14 Fla. L. Weekly Supp. 28b
Attorney’s fees — Insurance — Personal injury protection — Contingency risk multiplier — Error to find that issue of missed independent medical examination made case complicated enough to justify multiplier where only benefits at issue were those accrued prior to scheduled IME — Application of multiplier is not appropriate penalty for delay in paying benefits — Difficulty of practicing PIP law and difficulty of case are factors that affect number of hours, not application of multiplier — Error to find that multiplier was necessary for medical provider to obtain competent counsel where there is no record evidence to support conclusion that provider had difficulty finding competent counsel, and fact that counsel approached provider and there was pre-existing relationship between provider and counsel contradicts finding — Although there is support for trial court’s conclusion that insurer was arrogant in failing to timely pay benefits it legitimately owed with virtually no meaningful defense, multiplier is not to be used as punitive measure — Length of time matter dragged on does not justify imposition of multiplier
U.S. SECURITY INSURANCE CO., Appellant, vs. PHYSICAL THERAPY WALK-IN CLINIC, P.A. (a/a/o Carlos Villanueva), Appellee. Circuit Court, 13th Judicial Circuit (Appellate) for Hillsborough County. Case No. 04-9083, Division X. L.C. Case No. 02-18932-SC. October 14, 2005. Review of a final order of the County Ct., Hillsborough County. Counsel: Catherine M. Aebel, Barr, Murman, Tonelli, Slother & Sleet, Tampa; David B. Pakula, Pembroke Pines, for Appellant. Timothy Patrick, Tampa, for Appellee.
(RICHARD A. NIELSON J.) Appellant U.S. Security Insurance Company (“Appellant” or “U.S. Security”) appeals a final judgment awarding attorney’s fees to Appellee Physical Therapy Walk-In Clinic (“Appellee” or “Physical Therapy”) based upon the application of a contingency fee risk multiplier. Appellant contends that the application of a risk multiplier was improper in this case. We agree and reverse.
The facts are as follows.
On July 30, 2001, Carlos Villanueva was involved in acovered incident. He received medical treatment between August 13, 2001 and October 15, 2001, at Physical Therapy Walk-In Clinic and assigned his personal injury protection (PIP) benefits thereto. Physical Therapy periodically submitted bills to Mr. Villanueva’s PIP insurer, U.S. Security, as the treatment progressed.
On October 5, 2001, U.S. Security sent a letter to the insured scheduling an independent medical examination (IME) for October 29, 2001. Mr. Villanueva did not appear for the appointment. On November 14, 2001, U.S. Security scheduled a second IME. Again, Mr. Villanueva did not appear.
U.S. Security sent a letter dated February 5, 2002, to the insured, with a copy to Physical Therapy, advising that the insurer was terminating PIP benefits as of October 29, 2001, because of the insured’s failure to attend the IMEs. At the time, U.S. Security had paid PIP benefits only through August 31, 2001, even though Mr. Villanueva received additional treatment through October 15, 2001, and almost all of the bills had been submitted prior to the cutoff date of October 29, 2001.
In March, 2002, Physical Therapy entered a contingency fee agreement with attorney Timothy Patrick. By that time, U.S. Security had paid $1,387.37 of the $10,520.00 in submitted claims. After deducting the amounts already paid, the co-payment and deductible amounts, Physical Therapy claimed that U.S. Security owed $5,028.63 in PIP benefits. Physical Therapy, through Mr. Patrick, sent a pre-suit demand letter.
On August 14, 2002, Physical Therapy filed suit against U.S. Security seeking recovery of $5,028.63 in PIP benefits. Neither Physical Therapy’s complaint nor U.S. Security’s answer raised any issues regarding Mr. Villanueva’s failure to attend an IME. At no time during discovery did the parties address the missed IMEs.
After taking into consideration amounts paid and deductibles, the amount U.S. Security owed Physical Therapy, exclusive of interest was $4,468.63. U.S. Security proposed settlement in the amount of $4500.00, and, on December 16, 2003, Physical Therapy accepted U.S. Security’s proposal, exclusive of attorney’s fees. With the substantive issues resolved, the only remaining issue was the amount of attorney’s fees owed to Physical Therapy.
During the June 30, 2004, fee hearing, the trial court received evidence relating to the application of a contingency risk multiplier. Timothy Patrick, as counsel for Physical Therapy, and his expert witness, Bradley Souders, testified that this was a difficult case primarily because of Mr. Villanueva’s failure to attend the IMEs. They also testified that PIP law is a difficult practice area generally, and specifically that this case was difficult; therefore, a multiplier was needed to attract competent counsel.
Both witnesses admitted on cross examination that they actively market themselves to medical providers to obtain PIP cases. In 2002, Mr. Patrick had about 15 to 20 medical providers as clients, each of whom referred him repeat business. At the time of the fee hearing, Mr. Patrick had almost 200 PIP suits pending. He testified that the majority of the cases settle within one year. Mr. Patrick had only two PIP cases go to trial in 2003, and one case in 2004. Mr. Souders testified that only about five percent of PIP cases go to trial. Mr. Souders said he knows about ten PIP lawyers in Hillsborough County.
In a counter point to Physical Therapy’s suggestion of difficulty, U.S. Security’s fee expert, James Nicholas, testified that Mr. Villanueva’s failure to attend and IME case was not an issue because U.S. Security had not paid benefits through the October 29, 2001, cutoff date, as required. In short, U.S. Security had nodefense for its failure to pay benefits through that date. Mr. Nicholas also testified that a contingency multiplier was not needed to attract competent PIP counsel in Hillsborough County, citing a 2003 appellate decision of this Court. Nationwide Mut. Fire Ins. Co. v. Hamilton, appeal case no. 02-11987 (Fla. 13th Jud. Cir. 2003), cert. denied 880 So.2d 1223 (Fla. 2d DCA 2004).
At the conclusion of the hearing, the trial judge announced he was awarding a 2.0 multiplier, for the following reasons:
The Court believes that in applying Quanstrom that it was a very difficult case at the onset. . . listening to the plaintiff’s expert. . . however, after listening to the defense expert, Mr. Nichols, it appears not only was this a difficult case on the outset, but apparently, according to the Defense expert, there appears to have been some arrogance on the part of the insurance company in refusing to make payments when, according to the Defense expert, it was clear that payment should not have ever stopped. . .
The trial court went on to find that the area of practice was difficult and that it is difficult to find competent counsel in this area for this field of practice. Ultimately, the final judgment awarded Mr. Patrick attorney’s fees totaling $19,850, consisting of 39.7 hours at $250 per hour with a 2.0 multiplier. The trial judge made the following findings regarding the multiplier:
a. The Court finds that this case was a difficult and risky case from the outset of the litigation for the Plaintiff’s counsel;
b. As to the local market, this court finds that Hillsborough County has few competent counsel in this area of practice; and
c. The court finds that, as testified to by Plaintiff’s counsel, this area of practice is difficult.
It is the application of the multiplier only that Appellant U.S. Security appeals.
Appellant concedes that it had no defense for its failure to pay the benefits accrued before the October 29, 2001, cutoff date. Benefits which accrued before October 29, 2001, are the only benefits at issue here. Thus, notwithstanding Appellee’s assertion that the insured’s failure to attend the IME made the case complicated enough to justify the application of a risk multiplier, the insured’s failure to attend the IME was, in fact, irrelevant. It did not turn this straightforward PIP collection case into something more. While we agree that Appellant insurer was very dilatory in paying what it legitimately owed, the record supports that U.S. Security had no meaningful defense. Aside from the IME issue, the eleven affirmative, but largely meritless, defenses were never asserted as contributing to the difficulty of this caseat the fee hearing, and all of the eleven were of the usual sort one finds in nearly all PIP cases. As for the delay in paying, prejudgment interest and attorney’s fees are the penalties therefor; the application of a multiplier is not intended to act as a penalty. It bears emphasizing that the issue of the IME never arose in the underlying case. Appellee’s counsel simply used the missed IME in an attempt to create complexity where none existed in order to support the application of a multiplier.
In reaching its decision to apply the multiplier, the trial court considered inappropriate factors. The difficulty of practicing PIP law and the difficulty of the case go into the number of hours, not the application of a multiplier. Nationwide Mut. Fire Ins. Co. v. Hamilton, appellate case no. 02-11987 (Fla. 13th Jud. Cir, 2003), cert. denied 880 So.2d 1223 (Fla. 2d DCA 2004), citing Florida Patient’s Compensation Fund v. Rowe, 472 So. 2d 1145, 1151 (Fla. 1985) and Standard Guaranty Insurance Co. v. Quanstrom, 555 So.2d 828, 831 (Fla. 1990). Quanstrom and Rowe set forth criteria that must be considered to determine an appropriate fee. Those criteria 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 case will preclude other employment by the lawyer; 3) the fee customarily charged; and 4) the amount involved and the results obtained. Rowe at 1150. 5) time limitations imposed by the client; 6) the length and nature of the professional relationship to the client; 7) the experience, reputation and diligence of the lawyer, or efficiency of effort reflected inthe actual providing of such services; and 8) whether the fee is fixed or contingent.
The criteria to be considered in enhancement in a tort or contract case are: 1) whether the 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 Rowe factors were applicable, namely the amount involved and the results obtained, and the nature of the arrangement between counsel and client. “Evidence of these factors must be present to justify the utilization of a multiplier.” Quanstrom, at 834.
Having concluded that this case was not one which involved any risk to Appellee’s counsel, we now ask whether a multiplier was really necessary for the healthcare provider to obtain competent counsel? We answer this question in the negative. The record reflects that Mr. Patrick approached the healthcare provider; the healthcare provider did not pound the pavement in search of an attorney. In fact, the record reflects that Mr. Patrick has a number of cases from this particular client. Although the trial court made a finding that a multiplier was necessary for the client to obtain competent counsel, there was no evidence in the record to support its conclusion. Indeed, the evidence of the pre-existing relationship, among other things, contradicts this finding. This fact is significant. In Michnal v. Palm Coast Development, Inc., 842 So.2d 927 (Fla. 4th DCA 2003), review denied 882 So.2d 385 (Fla. Aug 20, 2004), the fourth district opined that a multiplier was not warranted in a case which is similar to the one before us. In Michnal, the trial court judge had said:
[i]f, as in this case, a party elects a “scorched earth” defense, raises some defenses with little or no merit, over does discovery and relitigates issues, without a multiplier a plaintiff could be economically overwhelmed — Without a risk reward mechanism, faced with the defense in this case, plaintiff would have to surrender. The Court finds that a multiplier is appropriate so that attorneys may continue in a meritorious case that has more risk and difficulty as a result of the defense. The Court has found no law that allows or prohibits the Court from doing the following. The Court determines that a multiplier is applicable. . . . .
To which the fourth district responded:
With all due respect to the trial court, we find all multiplier jurisprudence prohibits a trial court from doing what it did in the instant case. As our Supreme Court laid out in Standard Guaranty Insurance Co. v. Quanstrom, 555 So.2d 828, 834 (Fla.1990), trial courts are to consider the following factors in determining whether amultiplier should be applied to a fee award: (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 Fla. Patient’s Compensation Fund v. Rowe, 472 So.2d 1145 (Fla.1985) are applicable, especially, the amount involved, the results obtained, and the type of fee arrangement between the attorney and the client. Further expounding on this issue, the Supreme Court has noted a primary rationale for the contingency risk multiplier is to provide access to competent counsel for those who could not afford it. See Bell v. U.S.B. Aquisition Co., 734 So.2d 403, 411 (F1a. 1999) (“The importance of this policy consideration is highlighted by the fact that the very first factor listed in Quanstrom. . . is ‘whether the relevant market requires a contingency fee multiplier to obtain competent counsel.’ ”). Multipliers are intended to level the playing field, to provide litigants, who may otherwise lack the resources, to obtain competent counsel, as a means of access to the legal system. As discussed in Quanstrom and its progeny, the appropriate time frame for determining whether a multiplier is “necessary” is when the party is seeking the employ of counsel. See, e.g., Simmons v. Royal Floral Distributors, Inc., 724 So.2d 99 (Fla. 4th DCA 1998) (there must be evidence that a contingent fee agreement was necessary in order for the prevailing party to have obtained competent counsel if a multiplier is to be imposed on the nonprevailing party). (Emphasis supplied.)
Michnal supports that it is the difficulty in obtaining competent counsel that is the primary consideration when determining whether to impose a multiplier. See also Bell v. U.S.B. Acquistion Co., 734 So. 2d 403, 411 (Fla. 1999).
The foregoing said, it was unfortunate that suit had to be filed at all, and there is some support for the trial court’s conclusion that the insurer was somewhat arrogant in failing to timely pay what it legitimately owed. However, as noted above, the insurer had virtually no meaningful defense. The parties have not presented any authority, nor is this court aware of any, that indicates the multiplier is to be used for punitive measures. We note that the fee represents more than three times the amount obtained, and the matter did not go to trial. As for the length of time the matter dragged on, we conclude that this is not an issue for two reasons. One is that Mr. Patrick admitted that he contributed to the delay. Second is the holding in Matetzschk v. Lamb, 849 So.2d 1141 (Fla. 5th DCA 2003), which provides that the delay inherent in nature of contingency fee cases does not justify imposition of multiplier.
It is axiomatic that the decision to apply a multiplier is discretionary. Carmichael v. State Comprehensive Health Ass’n, 717 So.2d 174 (Fla. 4th DCA 1998). It is not automatic, and the court should not apply a multiplier in “run of the mill” cases. United States Sec. Ins. Co. v. LaPour, 617 So. 2d 347 (Fla. 3d DCA 1993). Our decision here is consistent with a previous decision of this court, Nationwide Mut. Fire Ins. Co. v. Hamilton, appellate case no. 02-11987 (Fla. 13th Jud. Cir. 2003), cert. denied 880 So.2d 1223 (Fla. 2d DCA 2004).
Finally, counsel for Appellee indicates that were this case “run of the mill,” he would not have spent almost 40 hours on it. We are unpersuaded by this argument. The number of hours in this Court’s Hamilton decision far exceeded the hours spent litigating the instant case.
It is therefore ORDERED that the decision of the trial court is REVERSED and the cause REMANDED for proceedings consistent with this opinion. (HONEYWELL and BARBAS, JJ., Concur.)
