Court finds the reasonable hourly rate for attorney Bills-Redon is $300.00
REASONABLE HOURS EXPENDED:
When two attorneys expend time as co-counsel, the Court must consider whether the time claimed was reasonably expended for the benefit of the Plaintiff and whether any of the time claimed was a duplication of legal services. The Court has reviewed both affidavits of time of Balauat’s attorneys and the affidavit of time of attorney Bills-Redon’s paralegal. Attorney Bills-Redon and attorney Klausman both testified as to the number of hours they reasonably expended. Prior to the hearing on attorney’s fees, counsel for Metropolitan stipulated certain hours claimed were reasonable and the hearing focused on the time challenged by Metropolitan. Attorney Bell testified for Metropolitan that attorney Bills-Redon reasonably expended 20 hours, his paralegal 17.25 hours, and attorney Klausman 30 hours. Attorney Bell testified concerning specific time entries he considered excessive or duplicative.
Attorney Bell conceded he had not reviewed the files of attorney Klausman and attorney Bills-Redon. Attorney Bell testified he did not review documentation in Balauat’s attorneys’ files that may have supported the reasonableness of the hours attorney Bell opined were excessive.
Attorney Lefevre testified he reviewed the complete files of both attorney Bills-Redon and attorney Glenn Klausman and he offered an opinion concerning the reasonable number of hours attorney Bills-Redon expended for the benefit of the Plaintiff, without duplication of attorney Klausman’s hours. Attorney McKeever testified he reviewed the complete files of both attorney Bills-Redon and attorney Glenn Klausman and he offered an opinion concerning the reasonable number of hours attorney Klausman expended for the benefit of the Plaintiff, without duplication of attorney Bills-Redon’s hours.
Based upon the testimony and evidence presented to the Court, the Court finds the reasonable number of hours expended for the benefit of Myrna Balauat was as follows:
Douglas Bills-Redon: 58.4 hours
Glenn Klausman: 63.1 hours
Accordingly, the lodestar attorney fees for the Plaintiff’s attorneys is as follows:
Douglas Bills-Redon: 58.4 hrs. x $300.00 per hour = $17,520.00.
Glenn Klausman: 63.1 hrs. x $325.00 per hour = $20,507.50.
CONTINGENCY FEE RISK MULTIPLIER:
Balauat’s attorneys asserted entitlement to a contingency fee risk multiplier. Metropolitan asserted a multiplier was unnecessary and unwarranted. The parties agreed Balauat had pure contingency fee “No recovery = No attorney’s fee” contracts with each of her attorneys. The next threshold issue for determining the applicability of a contingency fee risk multiplier is whether the legal marketplace required a contingency fee risk multiplier for Balauat to obtain competent counsel to pursue the claims alleged in this lawsuit.
Attorney Bell testified for Metropolitan that a significant number of attorneys in this legal marketplace file personal injury protection benefits lawsuits. This Court is aware of the number of personal injury protection benefits lawsuits filed in Orange County, Florida. Attorney Bell testified that because of the number of attorneys who file these lawsuits, the Plaintiff should have been able to find competent counsel to pursue her lawsuit without the need for a contingency fee risk multiplier.
Attorney Bell did not address the specific facts of this case in concluding Balauat could have obtained competent counsel without the availability of a fee multiplier. Metropolitan offered no evidence of a specific attorney who may have agreed to pursue this case in the absence of the availability of a contingency fee risk multiplier. Attorney Lefevre and attorney McKeever both testified a contingency fee risk multiplier was necessary at the outset of this case for Balauat to obtain competent counsel.
The Court agrees there are many PIP benefits lawsuits that do not require a contingency fee risk multiplier. That fact does not negate the applicability of a multiplier in the appropriate case.
A second factor in determining whether a multiplier is necessary is whether the attorney could have mitigated the risk of non-payment in any way. Attorney Bell testified that plaintiffs’ attorneys can mitigate their risk because they recover attorney’s fees on a significant number of the PIP lawsuits they file. Balauat’s counsel both testified there was no way to mitigate the risk of non-payment in this case. The amount of the two bill reductions in the exhibit to the Complaint was $858.00. The Court finds there was no way for Balauat’s counsel to mitigate the risk of non-payment in this case. The Court finds the issue whether plaintiff’s counsel can mitigate the risk of non-payment applies only to the case at issue.
When an attorney agrees to take on an insurance company with the risk of non-payment unless there is a recovery, with no ability to mitigate the risk of non-payment, and when the insured could not obtain competent counsel but for a fee multiplier, a contingency fee risk multiplier becomes appropriate. In determining whether a contingency fee risk multiplier is necessary in this case, the Court has
also considered the Rowe factors, especially the amount involved, the results obtained, and the type of fee arrangement. Based upon the specific facts presented in this case, the Court finds a contingency fee risk multiplier was necessary for Balauat to obtain competent counsel to pursue the claims alleged in her Complaint.
The amount of the fee multiplier is determined by the facts at the outset of the case. Attorney Klausman suggests the outset of the case in determining his fee multiplier is when he entered into the agreement to represent Balauat in the pending litigation. The record before the Court is it appeared unlikely the Plaintiff would obtain any recovery at the time attorney Klausman entered into the agreement to represent Balauat.
When a Plaintiff retains a second attorney during the course of litigation, is the contingency fee risk multiplier for the second attorney determined by the facts at the initiation of the case or the facts at the time the second attorney agreed to represent the Plaintiff? This appears to be a case of first impression as to this issue.
In Rowe, the Court stated the contingency fee risk multiplier is determined “at the outset of the case.” The “outset of the case” and the moment in time when an attorney agrees to represent a client will usually be the same. In this case, the “outset of the case” and the moment when attorney Klausman agreed to represent the Plaintiff are different. The facts at the outset of the case and the facts at the outset of attorney Klausman’s agreement to represent Balauat are different.4
The argument on behalf of attorney Klausman is the assessment of the amount of the fee multiplier should be consistent with the purpose of the fee-shifting statute in personal injury protection benefits lawsuits. The purpose for the fee-shifting statute is to encourage competent counsel to accept cases when insurers have declined to pay benefits owed to insureds. Therefore, attorney Klausman contends the Court should consider the operative moment to be when counsel seeking the fee entered into the fee agreement with the plaintiff.
While it may be more equitable to determine the multiplier at the time the attorney agrees to represent the plaintiff, the applicable law requires the Court to consider the facts at “the outset of the case” for the determination of the appropriate contingency fee risk multiplier.
The facts at the outset of this case were Balauat would likely not have obtained a recovery on the two database medical bill reductions at issue because she had assigned5 her right to pursue those claims to each of the medical providers, see Oglesby v. State Farm Automobile Ins. Co., 781 So.2d 469 (Fla. 5th DCA 2001), and the medical providers apparently accepted the bill reductions. It appears the reason Metropolitan paid the bills in dispute was to avoid Balauat’s pending discovery concerning the validity and reliability of the database.
Metropolitan argues Balauat’s attorneys should not benefit from a significant multiplier when the initial Complaint was subject to dismissal due to lack of standing and lack of damages. If Metropolitan had succeeded in establishing Balauat’s attorney knew or should have known the claims presented would not be supported by existing law, Metropolitan could have obtained sanctions against Balauat, and her attorney, pursuant to Florida Statute 57.105.
Instead of pursuing summary judgment and 57.105 sanctions, Metropolitan confessed judgment and paid the claims at issue. Therefore, the posture of this case is to award attorney’s fees to Balauat based upon Standard Guaranty Insurance Co. v. Quanstrom, 555 So.2d 828 (Fla. 1990). Pursuant to Quanstrom, the more difficult the case was for the plaintiff who obtained a recovery, the greater the potential contingency fee risk multiplier.
Metropolitan also contends the amount of the contingency fee risk multiplier should be determined by Plaintiff’s counsel’s subjective assessment of the chances of a recovery at the outset, and not the facts that actually existed. Using a subjective standard would likely take the Court down a slippery slope and into a morass requiring plaintiffs’ counsel to reveal work product and privileged matters to determine what plaintiff’s counsel actually knew at the outset of the agreement to pursue the claim. The Court is of the opinion the appropriate standard for review is the constellation of facts the plaintiff’s attorney should have known existed at the moment the attorney agreed to pursue the claim.
Based upon those facts that existed at the outset of this case, the Court finds the Plaintiff’s chances of success at the outset were even for Bills-Redon and less than 50/50 for Klausman.6 Accordingly a multiplier of 1.5 to 2.5 is appropriate. Considering the appropriate Rowe factors, the Court finds the appropriate contingency fee risk multiplier for each of Balauat’s attorneys is 1.5 for Bills-Redon and 2.0 for Klausman.
Attorney Bills-Redon shall recover from the Defendant attorney’s fees in the sum of $26,280.00. Attorney Glenn Klausman shall recover attorney’s fees from the Defendant in the sum of $41,015.00.
COSTS:
Based upon the record before the Court, the Court finds attorney Bills-Redon is entitled to reimbursement of paralegal costs of 17.29 hrs. @ $85.00/hr. = $1,469.00.
Balauat’s expert witnesses, attorney Keith Lefevre and attorney Don McKeever, provided useful, beneficial, and necessary testimony to the Court. Their testimony was not cumulative. Both experts testified this case was an imposition on their time. Balauat’s attorneys presented a sufficient predicate to tax as costs the two expert witness fees. Attorney McKeever testified his hourly rate is $325 and attorney Lefevre testified his hourly rate is $300. The Court finds the reasonable expert witness fee of attorney McKeever is $325 per hour x 12 hours = $3,900 and the reasonable expert witness fee of attorney Lefevre is $300 per hour x 9 hours = $2,700.
The Court finds the following additional costs incurred by Balauat were reasonable, necessary, and taxable:
Filing Fee/Service of Process: $110.00
Deposition Mary Vacarrezza: $678.20
Deposition Angie Amis: $392.37
Balauat is entitled to statutory pre-judgment interest since August 7, 2001, on the attorney fees awarded and on those costs incurred prior to August 7, 2001.
For which let execution issue.
__________________
1R. Regulating Fla. Bar 4-1.5(b)
2Bell, at page 407
3For example, an attorney with significant litigation experience would likely not reasonably expend significant time researching legal issues a less experienced attorney may need to research.
4For example, PIP benefits were exhausted by payments after the lawsuit was filed and before attorney Klausman filed his appearance.
5Metropolitan claimed the following was not an assignment: “I authorize and assign and direct you to pay without further notice from me to Physicians of the Jewett Orthopaedic Clinic, P.A., such amount as may be payable to me for medical or surgical treatment.” The Court finds no merit in Metropolitan’s position.
6The Court finds the argument of Metropolitan that an income loss claim was presented in the Complaint is contrary to the record and the letter from Metropolitan’s attorney, dated 1/22/01, stating income loss “was not an issue in this suit.”
* * *
