13 Fla. L. Weekly Supp. 13a

Attorney’s fees — Insurance — Personal injury protection — Contingency risk multiplier — Where trial court had evidence before it that relevant market does require multiplier to obtain competent counsel, that there was no way to mitigate risk of nonpayment, that maximum results were obtained, that attorney represented medical provider on pure contingency fee contract, that case was highly contested, that law concerning preferred provider arrangement advocated by insurer was unsettled at time case was filed, and that, due to combination of PPO issue, exhaustion of benefits and med pay issue, provider’s chances of prevailing at outset were less than 50%, trial court was within its discretion to award multiplier of 2.5 — Appellate fees — Appellate fees cannot be awarded where only issue in case was application of, and entitlement to, contingency risk multiplier

PROGRESSIVE CONSUMERS INSURANCE COMPANY, Appellant, v. CENTRAL FLORIDA PHYSIATRISTS, P.A., by assignment of benefits from Kathleen Fahey, Appellee. Circuit Court, 9th Judicial Circuit (Appellate) in and for Orange County. Case No. CVA1-04-25. L.C. Case No. SCO-01-6465. August 29, 2005. Appeal from the County Court for Orange County, Jerry L. Brewer, Judge. Counsel: Douglas H. Stein, Anania, Bandklayder, Blackwell, Baumgarten, Torricella & Stein, Miami, for Appellant. Donald A. Myers, Jr., Bailey & Myers, P.A., Maitland, for Appellee.

(Before WHITEHEAD, O’KANE, and GRIDLEY, JJ.)

ORDER AFFIRMING THE APRIL 21, 2004, “AMENDEDFINAL JUDGMENT AWARDING ATTORNEY’S FEESAND COSTS” OF THE TRIAL COURT

(PER CURIAM.)Appellant, Progressive Consumers Insurance Company (Progressive), appeals the April 21, 2004, Order which determined the amount of attorney’s fees, multiplier, and costs, pursuant to section 627.428, Florida Statutes, to be awarded Appellee, Central Florida Physiatrists, P.A., as assignee of Kathleen Fahey, (CFP), arising out of an underlying action to recover personal injury protection (PIP) benefits. Progressive does not challenge CFP’s entitlement to an award of attorney’s fees, the trial court’s determination of the reasonableness of the number of hours expended by counsel, or the hourly rate awarded by the trial court. Specifically, Progressive challenges only the application of a contingency risk multiplier. Progressive has requested oral argument. This Court has jurisdiction pursuant to Florida Rule of Appellate Procedure 9.030(c)(1)(A). We dispense with oral argument. Fla. R. App. P. 9.320.Procedural and Factual Background

On April 7, 1997, Kathleen Fahey was involved in a motor vehicle accident from which she claimed injuries. At the time of the accident, Fahey was an insured of Progressive which provided no-fault benefits in accordance with Florida law. Following the accident, Fahey received treatment for accident related injuries from, and assigned her benefits under her insurance policy to, CFP.

CFP billed Progressive for medical treatment rendered. Progressive paid a portion of the bill, less than 80%, claiming that it was entitled to reduce the amount paid on the basis of a preferred provider arrangement. Essentially, Progressive alleged that it had entered into an agreement with a third party, Beech Street Corporation, to access reduced price arrangements that Beech Street had with groups of physicians, including CFP. On the basis of these preferred provider organization (PPO) agreements, Progressive paid less than 80% of the usual and customary charge for services required by section 627.736, Florida Statutes. Progressive denied that it was required to comply with section 627.736(10) in order to access reduced PPO pricing.

Prior to filing suit, Progressive informed CFP that the entire policy benefit had been exhausted, and that there were no monies remaining in the policy coverage to pay CFP. All of the PIP benefits had been paid to other health care providers. As a result, Progressive asserted that CFP would receive no further payments whatsoever.

CFP filed suit alleging that Progressive improperly reduced its medical billings, seeking to recover the balances due, together with interest. After extensive discovery, Progressive confessed judgment and agreed to pay all of the amounts due, together with statutory interest. Progressive stipulated that CFP was entitled to the award of its reasonable attorney’s fees and costs. Accordingly, CFP filed its Motion to Tax Attorney’s Fees and Costs Pursuant to section 627.428, Florida Statutes.

On April 6, 2004, the trial court conducted an evidentiary hearing on the Motion for Attorney’s Fees. In support of the Motion, CFP presented the testimony of its counsel, Donald Meyers, and its expert, attorney Kevin Weiss, as well as documentary exhibits. For its defense, Progressive relied on the testimony of attorney Mike Bell. Progressive stipulated to the reasonable hourly rate of $300.00 for Mr. Myers, and $200.00 for his associate, and to the taxable costs incurred by CFP. Progressive contested the number of hours, entitlement to a multiplier, and the amount of the multiplier sought by CFP.

With respect to the issue of entitlement to a multiplier, Mr. Myers testified that he had a pure contingency agreement with CFP. A copy of the agreement was admitted into evidence. He also testified that at the time CFP filed the case, it did not have opportunity or access to competent counsel to handle PPO cases such as this one. Specifically, he testified that there were just a handful of attorneys who were filing PPO cases in the Central Florida area. He noted that CFP had previously retained local counsel, but that concerns had been raised about the competency of that attorney to handle cases such as this one, and that attorney had been discharged. Mr. Myers testified that CFP had approached two other attorneys who had declined representation before retaining him. Further, he stated that he would not have taken this case without the opportunity to obtain a multiplier.

Mr. Weiss¹ then testified as to the issue of entitlement to a contingency risk multiplier. He opined that a multiplier was appropriate in this case. As a basis for his opinion, he testified about a conversation with Matthew Imfeld, M.D., a principal of CFP, confirming that CFP had problems finding counsel to represent them, and that CFP had terminated the services of its prior counsel due to concerns about his competency to handle PPO cases. Mr. Weiss testified that neither he, nor his law firm at the time, would handle any type of cases involving a PPO arrangement.

Specifically, he testified that the relevant market, Central Florida, requires a multiplier in order to obtain competent counsel. Mr. Weiss also confirmed that he would not have taken on the case without the ability to obtain a multiplier. Based upon his familiarity with the relevant market, he agreed that there were just a handful of local attorneys handling PPO cases at the time this case was filed. He observed that the fact of two South Florida firms filing PPO cases for local medical providers supported the conclusion that local attorneys would not pursue PPO cases, and that it was difficult to find competent counsel without the prospect of a contingency risk multiplier. Mr. Weiss testified that it was not until Mr. Myers started having success on the PPO issue that other local attorneys began to accept these cases.

Mr. Weiss also confirmed that Mr. Myers had a pure contingency fee agreement with CFP. He further noted that Mr. Myers was unable to mitigate the risk on non-payment in any way. As justification for this opinion, Mr. Weiss observed that the amount at issue was relatively small, and would not justify another type of fee arrangement. Finally, Mr. Weiss opined that the results achieved were significant, as Mr. Myers obtained a full recovery for CFP. The trial court also heard testimony and received evidence to the fact that there were some county court cases from the relevant time period when representation of CFP was undertaken in the instant case that found for the plaintiff on PPO issues, as well as cases decided against the plaintiff.

Mr. Bell then testified for Progressive on the issue of entitlement to a contingency risk multiplier. He opined that it would be an abuse of discretion for the trial court to award a multiplier in this case. He stated that the Court must hear evidence from CFP’s principals that they had made efforts to obtain competent counsel, but were unsuccessful. He further concluded that the evidence offered by Mr. Myers and Mr. Weiss was not sufficient to establish substantial difficulties in obtaining counsel without a multiplier. Finally, Mr. Bell expressed his belief that the application of a multiplier is not appropriate in a case with a “wealthy, well-established medical practice” such as CFP.

On cross examination, Mr. Bell conceded that the relevant geographic market for consideration of competent counsel is Orange, Osceola, and Seminole counties. He implicitly agreed that there were only a handful of local lawyers handling PPO cases in the time frame that this case was filed. Mr. Bell also agreed that he would not advise his clients to pay even a reduced hourly rate of $125.00 to $165.00 to collect a bill of $500.00. Mr. Bell additionally testified that he had handled less than ten plaintiffs’ PIP cases and each case generally settled quickly after filing. He further testified that he had never had to advance any significant cost money on a PIP case, nor had he ever had a PIP case that he had invested hundreds of hours in go bad.

Progressive offered and filed the transcript of testimony of Mr. Myers and Mr. Weiss in another attorney’s fee hearing for consideration by the trial court in this case.² The prior testimony of Mr. Myers and Mr. Weiss which the trial court in the instant case received for consideration may be summarized as follows:

(1) At the outset, when this case was filed, CFP did not have access to competent counsel to handle PPO cases without the applicability of a multiplier.

(2) CFP experienced actual difficulty in retaining competent counsel on the PPO issue.

(3) The fact that the law was unchartered and unsettled significantly increased the risk in PPO cases and discouraged attorneys from accepting PIP PPO cases.

(4) There were only a handful of lawyers that accepted PIP PPO cases in Seminole County, and even attorneys who handled PIP cases on a regular basis refused to handle PIP PPO cases because of the risks involved.

(5) Those attorneys that did handle PPO cases refused to do so without the opportunity for a contingency risk factor.

(6) Mr. Myers would not have accepted the case without the opportunity of a multiplier.

(7) Mr. Myers was unable to mitigate the risk of non-payment in any way. He could not, in good conscience, recommend to CFP that it pay his regular hourly rate to pursue the benefits at issue in the case.

After considering the testimony and documents presented, with respect to the multiplier issue, in light of the relevant case law, the trial court found that: (1) counsel undertook representation of CFP pursuant to a pure contingency fee agreement; (2) the market in the relevant jurisdiction requires a contingency risk multiplier to obtain competent counsel in such cases; (3) CFP had met its burden of proof with respect to the entitlement to a multiplier; and (4) CFP’s chances of success at the outset of the case were unlikely. The trial court determined that counsel reasonably expended 81.25 hours and, because of the difficulty of the issues at the outset, that the case merited the highest multiplier allowed by law, 2.5. The total amount awarded to CFP for attorney’s fees and costs was $63,645.52. The trial court based its decision on, and applied the factors and criteria contained in Standard Guaranty Ins. Co. v. Quanstrom, 555So. 2d 828 (Fla. 1990); Florida Patient’s Compensation Fund v. Rowe, 472 So. 2d 1145 (Fla. 1985); and Bell v. U.S.B. Acquisition Company, Inc., 734 So. 2d 403 (Fla. 1999).

Standard of Review

Progressive argues that a multiplier should not be awarded in a case where attorney’s fees are awarded pursuant to a fee-shifting statute and that there must be competent substantial evidence which proves that the relevant market requires the award of a multiplier. 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, 775So. 2d 372 (Fla. 3d DCA 2000) and Holiday v. Nationwide Mutual Fire Insurance Co., 864 So. 2d 1215 (Fla. 5th DCA 2004).

Discussion

Progressive asserts that the trial court erred in applying a contingency risk multiplier when calculating CFP’s award of attorney’s fees pursuant to section 627.428, Florida Statutes, for the reason that there was no competent evidence to support the application of a multiplier. Specifically, Progressive argues that CFP presented no competent evidence that the relevant market requires a multiplier to obtain competent counsel or that its attorney was unable to mitigate the risk of non-payment in any way. Progressive also contends that a contingency risk multiplier can no longer be applied to an attorney’s fee awarded pursuant to section 627.428.

CFP counters that the trial court did not abuse its discretion when it decided that a contingency risk multiplier was justified on the basis of competent substantial record evidence. CFP further maintains that binding precedent permits application of a multiplier to an attorney’s fee awarded pursuant to section 627.428, Florida Statutes.

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, Progressive effectively confessed judgment by stipulating that CFP was entitled to reasonable attorney’s fees, and paying the outstanding amount owed under the policy.

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 of a multiplier is one of abuse of discretion. Progressive argues that a multiplier was not warranted in a case in which fees are awarded pursuant to a fee shifting statute such as section 627.428, Florida Statutes. Progressive cites to two recent cases, Sarkis v. Allstate Insurance Company, 863 So. 2d 210 (Fla. 2003) and Holiday v. Nationwide Mutual Fire Insurance, 864 So. 2d 1215 (Fla. 5th DCA 2004) to support its argument. The Holiday court 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 Sarkis court, 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 627.429, Florida Statutes, the award of a multiplier in this case was appropriate. See Progressive Auto Pro Insurance Co. v. Wynne Chiropractic, Inc., 905 So.2d 1038 (Fla. 5th DCA 2005).

To determine whether a contingent 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.

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. The trial court had before it evidence that the relevant market does require a multiplier, that there was no way to mitigate the risk of non-payment, that the maximum results were obtained by Mr. Myers, that he represented CFP on a pure contingency fee contract, and that the case was highly contested with Progressive taking the position that it was not required to pay more than what it had previously paid. In fact, the trial court heard testimony that Mr. Myers made multiple attempts with Progressive to help them reduce their fee exposure in this case, yet Progressive continued to defend the case aggressively.

The record demonstrates that the bills at issue in this case were incurred in May of 1997, suit was not filed until July of 2001, and the decision awarding the multiplier was not rendered until April of 2004. The trial court could reasonably conclude that the potential case languished for lack of a competent attorney to pursue the claim. The trial court heard testimony that there were less than a handful of competent attorneys in the relevant market willing and available to pursue PIP PPO cases at the time the instant case was filed, and that the few attorneys that did accept such cases would not accept the cases without the incentive of a multiplier because of the substantial risk involved.

Moreover, the trial court heard testimony that the law concerning the PPO arrangement advocated by Progressive was unsettled at the time the instant case was filed. There was no binding appellate authority either authorizing or prohibiting the scheme utilized by Progressive. As for Progressive’s denial that it was required to comply with section 627.736(10), Florida Statutes, in order to access reduced PPO pricing, the trial court heard that there are two district court of appeal opinions on polar extremes of the issue thereby indicating it was not a clear-cut issue at the inception of the instant case.

The trial court received expert testimony that the case had less than a 50% chance of prevailing at the outset due to the PPO issue. Had the case presented simply the PPO issue, the expert testified that it would have been a 50/50 chance of success; specifically suggesting the 2.0 multiplier due to the novelty of the issue and that there was no existing case law at the time. Further, there were prior cases that indicated a 2.0 multiplier was appropriate in a PPO case. However, due to the combination of the PPO issue, the exhaustion of benefits issue identified at the beginning of the case, and the “MedPay” issue, the expert testified that this would be a 2.5 multiplier case.

The trial court also heard evidence that CFP experienced actual difficulty in retaining competent counsel to represent it in cases with the PPO issue. CFP discharged one attorney due to concerns about the way a PPO case was being handled. Testimony was presented regarding conversations with the doctors at CFP about at least two attorneys that declined to accept CFP’s PPO cases because of the risks involved.

Furthermore, the trial court heard testimony that counsel was unable to mitigate the risk of non-payment. The amount at issue was relatively small, and a fee agreement based upon a percentage of the award would not be economically justifiable. Additionally, it would not be economically viable to hire counsel on an hourly basis to pursue the benefits at issue in this 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). Here, there was competent substantial evidence to support the trial court’s decision to apply 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 multiplier to the reasonable attorney’s fees incurred by counsel.

Attorney’s Fees

CFP is seeking attorney’s fees pursuant to sections 627.428, 627.736(8), and 57.105, Florida Statutes, and Florida Rule of Appellate Procedure 9.400. Due to the fact that only the application of and entitlement to a contingency fee multiplier is at issue in the instant case, no award of appellate attorney’s fees is warranted. Fees cannot be awarded for the time spent litigating over the entitlement to a contingency risk multiplier.

Two statutes underlie this conclusion. First, section 627.736(8) authorizes an award of attorney’s fees with respect to certain disputes between an insured and its insurer arising out of the Florida Motor Vehicle No-Fault Law,³ including cases involving personal injury protection. Second, section 627.428(1) specifically provides for an award of appellate attorney’s fees upon rendition of a judgment or decree in actions in which the insured prevails against his or her insurance carrier. The Florida Supreme Court held in State Farm Fire & Casualty Company v. Palma, 629 So. 2d 830 (Fla. 1993), however, that although attorney’s fees may be awarded under section 627.428 for litigating the issue of entitlement to attorney’s fees, the statute does not authorize an award of fees for litigating the amount of the fees to be awarded. Subsequently, the Fifth District Court of Appeal held in Allstate Indemnity Company v. Hicks, 880 So. 2d 772 (Fla. 5th DCA 2004), rev. dismissed, Hicks v. Allstate Indemnity Company, 901 So.2d 120 (Fla. 2005), that time spent litigating the propriety of a fee multiplier concerns only the amount of the fee to be awarded, and not the matter of entitlement. The applicability of a multiplier in this context is, therefore, not recoverable by an insured under the subject statutes. See also Mercury Cas. Co. v. Flores, 905 So. 2d 179 (Fla. 3d DCA 2005).

Conclusion

Progressive has failed to establish that the trial court abused its discretion in rendering the April 21, 2004, judgment regarding the determination of 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 Guarantee Insurance Company v. Quanstrom, 555 So. 2d 828 (Fla. 1990) to substantiate the award of a 2.5 contingency fee multiplier.

Accordingly, it is hereby ORDERED AND ADJUDGED that:

1) The trial court’s April 21, 2004, “Amended Final Judgment Awarding Attorney’s Fees and Costs” is AFFIRMED;

2) Appellee Central Florida Physiatrists’ Motion for Appellate Attorneys’ Fees is DENIED.

__________________

¹Progressive stipulated to Mr. Weiss’ expert qualifications.

²The attorney’s fee hearing transcript was prepared in the case of Central Florida Physiatrists, P.A. (a/a/o Patricia Autrey) v. Progressive Express Insurance Company, Case No. 01-SC-002859-19-U, County Court Seminole County. That fee hearing also involved the award of a contingency risk multiplier to counsel in a PIP PPO case filed in September 2001, the same time frame as the instant case. The same law firms represented each of the parties and the testimony of both Mr. Myers and Mr. Weiss was offered. The testimony of Mr. Myers and Mr. Weiss is admissible and was properly considered by the trial court in the instant case. See § 90.803(22), Fla. Stat. (2004). Further, by offering the transcript of former testimony, Progressive waived any objections concerning its admissibility. Williams v. Mosely, 2 Fla. 304 (Fla. 1848).

The trial court’s award of a contingency risk multiplier in the CFP/Autrey case wasappealed to the Circuit Court of Seminole County. The Circuit Court affirmed the award of a multiplier, finding no abuse of discretion.

³§§ 627.730-627.7405, Fla. Stat. (2001).

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