14 Fla. L. Weekly Supp. 740a

Attorney’s fees — Insurance — Personal injury protection — Contingency risk multiplier — Fee multiplier is not impermissible in PIP cases — Error to apply contingency risk multiplier where there was no evidence except conclusory opinion of expert that multiplier was required for insured to obtain competent counsel at outset of case — Where fee application is not wholly unsupported, remand for further proceedings is appropriate

PROGRESSIVE EXPRESS INSURANCE COMPANY, Appellant, v. LHAUNER PHILIPPE, Appellee. Circuit Court, 9th Judicial Circuit (Appellate) in and for Orange County. Case No. CVA1 05-63. L.C. Case No. 2002-SC-12836-O. June 5, 2007. Appeal from the County Court, for Orange County, Leon B. Cheek, Judge. Counsel: Douglas H. Stein, Anania, Bandklayder, Blackwell, Baumgarten, Torricella & Stein, Miami, for Appellant. Todd Copeland, Orlando, for Appellee.

(Before ADAMS, G., THORPE, AND SMITH, T., JJ.)

ORDER REVERSING THE JUNE 27, 2005 FINAL JUDGMENT

[Editor’s note: Lower court judgment published at 13 Fla. L. Weekly Supp. 357a.]

(PER CURIAM.) This is a PIP counsel fee matter. The issue on appeal concerns the application of a multiplier to the fee awarded to plaintiff’s counsel. The appellant, Progressive Express Insurance Company (“Progressive”), does not challenge counsel’s entitlement to a fee award. The trial court awarded $12,512.25 based upon an hourly fee of $335.00 with a contingency risk multiplier of 1.5. Progressive does not contest either of these findings. The only issue concerns the propriety of the trial court’s use of a contingency fee multiplier. This Court has jurisdiction over this timely appeal pursuant to Florida Rule of Appellate Procedure 9.030(c)(1)(A). We dispense with oral argument. Fla. R. App. P. 9.320.

FACTS AND PROCEDURAL HISTORY

The plaintiff, Lhauner Philippe (“plaintiff” or “Philippe”) was involved in a motor vehicle accident in March 2002 and sustained injuries. He was an insured under a policy of insurance issued by the defendant Progressive Express Insurance Company (“defendant” or “Progressive”). As required by law, the Progressive auto insurance policy provided Personal Injury Protection (“PIP”) benefits.¹ Progressive required Philippe to attend an IME, which he did in July 2002. On August 20, 2002, Progressive cut off chiropractic benefits. Philippe, who had been involved in at least one prior accident, continued to receive chiropractic treatment through November 2002. Plaintiff’s treating chiropractor was paid by Progressive at a reduced rate and payment for services after August 20, 2002 was denied. The chiropractor billed $6,581.50 for services rendered and Progressive paid $2,546.80 in PIP benefits.

Plaintiff filed suit on November 13, 2002 in small claims court stating in his Complaint that the amount in controversy did not exceed the sum of $2,500.² Counsel represented plaintiff pursuant to a “PIP Contingency Fee Contract.” (R. 106.) Under that agreement, counsel’s fee was “limited to any Court-awarded fees and costs awarded against any insurance company together with any applicable interest and contingency multiplier.” (Id.)

On October 26, 2004, Progressive tendered a check for $2,539.00 in full settlement of this action. Shortly thereafter, plaintiff filed a motion to “tax attorney’s fees, paralegal fees and costs” pursuant to section 627.428, Florida Statutes. (R. 39.)³ In that application, counsel sought compensation for a total of 36.5 hours of time divided between himself (35.8 hours) at $350 per hour and his associate (.7 hour) at $200 per hour. Counsel also sought a fee multiplier “in the range of 1.75 to 2.0.” (R. 144:14-15.)⁴

At the fee hearing, plaintiff presented the testimony of Kevin Weiss, Esq., who without objection testified as an expert. Mr. Weiss opined that, based upon what he, himself, had seen, plaintiff’s counsel is a “skilled” trial attorney (R. 146:3); has a very good reputation at getting PIP cases resolved; and has been awarded $350 per hour in similar cases by the Orange County Court in the past. Mr. Weiss also testified that the amount of hours expended was reasonable. He noted that Progressive had employed three different law firms, was uncooperative in discovery, and filed motions only to later withdraw them. A multiplier of 1.75 to 2.0 was, in Mr. Weiss’s opinion, appropriate in this case (and he “would push it toward a 2.0.”) (R. 154:7-8). In support of this opinion, Mr. Weiss noted that plaintiff’s counsel had achieved “excellent” results (R. 153:24) considering the following factors: Philippe’s history of other accidents; prior chiropractic treatment by the same doctor for the same affected areas; lack of emergency care or medical attention at the scene of the accident; IME report recommending a cessation of benefits; and Progressive’s aggressive stance towards reducing bills it deems unreasonable in this geographic area. Further, Mr. Weiss testified that he would not have represented Philippe in this case without the ability to obtain a fee multiplier;” that, in his opinion, “a multiplier is required to obtain competent counsel for a case like this one, versus Progressive given the specific facts of this case” (R. 153:13-16); and that plaintiff’s counsel could not have mitigated the risk of nonpayment. Mr. Weiss testified that 35.8 hours was a reasonable and appropriate amount of attorney time to litigate this case — slightly less that the 36.5 hours sought by plaintiff’s counsel. (R. 147: 5-6, 148: 12-13.)

Progressive presented Scott W. Dutton, Esq., as an expert witness, without objection. Mr. Dutton is an insurance defense attorney who handles PIP cases for Progressive. He testified that, “no [fee] multiplier should apply, and, if one should apply, that a multiplier [should be] between 1.0 and 1.5, because it’s more likely [than] not that the plaintiff would have prevailed at the outset of this case.” (R. 162:15-20.)

Mr. Dutton viewed the lack of evidence that Philippe had “substantial difficulty” obtaining an attorney for his PIP case as a “threshold issue” with respect to the applicability of a fee multiplier. (R. 172:4-7.) Progressive’s expert noted that Philippe’s counsel had also represented him in connection with the bodily injury case and expressed the view that absent evidence that Philippe had substantial difficulty in acquiring PIP counsel, “no multiplier should apply.” (R. 172:4-7.) Dutton further testified that “if a multiplier should apply at all, it should be a multiplier between 1.0 and 1.5 and not at higher level such as suggested by the plaintiffs [sic] in this case.” (R. 176:11-14.) The low multiplier was appropriate, in Mr. Dutton’s opinion, because this was a “pretty unique case where the plaintiff has multiple issues upon which it can prevail.” (R. 176:3-5.) Making the case less challenging for plaintiff’s counsel, in Mr. Dutton’s view, were the facts that the IME doctor found Philippe had back and neck spasms; that Progressive had employed inconsistent payment practices; that Progressive pays a higher rate to its IME doctor than charged by the treating doctor, Dr. Boise, whose bills Progressive reduced as excessive; that there was neither a gap in treatment nor “gross overutilization” of medical services (R. 174:10-14); and that there were two doctors “saying that [Philippe] needs further treatment and care as a result of this accident.” (R. 173:13-15.)

In the end, the county court awarded plaintiff’s counsel a fee of $12,512.25 which included a multiplier of 1.5. Progressive filed a timely appeal and contests only the trial court’s use of a multiplier.

STANDARD OF REVIEW

The standard of review to be applied with respect to the application of a contingency fee multiplier is abuse of discretion. Holiday v. Nationwide Mut. Fire Ins. Co., 864 So. 2d 1215, 1218 (Fla. 5th DCA 2004), rev. denied, 924 So. 2d 809 (Fla. 2005).

CONTINGENCY FEE MULTIPLIERS

In contending that application of a fee multiplier was erroneous, Progressive raises two principal arguments. It first argues that contingency award multipliers can no longer be awarded in PIP cases. Also, Progressive urges that, in this case, there is no competent evidence to support the application of a multiplier. Each argument will be addressed in turn.

Is a fee multiplier prohibited?

Enhanced fees may be awarded in PIP cases. This proposition was reaffirmed by the Florida Supreme Court in Standard Guaranty Insurance Co. v. Quanstrom, 555So. 2d 828 (Fla. 1990).

Progressive traces the development of enhanced fees in general and as applied in PIP cases in particular. It concludes that the Fifth District Court of Appeal has recognized that contingency risk multipliers no longer apply to attorney’s fees awarded pursuant to section 627.428, Florida Statutes. To be sure, the Fifth District Court of Appeal has questioned the continued viability of the practice awarding enhanced fees in PIP cases. Holiday v. Nationwide Mut. Fire Ins., 864 So. 2d 1215 (Fla. 5th DCA 2004). In Holiday, the Fifth District Court of Appeal certified the issue of whether a multiplier may be applied to enhance a fee award under section 627.428. Id. at1221. It also did so in Progressive Consumers Insurance Co. v. Central Florida Physiatrists, P.A., 915 So. 2d 261 (Fla. 5th DCA 2005), Progressive Auto Pro Insurance Co. v. Wynne Chiropractic, Inc., 905 So. 2d 1038 (Fla. 5th DCA 2005) and Bluegrass Art Cast, Inc. v. Consolidated Erection Services, Inc., 870 So. 2d 196 (Fla. 5th DCA 2004). Every time, the Supreme Court refused to review the issue. See Progressive Consumers Ins. Co. v. Cent. Fla. Physiatrists, P.A., 928 So. 2d 336 (Fla. 2006), Progressive Auto Pro Ins. Co. v. Wynne Chiropractic, Inc., 928 So. 2d 336 (Fla. 2006), Holiday v. Nationwide Mut. Fire Ins., 924 So. 2d 809 (2005). “The supreme court has repeatedly denied review of this certified question.” Allstate Ins. Co. v. Regar, 942 So. 2d 969, 975 (Fla. 2d DCA 2006).

Still, Quanstrom has not been overruled. Thus, despite its doubts about the continued viability of Quanstrom, the Fifth District Court of Appeal has recognized that it must “follow the dictates” of that holding. Bluegrass Art Cast, Inc. v. Consol. Erection Servs., Inc., 870 So. 2d at 197.⁵ This Court must likewise adhere to Quanstrom. A fee multiplier is not impermissible. The question is whether or not, under the facts of this case, the award of an enhanced fee was an abuse of discretion.

Should an enhanced fee have been awarded in this case?

Where a statute permits a party to recover counsel fees, the Florida Supreme Court has long recognized that a multiplier may be appropriate in determining a “reasonable” fee where counsel for the prevailing party has handled the case on a contingency basis. Fla. Patient’s Compensation Fund v. Rowe, 472 So. 2d 1145, 1151 (Fla. 1985). Rowe set forth an acceptable range for contingency multipliers of 1.5 to 3. Id. Also, Rowe instructed that courts making fee awards were to consider the eight factors set out in the Florida Code of Professional Responsibility (the“Rowe factors”). Id. at 1150. See R. Regulating Fla. Bar 4-1.5.⁶

In Quanstrom, the Florida Supreme Court reaffirmed the availability of the contingency fee multiplier in computing a reasonable counsel fee. Standard Guar. Ins. Co. v. Quanstrom, 555So. 2d at 834-35. Quanstrom modified the Rowe standards for determining how enhanced fees should be calculated. Standard Guar. Ins. Co. v. Quanstrom, 555So. 2d at 833. The Quanstrom court divided attorney’s fee cases into three categories: 1) public policy enforcement cases; 2) tort and contract claims; and 3) family law, trusts and estates and eminent domain matters. Id. at 833. PIP cases fall into the second category. State Farm Fire & Cas. Co. v. Palma, 555 So. 2d 836, 838 (Fla. 1990).⁷ Quanstrom also reduced the highest available multiplier from the 3.5 announced in Rowe to 2.5. Standard Guar. Ins. Co. v. Quanstrom, 555So. 2d at 834.

With respect to “category two ” cases, the Quanstrom court held:

Here, we reaffirm the principles set forth in Rowe, including the code provisions, and find that the trial court should consider the following factors in determining whether a multiplier is necessary: (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 areapplicable, especially, the amount involved, the results obtained, and the type of fee arrangement between the attorney and his client. Evidence of these factors must be presented to justify the utilization of a multiplier. We find that the multiplier is still a useful tool which can assist trial courts in determining a reasonable fee in this category of cases when a risk of nonpayment is established.

Id.

Progressive contends that Philippe failed to present any “competent evidence” on the first two of these factors. (Initial Br. 4, 8.)

With respect to considerations of whether the relevant market requires that contingency fees be enhanced, Progressive contends that the testimony of Philippe’s expert is “insufficient.” (Initial Br. 6.) During the pendency of this appeal, the Fifth District Court of Appeal decided Progressive Express Insurance Co. v. Schultz, 948 So. 2d 1027 (Fla. 5th DCA 2007). In that case, the court of appeal granted a writ of certiorari and quashed a judgment awarding an enhanced counsel fee award in a PIP case. Id. at1029. The Schultz court concluded that there was “nothing . . . that call[ed] for a fee multiplier.” Id. at 1033.

Because Mr. Schultz did not testify at the fee hearing, we have nothing to suggest that he had any difficulty obtaining competent counsel to pursue his PIP claim, other than [Schultz’s counsel’s] statement that the attorney handling Mr. Schultz’s third-party liability claim was not interested in pursuing Mr. Schultz’s PIP case. In our view, that lack of evidence alone may be fatal to the claim for a multiplier.

Id. at1030.

Here, Philippe, like the plaintiff in Schultz, did not testify at the fee hearing. The difficulty in obtaining local counsel has been called the prominent factor in determining when enhancement of a contingency fee is necessary and appropriate. Id.⁸ The expert for plaintiff’s counsel in this case testified that he “believe[d] a multiplier is required in order to obtain competent counsel [in] a case like this one, versus Progressive, given the facts of the case.” R. 153:13-16.) This statement, along with the expert’s testimony that he, personally, wouldn’t have gotten involved in the case, is the totality of the evidence that the market requires a multiplier to obtain a competent attorney to take on a case such as this. “[N]o weight may be accorded an expert opinion which is totally conclusory in nature and is unsupported by any discernible, factually-based chain of underlying reasoning.” Div. of Admin. v. Samter, 393 So. 2d 1142, 1145 (Fla. 3d DCA 1981). See also M.A. Hajianpour, M.D., P.A. v. Khsrow Maleki, P.A., 932 So. 2d 459, 464 (Fla. 4th DCA 2006).

The Court does not read Schultz as necessarily requiring testimony from the plaintiff on this point in every case. Here, however, the proofs barely address this issue at all. Specifically, the expert testimony about the need for multipliers to attract counsel was conclusory in the extreme.

The trial judge observed that the question of whether employment of a contingency multiplier is needed to attract counsel can be viewed as a “chicken or the egg” matter. (R. 185:20-21.) This is an apt analogy. The county court judge expressed his understanding of Progressive’s position that there is seemingly a “plethora of attorneys willing to handle PIP cases.” (R. 185:20-21.) At the same time, he stated his suspicion that this abundance of willing counsel was a product of the availability of the multiplier and did not exist independent of the possibility of enhanced fees. In the end, the judge below confessed to being “not sure” as to “whether there would be any representation of people absent the multiplier.” (R. 185:19; 186:1-2.) These comments highlight the failure of Philippe’s attorney to meet his burden of proof on this important consideration in the decision to apply a multiplier. At the end of the hearing, the court below ought not to have been expressing suspicions about the need for a multiplier in the Orlando market. It was the obligation of the attorney seeking multiplier to make this showing. See United Servs. Auto. Ass’n v. Kiibler, 364 So. 2d 57, 59 (Fla. 3d DCA 1978) (“An attorney who requests a court awarded fee has the burden of proving his entitlement to the fee.”). See also Martin v. Univ. of S. Ala., 911 F.2d 604, 611 (11th Cir. 1990) (attorney seeking contingency fee enhancement under federal civil rights statute bears burden of proving entitlement to it). While the “chicken or egg” description was an accurate one, Philippe’s counsel bore the burden of replacing this conundrum with a measure of certitude regarding market conditions. As the trial judge’s comments demonstrate, counsel failed to do so. The Fifth District Court of Appeal has observed:

“An award of attorney’s fees under a fee-shifting statute isn’t a prize to the winning lawyer. Rather, it compensates the prevailing party for legal fees prudently incurred. Normally this consists of a reasonable hourly rate, multiplied by a reasonable number of hours (the lodestar). There is a ‘strong presumption’ that an attorney’s fee award may not exceed this figure. On rare occasions, a court may grant a multiplier to account for factors not adequately reflected in the lodestar.”

Allstate Indem. Co. v. Hicks, 880 So. 2d 772, 774 (Fla. 5th DCA 2004) (citations omitted) (quoting Guam Soc’y of Obstetricians & Gynecologists v. Ada, 100 F.3d 691, 706-07 (9th Cir. 1996) (Kozinski, J., dissenting in part)).

The trial court mused that the willingness of many attorneys to litigate PIP cases may be a function of the availability of a multiplier, but it is unclear whether these counsel are drawn to the possibility of a “prize” or view the prospect of an enhanced fee as a necessary inducement to take on the case in the first place. Plaintiff’s counsel called one witness and his testimony does not rebut the “strong presumption” of reasonableness which attaches to the lodestar. There was no evidence in this case, save the conclusory opinion ventured by Mr. Weiss, that a multiplier, while obviously desirable to the plaintiff’s PIP bar, was required at the outset of this case. See Standard Guar. Ins. Co. v. Quanstrom, 555 So. 2d at 834.

While the counsel fee award does not survive Schultz, the fee application was not wholly unsupported. Plaintiff’s counsel presented expert testimony which, in many respects, has not been challenged on appeal. An unsustainable decision on a fee application should be remanded for further proceedings when the award contains some substantial competent evidence supporting it but fails to include some essential evidentiary support. Rakusin v. Christiansen & Jacknin, 863 So. 2d 442, 444-45 (Fla. 4th DCA 2003). Such is the case here. It is only where there is no competent substantial evidence to support a fee award that an appellate court should reverse without remand. Id. at444. Here, counsel’s entitlement to an award and the trial court’s findings as to the amount of his reasonable hourly rate and hours are not disputed. The order appealed from is reversed and the matter remanded to the county court for further proceedings.⁹

MOTION FOR APPELLATE ATTORNEY’S FEES

Philippe’s counsel has filed a timely motion seeking an award of appellate attorney’s fees and costs pursuant to sections 627.736(8) and 627.428, Florida Statutes, and Rule 9.400 of the Florida Rules of Appellate Procedure. As Philippe has not prevailed on appeal, his motion for appellate attorney’s fees should be denied.

Accordingly, it is hereby ORDERED and ADJUDGED that the trial court’s June 27, 2005 Final Judgment is REVERSED and this case is REMANDED to the County Court for further proceedings consistent with this opinion.

__________________

¹With limited exception, “each motor vehicle owner or registrant required to be licensed in Florida is required to carry a minimum amount of personal injury protection, or PIP insurance, for the benefit of the owner and other designees.” Warren v. State Farm Mut. Auto. Ins. Co., 899 So. 2d 1090, 1094 (Fla. 2005). This coverage includes benefits for accident-related medical expenses, disability (lost wages) and death. § 627.736(1), Fla. Stat. (2005).

²In his Complaint, plaintiff maintains that in addition to outstanding chiropractic bills, Progressive denied full payment of bills submitted by Dr. Rudolph Moise. Progressive also denied Philippe’s claim for essential services benefits. Plaintiff claimed that Progressive had underpaid PIP benefits by approximately $4,100.00.

³Philippe’s counsel claims on appeal that Progressive agreed to pay the “full PIP benefits at issue in the lawsuit.” (Answer Br. 2.) In his Statement of Particulars, Philippe claimed over $4,000 in unpaid medical bills — more than the amount of final settlement.

⁴In the written fee application, plaintiff’s counsel sought payment at one rate of “$325.00 to 350.00” and a multiplier of 2.0. (R. 59-60.)

⁵More recently, the Fifth District Court of Appeal decided a PIP fee case involving the enhancement issue and did not certify the question of whether multipliers may be granted in PIP cases. See Progressive Express Ins. Co. v. Schultz, 948 So. 2d 1027 (Fla. 5th DCA 2007).

⁶The“Rowe factors” are: 1) the time and labor required, the novelty and difficulty of the question involved, and the skill requisite to perform the legal service properly; 2) the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer; 3) the fee customarily charged in the locality for similar legal services; 4) the amount involved and the results obtained; 5) the time limitations imposed by the client or by the circumstances; 6) the nature and length of the professional relationship with the client; 7) the experience, reputation, and ability of the lawyer or lawyers performing the services; and 8) whether the fee is fixed or contingent. Fla. Patient’s Compensation Fund v. Rowe, 472 So. 2d at 1150.

⁷Palma was decided the same day as Quanstrom.

⁸The trial judge did not have the benefit of Schultz when he decided this case.

⁹Progressive also argued that plaintiff’s counsel presented no evidence that he was unable to mitigate the risk of nonpayment. This point was addressed only fleetingly by Mr. Weiss who testified only that “I don’t believe there is any possibility for [plaintiff’s counsel] to have mitigated the risk of nonpayment in any way.” (R. 153:21-23.)