13 Fla. L. Weekly Supp. 98a

Attorney’s fees — Insurance — Personal injury protection — Hours — Hours reasonably expended include hours expended after final judgment confirming arbitration award, including hours spent on post-trial discovery, where there is no clear and credible evidence that insurer acquiesced to medical provider’s entitlement to attorney’s fees until response to request for admissions one month after judgment was entered — Contingency risk multiplier — Where provider’s likelihood of success was approximately even at outset, relevant market requires contingency risk multiplier to obtain competent counsel in PIP cases, case against this insurer is much less desirable than case against other insurers because insurer aggressively litigates cases, case aggressively defended by insurer was not simple, provider’s counsel was unable to mitigate risk of nonpayment, provider’s recovery was excellent result in light of insurer’s tenacity in litigating case, and fee agreement between provider and counsel is pure contingency fee agreement, multiplier of 1.5 is reasonable and appropriate — Prejudgment interest, expert witness fees and costs are awarded

FRANCISCO M. GOMEZ, M.D., P.A., (as assignee of Brandy Williams), Plaintiff, vs. PROGRESSIVE EXPRESS INSURANCE COMPANY, Defendant. County Court, 13th Judicial Circuit, Hillsborough County, Civil Division. Case No. 03-SC-005079, Division J. October 17, 2005. Eilizabeth G. Rice, Judge. Counsel: Timothy A. Patrick, Timothy A. Patrick, P.A., Tampa, for Plaintiff. Alan F. Scharf, Molhelm & Fraley, P.A., Tampa, for Defendant.

ORDER GRANTING PLAINTIFF’S MOTION TO TAX ATTORNEYS’ FEES AND COSTS AND APPLY CONTINGENCY RISK MULTIPLIER

This case came before the Court for hearing on September 8, 2005, and on September 9, 2005 (collectively, the “Fee Hearing”), on the Second Amended Motion to Tax Attorney’s Fees, Legal Assistant Fees and Costs (“Motion”) filed by the plaintiff, FRANCISCO M. GOMEZ, M.D., P.A., (as assignee of Brandy Williams) (“Plaintiff”), against the defendant, PROGRESSIVE EXPRESS INSURANCE COMPANY (“Defendant”). Counsel for Plaintiff, Timothy A. Patrick, and counsel for Defendant, Alan F. Scharf, were present. In addition, Roberto R. Alayon, Plaintiff’s expert witness, and David B. Kampf, Defendant’s expert witness, were present. The Court having considered the Motion, together with the entire court file and record; having considered the sworn testimony of Plaintiff’s counsel and the parties’ expert witnesses; having heard argument of counsel; and having considered the pre- and post-Fee Hearing memoranda submitted by the parties and other applicable law; it is

ORDERED as follows:

Background Facts and Issues

Plaintiff filed this case against Defendant on March 3, 2003, seeking to recover approximately $956.80 in unpaid medical bills. The case involved a dispute between the parties over Defendant’s failure to pay in full various billing statements because the statements contained charges which Defendant maintained exceeded a reasonable fee in this geographic region. Defendant filed motions to dismiss the complaint, for more definite statement, and to strike a portion of the complaint, which were all denied and Defendant filed its answer and affirmative defenses on September 2, 2003.

The case was mediated on September 16, 2003, but no settlement was reached. Shortly thereafter, Defendant served a proposal for settlement in the amount of $100, inclusive of benefits, interest, attorneys’ fees, and costs, which proposal was rejected by Plaintiff. The parties were referred to non-binding arbitration which eventually took place on March 4, 2004. An arbitration award in Plaintiff’s favor was entered on or about March 19, 2004, and Defendant moved for a trial de novo. Afterwards, the parties conducted extensive and contentious discovery. Both parties at various times filed motions for summary judgment, which were all denied by the Court. Defendant additionally filed a motion for leave to amend its affirmative defenses and to file a counterclaim for fraud, which likewise was denied. The parties eventually were ordered to binding arbitration, which took place on April 11, 2005. Plaintiff prevailed at the binding arbitration, and a final judgment confirming the arbitration award was entered by this Court on July 12, 2005.

Plaintiff filed its Motion for attorneys’ fees and costs on July 14, 2005, and had previously filed its first request for admissions to Defendant in connection with the issues raised in the Motion on April 18, 2005 (“Request for Admissions”). Paragraph 11 of the Request for Admissions asks Defendant to admit or deny whether “Plaintiff is entitled to attorneys’ fees.” Defendant filed its response to Plaintiff’s Request for Admissions on August 15, 2005, and admitted paragraph 11. The Fee Hearing on the Motion commenced September 8, 2005, and ultimately concluded on September 9, 2005.

In support of its Motion, Plaintiff filed the following two affidavits: (1) Timothy Patrick’s Affidavit of Attorney’s Fees and Costs reflecting a total of 257.1 hours expended and $6,522.74 in costs incurred in litigating the case during the period commencing 2/5/03 through 7/26/05; and (2) Matthew D. Brumley’s Affidavit of Detailed Itemization of Time reflecting a total of 86 hours expended in litigating the case during the period commencing 8/25/04 through 12/12/04.

At the Fee Hearing, Plaintiff’s counsel Timothy A. Patrick (“Patrick”) testified, based on his previously filed affidavit as to fees and costs, that he reasonably expended 257.1 hours in litigating the case through July 26, 2005. He further testified he was admitted to The Florida Bar in 1992, and has been practicing in the area of personal injury protection (“PIP”) for most of his legal career. Plaintiff’s counsel Matthew D. Brumley (“Brumley”) also testified, based on his previously filed affidavit, that he reasonably expended 86 hours in litigating the case through December 12, 2004. He also testified he was admitted to The Florida Bar in 2001.

Plaintiff’s expert witness Roberto R. Alayon (“Alayon”) testified that based on his review of the time records for Plaintiff’s counsel and applicable case law, he believed

(a) 239.45 hours was a reasonable number of hours for Patrick to have expended in litigating the case through July 26, 2005, assuming Defendant had failed to concede Plaintiff’s entitlement to attorneys’ fees in this case by that date;

(b) 222.45 hours was a reasonable number of hours for Patrick to have expended in litigating the case through July 14, 2005, assuming Defendant had conceded Plaintiff’s entitlement to attorneys’ fees in this case by that date;

(c) 75.9 hours was a reasonable number of hours for Matthew D. Brumley (“Brumley”) to have expended in litigating the case through December 10, 2004;

(d) a total of 315.35 hours was reasonably expended by both counsel in litigating the case through July 26, 2005, assuming Defendant had not conceded entitlement to attorneys’ fees on or before July 14, 2005;

(e) a total of 298.35 hours was reasonably expended by both counsel in litigating the case through July 14, 2005, assuming Defendant had conceded entitlement by that date;

(f) a rate in the range of $250 to $300 per hour was a reasonable rate for Patrick; and a rate of $225 was a reasonable rate for Brumley.

He further testified that Plaintiff’s claims were so intermingled, he was unable to separate out the time and thus, he made no reductions for unsuccessful claims. He also testified a contingency risk multiplier of 1.75 should be applied to the fee award given, among other reasons, the uncertainty of outcome at the outset of the case and Plaintiff’s difficulty in retaining competent counsel to handle this type of PIP claim against this particular Defendant.

Alternatively, Defendant’s expert witness David B. Kampf (“Kampf”) testified that based on his review of the time records for Plaintiff’s counsel and applicable case law, he believed 120 to 130 hours was a reasonable number of hours to have been reasonably expended by Patrick in litigating the case through July 12, 2005, 15 to 20 hours was a reasonable number of hours to have been reasonably expended by Brumley; a total of 135 to 150 hours was reasonably expended by both counsel in litigating the case through July 12, 2005; $175 per hour was a reasonable rate for Patrick; and $150 was a reasonable rate for Brumley. He also testified no contingency risk multiplier was warranted based on the facts of this case.

The primary issues now before the Court are (1) the number of hours reasonably expended by Plaintiff’s counsel in litigating this case to a final resolution; (2) the reasonable hourly rate to be awarded for Plaintiff’s counsel for this type of litigation; (3) whether the Court should apply a contingency risk multiplier to any fees awarded pursuant to sections 627.428 and 627.736(8), Florida Statutes, and if so, (4) the amount of such multiplier; and (5) whether expert witness fees may be taxed as a cost against Defendant, and if so, in what amount.

For the reasons set forth below and pursuant to sections 627.428 and 627.736(8), Florida Statutes, Plaintiff’s Motion is GRANTED.

Reasonable Attorneys’ Fees

In determining the amount of reasonable attorneys’ fee to award Plaintiff, the Court must utilize the criteria and guidelines for determining reasonable fees articulated by the Florida Supreme Court in Florida Patient’s Compensation Fund v. Rowe, 472 So. 2d 1145 (Fla. 1985). In Rowe, the court adopted the federal loadstar approach as an objective means to calculate fees to assist courts in setting reasonable attorney fee awards. 472 So. 2d at 1150. Accordingly, in computing a reasonable fee under the loadstar approach, the Court must first, determine the number of hours reasonably expended in the litigation; second, determine the reasonable hourly rate for the prevailing attorney’s services; and third, multiply the reasonable number of hours by the reasonable hourly rate. See Id. at 1150-51. The court in Rowe also identified eight criteria set forth in Disciplinary Rule 2-106(b) of the Florida Bar Code of Professional Responsibility that courts should consider in determining a reasonable attorney fee. See Id.

Utilizing the criteria outlined in Rowe and based on the competent evidence presented at the Fee Hearing and the entire record, the Court finds a reasonable number of hours for Plaintiff’s counsel to have expended in litigating Plaintiff’s claim to a final resolution and their respective, reasonable hourly rates are as follows:

 Attorney                 Hours              Hourly Rate                 Total Patrick                 218.85                   $250                  $54,712.50 Brumley                  77.95                   $175                  $13,641.25 TOTAL                    296.8                                          68,353.75 

The number of hours determined by this Court above to have been reasonably expended by Plaintiff’s counsel specifically includes work performed during the period ending July 26, 2005. In particular, the Court finds Patrick reasonably expended 218 hours during the period commencing February 5, 2003, and ending July 26, 2005.¹ In this case, there is no clear and credible evidence in the record that Defendant acquiesced to Plaintiff’s entitlement to attorneys’ fees prior to July 26, 2005. To the contrary, the only credible evidence in the record regarding the issue of entitlement is the answer to paragraph 11 of Plaintiff’s Request for Admissions filed by Defendant on August 15, 2005, nearly four months after Plaintiff’s request was served, admitting Plaintiff’s entitlement to “attorneys’ fees.” “Florida courts have recognized that when a party fails to acquiesce to entitlement, the movant party is entitled to recover all fees, including those fees incurred with post-trial discovery.” See Dr. Richard Merritt d/b/a Chiropractic Health Center v. Progressive Express Ins. Co., 12 Fla. L. Weekly Supp. 238a, 239 (Fla. 10th Cir. Ct. 2004); State Farm Mutual Auto Ins. Co. v. Gurney, 12 Fla. L. Weekly Supp. 700, 701 (Fla. 9th Cir. Ct. 2005) (emphasis added).

The mere entry of an arbitration award or rendition of a final judgment is insufficient proof of acquiescence because acquiescence cannot be implied in light of Florida Rule of Civil Procedure 1.525. Even if a final judgment is rendered in favor of a party, a party may not be entitled to attorneys’ fees if the party fails to timely file a motion under Rule 1.525. Rule 1.525 creates a bright line rule for the award of fees. This Court likewise embraces a bright line rule for entitlement and rules that a party’s acquiescence or concession to a party’s entitlement to attorneys’ fees must be clear and unequivocal from the record. In this case, it is unclear from the evidence in the record that Defendant intended the mere entry of the final judgment to serve as its unequivocal acquiescence to Plaintiff’s entitlement to attorneys’ fees in view of the possibility Plaintiff may have failed to properly seek the recovery of such fees pursuant to Florida Rule of Civil Procedure 1.525 and an award of fees may have been denied on procedural grounds.

Applying the loadstar approach, the Court accordingly finds Plaintiff is entitled to a reasonable fee award of $68,353.75.

Contingency Risk Multiplier

In Rowe, the court likewise concluded that in contingency fee cases, the loadstar figure calculated by the court is entitled to enhancement by an appropriate contingency risk multiplier. 427 So. 2d at 1151. The Rowe court’s ruling regarding the application of a contingency risk multiplier subsequently was modified in Standard Guaranty Ins. Co. v. Quanstrom, 555 So. 2d 828 (Fla. 1990), and in Bell v. U.S.B. Acquisition Co., Inc., 734 So. 2d 403 (Fla. 1999). In Quanstrom, the Florida Supreme Court reaffirmed the principles in Rowe and found that a trial court should consider the following factors in determining whether to apply a multiplier in contract cases, such as this one:

(1) whether the relevant market requires a contingency 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 areapplicable, especially the amount involved, the results obtained, and the type of fee arrangement between the attorney and client.

Quanstrom, 555 So. 2d 828, 834; Bell, 734 So.2d 403, 411. The Quanstrom court went on, however, to modify the multiplier in Rowe. The court announced that a trial court may in a case (1) apply a multiplier of 1 to 1.5 if it determines success was more likely than not at the outset; (2) apply a multiplier of 1.5 to 2.0 if it determines the likelihood of success was approximately even at the outset; and (3) apply a multiplier of 2.0 to 2.5 if it determines that success was unlikely at the outset of the case. 555 So.2d at 834.

Both Patrick and Alayon testified at the Fee Hearing that the attorneys’ fee agreement between Plaintiff and Plaintiff’s counsel was a pure contingency fee contract. Neither Defendant nor its expert Kampf presented any credible contradictory evidence. Accordingly, the Court finds that the contract addressing Plaintiff’s counsel’s recovery of attorneys’ fees was a pure contingency fee contract and thus, the Court must consider applying a contingency risk multiplier to the amount of fees this Court has determined were reasonably incurred by Plaintiff. Utilizing the criteria set forth in Rowe, Quanstrom, and Bell, this Court accordingly finds Plaintiff’s likelihood of success was approximately even at the outset of this case, and a continency risk multiplier of 1.5 is reasonable and appropriate. The Courts’s application of the 1.5 contingency risk multiplier is premised on the following specific findings:

a. The relevant market requires a contingency risk multiplier to obtain competent counsel in PIP cases. As the Florida Supreme Court noted in Bell, “[a] primary rationale for the contingency risk multiplier is to provide access to competent counsel for those who could not otherwise afford it.” 734 So. 2d 403, 411 (Fla. 1999). The Court notes that local courts are awarding multipliers in cases handled by leading, local PIP attorneys. Indeed, “[c]ontingency risk multipliers are part of the expectation of practicing PIP law for Plaintiff’s lawyers at this point.” Francisco M. Gomez, MD., P.A., (as assignee of Mohamed Koraitim) v. Nationwide Mutual Fire Ins. Co., 11 Fla. L. Weekly Supp. 457c (Fla. 13th Cir. County Court, March 18, 2004). Likewise, as Justice Grimes emphasized in Lane v. Head, 566 So. 2d 508, 513 (Fla. 1990), “[t]he justification for a contingency fee multiplier is that without providing an added incentive for lawyers to obtain higher fees, clients with legitimate causes of action (or defenses) may not be able to obtain legal services.” 566 So.2d 513 (Grimes, J., concurring). This is especially true in a case like this where the ultimate amount in controversy was less than $400 making it much less desirable than other types of cases.

b. The Court is aware from its own experience and its own review of a significant number of reported decisions in this area of the extremely litigious and contentious nature of PIP cases. In this regard, the Court finds credible Alayon’s testimony that this particular Defendant aggressively litigates its cases and that a case against this particular Defendant is much less desirable than cases against other insurers.

c. Despite Kampf’s testimony that there was nothing novel about this case and that the chances of success were high, the facts in this case and this Court’s own knowledge and experience regarding Plaintiff’s success rates before a jury in PIP cases fail to support such contention. It is clear from the record as a whole that Defendant, from the outset, was doing more than merely defending against any deficiencies in Plaintiff’s complaint. Defendant initially filed a motion to dismiss Plaintiff’s complaint, which was denied, and thereafter filed a motion for summary judgment. Defendant even sought leave to amend its affirmative defenses and to assert a counterclaim for fraud. The case went to arbitration three times, the final time being binding in nature. Defendant had numerous opportunities to settle the case, but declined to do so. Defendant is entitled to aggressively defend its position. It seems somewhat disingenuous, however, for Defendant to argue now that the case was a simple one and that there was nothing “novel” about it when the evidence clearly demonstrates Defendant aggressively defended the case from its inception through the entry of a final judgment in favor of Plaintiff.

e. Plaintiff’s counsel attempted to mitigate the risk of nonpayment, but was unable to do so.

f. The use of a multiplier is justified based on factors such as the amount of risk involved, the results obtained, and the type of fee arrangement between the attorney and client. Given Defendant’s tenacity in defending this case, the nature of the services at issue, and the amounts involved, Plaintiff’s settlement recovery was an excellent result. Lastly, as the Court previously noted, the fee agreement between Plaintiff and its counsel is a pure contingency fee agreement which only allowed for the recovery of attorneys’ fees by Plaintiff’s counsel if counsel prevailed in establishing Plaintiff’s claim for damages against Defendant.

Pre-judgment Interest

Pursuant to Quality Engineered Installation, Inc. v. Higley South, Inc., 670 So. 2d 929 (Fla. 1996) and Boules v. Florida Dept. of Transportation, 733 So. 2d 959 (Fla. 1999), pre-judgment interest on an attorney fee award accrues from the date entitlement to attorneys’ fees is fixed through agreement, arbitration, or court determination. Plaintiff therefore is entitled to pre-judgment interest on the attorneys’ fees awarded at the statutory rate of 7% from August 15, 2005, the date of Defendant’s response to Plaintiff’s Request for Admissions.

Expert Witness Fees

As to the issue regarding the award of Plaintiff’s expert witness fees, the Court finds an award of fees to Plaintiff is appropriate pursuant to the courts’ rationale in Travis v. Travis, 474 So. 2d 1184 (Fla. 1985); Stokes v. Phillips, 651 So. 2d 1244 (Fla. 2d DCA 1995); and Mandel v. Bob Dance Dodge, Inc., 739 So. 2d 720 (Fla. 5th DCA 1999). Accordingly, the Court finds that 14.5 hours expended by Alayon in preparing for and attending the Fee Hearing is a reasonable number of hours to be expended and that the hourly rate of $225 per hour is a reasonable expert witness hourly rate for Alayon. The Court further finds based on Patrick’s testimony that he intended and expected to be compensated for his time expended as an expert witness in this case. Plaintiff therefore is entitled to an award of $3,262.50 in reasonable expert witness fees.

Reasonable Costs

The Court has considered the costs affidavit submitted by Plaintiff in this case and determines that Plaintiff is entitled to an award of $6,345.70 in reasonable costs incurred in litigating this case to a successful conclusion as these costs were necessarily and reasonably incurred by Plaintiff. See Willey v. M.K. Roark, Inc., 616 So. 2d 1140 (Fla. 4th DCA 1993); Orlando Regional Medical Center, Inc. v. Chmielewski, 573 So. 2d 876 (Fla. 5th DCA 1990); Winn-Dixie Stores, Inc. v. Vote, 463 So. 2d 459 (Fla. 2d DCA 1985). Defendant introduced no credible evidence to contradict the reasonableness of these costs.

Summary of Reasonable Fees and Costs

In summary, the Court hereby finds based on the evidence presented at the Fee Hearing, the entire record as a whole, and applicable case law, as follows:

a. reasonable number of hours expended by Plaintiff’s counsel — 296.8

(1) Patrick218.85

(2) Brumley77.95

b. reasonable hourly rate for Plaintiff’s counsel —

(1) Patrick$250

(2) Brumley$175

c. loadstar attorneys’ fees — $68,353.75

218.85 hours x $250 = $54,712.50

77.9 hours x $175 = $13,641.25

d. applicable contingency risk multiplier — 1.5

e. total reasonable attorneys’ fees — $102,530.62 (1.5 x $68,353.75)

f. pre judgment interest — $1,238.79 (63 days @ $19.6634 per diem)

g. reasonable court costs — $6,345.70

h. reasonable expert witness fees — $3,262.50 (14.5 hours x $225/hr.)

I. total reasonable fees, costs, interest, and expert witness fees — $113,377.61

FINAL JUDGMENT OF ATTORNEYS’ FEES AND COSTS AGAINST DEFENDANT

Based on the foregoing findings of fact and conclusions of law, the Court hereby ADJUDGES as follows:

1. Plaintiff, FRANCISCO M. GOMEZ, M.D., P.A., (as assignee of Brandy Williams), shall have and recover against Defendant, PROGRESSIVE EXPRESS INSURANCE COMPANY, the amount of $68,353.75 in reasonable attorneys’ fees; $1,238.79 in pre-judgment interest; $6,345.70 in reasonable costs; and $3,262.50 in reasonable expert witness fees, for a total sum due of $113,377.61, that shall bear interest at the rate prescribed in section 55.03, Florida Statutes (2004), of 7% per annum, for all of which let execution issue.

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¹The Court additionally finds Patrick reasonably expended 206.25 hours during the period commencing February 5, 2003, and ending July 14, 2005.

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