12 Fla. L. Weekly Supp. 426a
Attorney’s fees — Insurance — Personal injury protection — Contingency risk multiplier — Where Florida Supreme Court has not answered certified question as to whether multiplier may be used to enhance fee award granted under fee-shifting statute such as section 627.428 and has not overturned decisions specifically approving multipliers on fees awarded in PIP cases, award of multiplier in PIP case was appropriate — Where insurer engaged in extensive investigation of claims filed by insured and medical providers, denied it had received proper notice of claim, advised provider that bills did not meet requirements for notice of claim, terminated benefits based on independent medical examination and advised that it would not make any voluntary payment and was closing file, trial court did not err in applying 1.75 multiplier because evidence supported finding that chance of success at outset was approximately even
UNITED AUTOMOBILE INSURANCE COMPANY, Appellant, v. FIRST CARE CHIROPRACTIC CENTER, INC., a/s/o GLADYS ASTREIDE, Appellee. Circuit Court, 9th Judicial Circuit (Appellate) in and for Orange County. Case No. CVA1-0417. L.C. Case Nos. CO-02-15214, SCO-03-1847, SCO-03-2128. January 6, 2005. Appeal from the County Court, for Orange County, Wayne Shoemaker, Judge. Counsel: Beth Moriarty and Heather Harwell Mendivil, Moriarty & Associates, Maitland, for Appellant. Terry A. Slusher, Seifert, Miller & Slusher, L.L.C., Orlando, for Appellee.
(Before HAUSER, SMITH, T., and RODRIGUEZ, JJ.)
ORDER AFFIRMING THE FEBRUARY 27, 2004, “FINAL JUDGMENT ON PLAINTIFF’S MOTIONS TO TAX FEES AND COSTS” OF THE TRIAL COURT
(PER CURIAM.) Appellant, United Automobile Insurance Company (United), appeals the February 27, 2004, order of the trial court which determined the amount of any contingency fee multiplier to be awarded Appellee, First Care Chiropractic Center, Inc., as assignee of Gladys Astreide, (First Care) arising out of an underlying action to recover personal injury protection (PIP) benefits. Prior to the fee hearing before the trial court, the parties stipulated that a reasonable hourly rate for Plaintiff’s counsel was $300.00 per hour and that 88 hours were reasonably expended in pursuing this action. Thus, the lodestar amount by stipulation of the parties was $26,400.00. This Court has jurisdiction pursuant to Florida Rule of Appellate Procedure 9.030(c)(1)(A).
Procedural and Factual Background
Astreide was involved in a motor vehicle accident on May 11, 2002, and entered into a contract for representation with Plaintiff’s counsel on May 13, 2002. Astreide filed a claim with her insurer, United, for PIP benefits for medical treatments and services and lost wages. United required Astreide to provide an Affidavit of Vehicle Ownership, required her to submit to an Independent Medical Examination (IME), and also required an Examination Under Oath (EUO). These items were in addition to the standard PIP claim application.
On June 12, 2002, United advised by letter to Plaintiff’s counsel that it had received Astreide’s PIP claim. On June 17, 2002, United sent another letter advising that it had not received a timely report of loss. On October 10, 2002, United advised First Care by letter that the medical bills submitted for May 28, 2002, did not constitute notice of loss of the claim. On October 18, 2002, United sent a letter to all medical providers and Plaintiff’s counsel stating, “Please be advised that based on our SIU1 investigation we are closing our file. No voluntary payments will be issued.”
On October 29, 2002, suit was filed on behalf of First Care. In January, 2003, Astreide settled her underlying bodily injury claim for $6,000.00 and it was determined that, in addition to all bills for First Care being denied, all bills for Comprehensive2 and Astreide’s lost wage claim had been denied as well. Suits for Astreide and Comprehensive were filed in February, 2003. Three suits3 were filed by Astreide or her medical providers as assignees of Astreide alleging non-payment of reasonable and necessary bills pursuant to her PIP coverage with United. On July 21, 2003, United settled the three suits4 with full payment of benefits and interest without any reduction or compromise of the amounts due. United admitted the issue of entitlement and stipulated to attorney’s hours expended and the hourly fee, leaving only the disputed application of a multiplier to the attorney’s fee for the trial court’s determination.
On September 26, 2003, Orange County Case No.(s) SCO-03-1847-O and SCO-03-2128 were consolidated into CCO-02-15214-O for the purpose of holding one attorney’s fee hearing for all three cases. Each case arose from the same underlying facts. At the fee hearing on January 29, 2004, both Plaintiff’s counsel and United’s counsel testified in the narrative and were subject to cross-examination. The trial court also heard testimony from Plaintiff’s fee expert, Julie Walbroel-Pardy, Esquire, and United’s fee expert, Robert Kingsford, Esquire. Plaintiff’s fee expert, Pardy, testified to the circumstances surrounding the accident, property damage and bodily injury sustained by Astreide, and the treatment Astreide received following the accident. Pardy also detailed the procedural history of the claim and how she would interpret the SIU and EUO investigations, as well as the IME, when evaluating a case such as Astreide’s. Additionally, Pardy went through the Quanstrom5 factors, pointed out the factors weighing in the Plaintiff’s benefit with regard to a multiplier, and concluded that a multiplier was necessary in a case involving a SIU investigation and an IME in order to retain competent counsel. Lastly, Pardy testified that this would be a 2.0 multiplier type of case, since the likelihood of success at the outset was approximately even based on the circumstances of the case.
The trial court then received testimony from United’s fee expert, Kingsford, who was testifying as a fee expert for the first time. Both fee experts were subject to cross-examination. The trial court also received Plaintiff’s Exhibits one through eight into evidence without objection from United. During testimony by Plaintiff’s counsel, United objected to testimony regarding events that occurred after suit was filed for First Care, but before suit was filed for Comprehensive and Astreide, the trial court sustained the objection.
Following the consolidated evidentiary hearing held on January 29, 2004, regarding the multiplier issue, and after considering the evidence before it, including but not limited to testimony of the parties’ expert witnesses, together with the factors/criteria set forth in Bell v. U.S.B. Acquisitions Company, Inc., 734 So. 2d 403 (Fla. 1999); Standard Guaranty Insurance Company v. Quanstrom, 555 So. 2d 828 (Fla. 1990); and Florida Patient’s Compensation Fund v. Rowe, 472 So. 2d 1145 (Fla. 1985), the trial court found that: (1) the applicable multiplier in this matter under the Quanstrom case was 1.75 since Plaintiff’s counsel undertook representation of the plaintiffs pursuant to a pure contingency fee agreement; the market in this jurisdiction does require a contingency risk multiplier to obtain competent counsel in cases like the instant case; and the likelihood of success at the outset was approximately even (1.5-2.0); (2) the total fee award was $46,200.00 (lodestar amount x multiplier); (3) the amount of pre-judgment interest accrues at 6% per annum from July 21, 2003, to present for total interest owed of $1,677.39; (4) the total amount of costs to be paid by United was stipulated by the parties at $1,746.11; (5) the reasonable number of hours expended by Julie Walbroel-Pardy, Esquire, as an expert witness in this matter was 8 hours and her hourly rate was $300.00 per hour for a total expert witness fee of $2,400.00 to be paid for her services as Plaintiff’s fee expert in these consolidated cases. Stokus v. Phillips, 651 So. 2d 1244 (Fla. 2d DCA 1995). The total award was $54,023.50.
Standard of Review
It is well settled that the determination of an award of attorney’s fees is within the sound discretion of the trial court and will not be disturbed on appeal absent a showing of a clear abuse of that discretion. DiStefano Construction, Inc. v. Fidelity and Deposit Company of Maryland, 597 So. 2d 248, 250 (Fla. 1992); Centex-Rooney Construction Co., Inc. v. Martin County, 725 So. 2d 1255, 1258 (Fla. 4th DCA 1999); Smiley v. Greyhound Lines, Inc., 704 So. 2d 204, 205 (Fla. 5th DCA 1998) (findings of the trial court are clothed with a presumption of correctness and should be affirmed in the absence of a clear abuse of discretion). The test for whether discretion has been abused is one of reasonableness. “[I]f reasonable men could differ as to the propriety of the action taken by the trial court, then the action is not unreasonable and there can be no finding of an abuse of discretion.” Canakaris v. Canakaris, 382 So. 2d 1197, 1203 (Fla. 1980).
Once it is determined that attorney fees are awardable, the standard of review with respect to the application of a multiplier is one of abuse of discretion. United Auto Insurance Co. v. Padron, 775 So. 2d 372 (Fla. 3d DCA 2000); Holiday v. Nationwide Mutual Fire Insurance Co., 864 So. 2d 1215 (Fla. 5th DCA 2004).
Discussion
United asserts that First Care was not entitled to a multiplier when the burden of proof regarding Quanstrom was not met for the reason that the relevant market did not require a fee enhancement multiplier to obtain competent counsel. Alternatively, United argues that if it is determined that a multiplier was required in order to obtain competent counsel, the Rowe factors, particularly with regard to the complexity of the case, were not supported by the record or any corroborating evidence. United contends that the multiplier applied should be no higher than 1.25. First Care counters that the trial court’s decision to apply a 1.75 multiplier did not constitute an abuse of discretion as it was supported by competent substantial record evidence.Award of the Contingency Fee Multiplier
Section 627.428, Florida Statutes, authorizes the award of a reasonable attorney’s fee to an insured who prevails against his or her carrier after being required to bring suit to establish a valid claim. Thus, if a dispute is within the scope of this statute and an insured must enforce his or her rights under a policy, and if a judgment is rendered against the insurer, then the insurer is required to pay attorney’s fees for the insured or the beneficiary. See Bell v. U.S.B. Acquisition Co., Inc., 734 So. 2d 403 (Fla. 1999). Here, the parties had previously stipulated that a reasonable hourly rate for Plaintiff’s counsel was $300.00 per hour and that 88 hours were reasonably expended in pursuing this action. Only the possible application of a multiplier to the attorney’s fee was left for the trial court’s determination.
Once it is determined that attorney’s fees are awardable, as stipulated to by the parties at the fee hearing, the standard of review with respect to the application and amount of a multiplier is one of abuse of discretion. United argues that Plaintiff’s counsel failed to proffer sufficient evidence and testimony to support the application of any type of risk enhancement modifier with regard to the representation of the appellees in all three cases. United contends that the evidence and testimony proffered did not meet all the criteria referred to as the Rowe factors, nor was there any substantial evidence to support Plaintiff counsel’s contentions, and Plaintiff’s counsel failed to substantially show that he could not otherwise mitigate the risk of non-payment, that a fee multiplier was necessary to obtain competent counsel in the relevant market, and that any of the appellees had any difficulty in obtaining counsel.
To determine whether a contingency risk multiplier may be applicable to fees awarded under section 627.428, Florida Statutes, the trial court must evaluate the factors set out in Standard Guaranty Insurance Co. v. Quanstrom, 555 So. 2d 828 (Fla. 1990). In Quanstrom, the Florida Supreme Court identified three different categories of cases in which attorney’s fees may be awarded by a court. The Florida Supreme Court concluded that the second of those categories, which applied principally to tort and contract cases, including cases such as the present controversy involving an insured and his or her insurance company, is one in which a contingency risk multiplier may be appropriate. In Quanstrom, the Court reaffirmed the principles set forth in Florida Patient’s Compensation Fund v. Rowe, 472 So. 2d 1145 (Fla. 1985), with respect to these cases, and added three additional factors to be considered in determining whether a multiplier should be applied:
1. Whether the relevant market requires a contingency fee multiplier to obtain competent counsel;
2. Whether the attorney was able to mitigate the risk of nonpayment in any way; and
3. Whether any of the factors set forth in Rowe are applicable, especially the amount involved, the results obtained, and the type of fee arrangement between the attorney and his or her client.
Quanstrom, 555 So. 2d at 834.
Recent cases, Sarkis v. Allstate Insurance Company, 863 So. 2d 210 (Fla. 2003); Bluegrass Art Cast, Inc. v. Consolidated Erection Services, Inc., 870 So.2d 196 (Fla. 5th DCA 2004); and Holiday v. Nationwide Mutual Fire Insurance, 864 So. 2d 1215 (Fla. 5th DCA 2004) have questioned the viability of the use of a multiplier under Quanstrom. The Fifth District Court of Appeal, in both Bluegrass and Holiday, certified to the Florida Supreme Court the following question as presenting an issue of great public importance:
In light of the Supreme Court’s decision in Sarkis, may a multiplier be applied to enhance an award of attorney’s fees granted under a fee-shifting statute such as section 627.428, Florida Statutes (2002).
Noting that the Florida Supreme Court has not answered the question certified by the Fifth District, nor has it overturned the decisions of State Farm Fire & Casualty Company v. Palma, 629 So. 2d 830 (Fla. 1993) and Standard Guaranty Insurance Company v. Quanstrom, 555 So. 2d 828 (Fla. 1990) which both specifically approved multipliers on fees awarded pursuant to section 627.428, Florida Statutes, the award of a multiplier in this case was appropriate.
Once the court determines that a multiplier is necessary, the trial court must then examine the likelihood of success at the outset and select a multiplier from the range of 1.0 to 2.5 in accordance with the guidelines set out in Quanstrom. Alvarado v. Cassarino, 706 So.2d 380 (Fla. 2d DCA 1998). The amount of a multiplier is determined by different criteria than what a court uses to determine the entitlement to a multiplier.
If the trial court determines that success was more likely than not at the outset, it may apply a multiplier of 1 to 1.5 in setting an attorney’s fee; if the trial court determines that the likelihood of success was approximately even at the outset, the trial judge may apply a multiplier of 1.5 to 2.0; and if the trial court determines that success was unlikely at the outset of the case, it may apply a multiplier of 2.0 to 2.5
Quanstrom, 555 So. 2d at 834.
Based upon all the factors, Plaintiff’s fee expert rendered her opinion that she thought this was a case that was on the high end of an even chance of success, rather than a greater chance of United prevailing, thus a 2.0 multiplier was appropriate. The trial court was presented with specific testimony that at the outset of the case, First Care was reasonable in believing that United was actively pursuing a fraud investigation in relation to Astreide’s claim and that United considered notice of the claim untimely. Plaintiff’s fee expert detailed to the trial court that cases involving an IME present about an equal shot of prevailing warranting a 1.5 multiplier. However, Plaintiff’s fee expert went on to testify that other factors weighing in favor of the Plaintiff were present which would take the 1.5 range of an even likelihood of success and place the appropriate multiplier to be awarded closer to the 2.0 range. Specifically, Plaintiff’s fee expert testified that an SIU investigation is generally a loser for the plaintiff.
In the present case, the trial court made specific findings of fact after having heard extensive and conflicting testimony and evaluated the likelihood of success from the outset of the case. There was competent substantial evidence to support the trial court’s decision regarding the application and amount of the multiplier. Duval Utility Company v. Florida Public Service Commission, 380 So. 2d 1028 (Fla. 1980) (competent substantial evidence is such evidence as will establish a substantial basis of fact from which the fact at issue can reasonably be inferred or such relevant evidence as a reasonable mind would accept as adequate to support a conclusion). The trial court was within its discretion to award a 1.75 multiplier to the reasonable attorney’s fees incurred by Plaintiff’s counsel.
Prior to the filing of the first PIP suit by First Care, the trial court could find that United had engaged in an extensive investigation of the claims filed by Astreide and her medical providers. Even though the accident at issue involved United’s named insured, United required an affidavit from Astreide, an IME on Astreide, and required her to participate in an EUO, all in the first two months following the accident. These items were required in addition to the standard PIP claim application. United also denied it had received proper notice of the claim and then advised First Care that its bills did not meet the requirements of the PIP statute for providing notice of a claim. United then terminated chiropractic benefits based upon the IME. Lastly, United advised that based upon its SIU investigation it would not make any voluntary payments and was closing its file.
The trial court was clearly acting within its discretionary authority when it accepted the testimony of Plaintiff’s fee expert and awarded a 1.75 multiplier. The trial court acknowledged that the only matters of concern for it to consider at a fee hearing are the facts at the outset of the case, not what occurred during litigation. The trial court did not err in applying a 1.75 multiplier because the evidence supported a finding that success was approximately even at the outset of the case. The trial court’s decision bears a presumption of correctness. The appellate court should not substitute its judgment for that of the trial judge, who was in the best position to evaluate the testimony and the credibility of the witnesses. Centex-Rooney Construction Co., Inc. v. Martin County, 725 So. 2d 1255, 1258 (Fla. 4th DCA 1999).
Attorney’s Fees
First Care’s motion for attorney’s fees pursuant to sections 627.428 and 57.105, Florida Statutes, and Florida Rule of Appellate Procedure 9.400 is granted. First Care’s “Motion for Sanctions Pursuant to Section 57.105, Florida Statutes,” is denied.
Conclusion
United has failed to establish that the trial court abused its discretion in rendering the February 27, 2004, judgment regarding the application and amount of the contingency risk multiplier. The trial court correctly applied all of the factors and criteria set forth in Florida Patient’s Compensation Fund v. Rowe, 472 So. 2d 1145 (Fla. 1985) and Standard Guaranty Insurance Company v. Quanstrom, 555 So. 2d 828 (Fla. 1990) to substantiate the award of a 1.75 contingency fee multiplier.
Accordingly, it is hereby ORDERED and ADJUDGED that:
1) The trial court’s February 27, 2004, “Final Judgment on Plaintiff’s Motions to Tax Fees and Costs” is AFFIRMED;
2) Appellee First Care’s Motion for Attorneys’ Fees is GRANTED, the assessment of which is REMANDED to the lower court;
3) Appellee First Care shall have costs taxed in its favor, if it files a proper motion pursuant to Florida Rule of Appellate Procedure 9.400(a) with the lower tribunal within thirty days of the issuance of the mandate in this matter; and
4) Appellee First Care’s “Motion for Sanctions Pursuant to Section 57.105, Florida Statutes,” is DENIED.
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1SIU is an acronym for Special Investigation Unit. This type of investigation may indicate that an insurance company suspects some type of fraud may be taking place.
2Astreide also received treatment from Comprehensive Health Center, Inc.
3Orange Co. Case No. CCO-02-15214-O filed on October 29, 2002, Orange Co. Case No. SCO-03-1847-O filed on February 21, 2003, and Orange Co. Case No. SCO-03-2128 filed on February 27, 2003.
4The cases settled for the amounts in controversy plus interest minus reductions and deductible: First Care received $6,692.80 (Orange Co. Case No. CCO-02-15214); Comprehensive received $424.40 (Orange Co. Case No. SCO-03-1847); and Astreide received $217.08 (Orange Co. Case No. SCO-03-2128).
5Standard Guaranty Insurance Company v. Quanstrom, 555 So. 2d 828 (Fla. 1990).
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