19 Fla. L. Weekly Supp. 598a

Online Reference: FLWSUPP 1907PROCInsurance — Personal injury protection — Attorney’s fees — Discovery — Sanctions — Where insurer’s counsel intentionally and knowingly withheld documents and information that had been legally and timely requested in discovery, including name of expert witness, and refused to cooperate in setting hearing on motion to compel before day of hearing on motion for attorney’s fees and costs, insurer’s expert is precluded from testifying — Amount — Contingency risk multiplier of 2.0 is appropriate where evidence established that there is no attorney in Northwest Florida who would handle PIP cases without expectation of multiplier, and case involving novel issues created exceptional risk for medical provider whose chances of success were even at best at outset

AURORA MEDICAL IMAGING, LLC., dba Aurora Open MRI a/a/o Sonhe Proctor, Plaintiff, vs. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant. County Court, 1st Judicial Circuit in and for Escambia County. Case No. 2010 SC 002508, Division 5. August 5, 2011. Pat Kinsey, Judge. Counsel: Robert N. Heath, Jr., and Lorca J. Divale, Divale Law Group, P.A., St. Petersburg, for Plaintiff. John L. Morrow and Matthew J. Corker, for Defendant.

FINAL JUDGMENT FOR ATTORNEYS’FEES AND COSTS

At an evidentiary hearing in open court on July 19, 2011, the parties appeared through counsel with their experts to provide testimony regarding plaintiff’s motion for attorney’s fees and costs. This PIP case was resolved through summary judgment granted on January 10, 2011, and the plaintiff timely moved for attorneys’ fees and costs. On April 13, 2011, the court set this evidentiary hearing with the consent of both parties for July 19, 2011, reserving a half-day beginning at 1:00 pm.

On May 11, 2011, more than sixty days prior to the evidentiary hearing, plaintiff served State Farm with interrogatories and a request for production. The responses were due on June 10, 2011. The defendant requested an additional week to respond, which the plaintiff graciously agreed to without need for hearing or order of the court. However, it was not until June 21, 2011, that the defendant actually responded, and that response was unverified, incomplete and far too often unresponsive and certainly legally insufficient.

Before the hearing on plaintiff’s motion for attorneys’ fees and costs could begin, plaintiff asked the court to hear their motion to compel. When the court inquired why the motion to compel had not been set for hearing in advance of the half-day evidentiary hearing, plaintiff’s counsel stated that counsel for the defendant would not make themselves available for a hearing despite more than two weeks of attempts to get it set. Defendant’s counsel conceded that they had been unable to make themselves available because it is “only a two lawyer office¹” and during the time in question, each had been on “staggered two week vacations.” By their own admission, at least one lawyer was not on vacation and available to keep the office running. Further, it must be noted that these two defense attorneys from Conroy, Simberg’s Orlando office involved in the defense of this lawsuit are part of a state-wide firm boasting more than 200 lawyers including a local Pensacola office². A hearing on plaintiff’s motion to compel could have been handled on a telephonic basis rather than having an attorney travel to Pensacola — or a local Pensacola member of their firm could have made an appearance just as they did for the pre-trial conference. It is quite simply not credible or acceptable that no one was available for a hearing on a motion to compel prior to today’s hearing on attorneys’ fees and costs.

Plaintiff’s motion to compel sought the court’s help in obtaining answers to their Interrogatories and Request to Produce. Plaintiff’s requests were relevant, clear and concise. For example, plaintiff requested inter alia the name of defendant’s expert, his or her qualifications, verification of what documents had been produced to the expert, how much the expert was being paid, and a copy of the defense time records (appropriately redacted for lawyer/client privilege). As a result of defense counsels’ actions, plaintiff’s counsel was forced to either continue the hearing on their attorneys’ fees and costs or appear “blind” without the information necessary to properly prepare for the hearing. It is clear to the court that State Farm’s counsel intentionally and knowingly withheld documents and information which had been legally, timely and properly requested. Furthermore, and even more troubling, it appears that State Farm’s counsel intentionally and knowingly refused to cooperate in setting a hearing on plaintiff’s motion to compel. By refusing to cooperate, they forced plaintiff into a position where they were compelled to delay payment of their fees and costs or go forward in a hearing where they were clearly and substantially prejudiced. This situation illustrates one of the primary reasons why the number of attorneys willing to handle PIP cases has dwindled down to only two or three in the two-county area of Escambia-Santa Rosa Counties. Not many attorneys can remain in business when their attempt to get paid for work performed encounters frivolous delays such as this.

Normally, at the hearing on a motion to compel, when the court becomes apprised of the frivolous nature of the “objections” and failure to produce, the court can impose an intermediary sanction and place the offending party on notice that the failure to comply could and would result in the striking a witness or other evidence. Here, defense counsels’ actions precluded the court from having any ability to address and/or react in a normal procedural manner. Therefore, because of defense counsels’ intentional acts which subverted the normal process, and the plaintiff’s understandable reluctance to further delay determination of their attorneys’ fees and costs, the court ruled that defendant’s expert, who was not timely disclosed and therefore could not be properly deposed prior to the hearing, could not testify during the evidentiary hearing on plaintiff’s request for attorney’s fees and costs. However, the court encouraged the expert to remain and assist defendant’s counsel during the course of the hearing and permitted the proffer of his testimony at the appropriate time.

Having prevailed after a contentious hearing on summary judgment, plaintiff seeks reimbursement for the time documented by both co-counsel, their paralegal, and reimbursement for their costs. Robert Heath and co-counsel Lorca DiVale testified about the number of hours they invested in this case themselves and by their paralegal. They also presented the testimony of Artie Shimek as to the reasonableness of their documented time and requested hourly rates. In addition, Mr. Shimek testified about the application of a multiplier to this case.

It is undisputed that plaintiff’s attorneys are entitled to an award of attorneys’ fees and costs having prevailed in this case. Having heard the argument of counsel, reviewed the submitted exhibits, reviewed the case law presented, reviewed the multiple volumes of the clerk’s file, and considered presentation of testimony during this evidentiary hearing, the court makes the following determinations in accord with Florida Patients Compensation Fund v. Rowe, 472 So.2d 1145 (Fla. 1985), Standard Guaranty Insurance Company v. Quanstrom, 555 So.2d 828 (Fla. 1990), Bell v. U.S.B. Acquisition Co., Inc., 734 So.2d 403 (Fla. 1999) [24 Fla. L. Weekly S220a], Pennsylvania v. Delaware Valley Citizens’ Council for Clean Air et al., 483 U.S. 711 (1987), Progressive Express Insurance Company v. Schultz, 31 Fla. L. Weekly D2610a (Fla. 5th DCA 2007), Progressive v. Schultz, 948 So.2d 1027 (Fla. 5th DCA 2007) [31 Fla. L. Weekly D2610a], The Florida Rules of Professional Conduct Rule 4-1.5(b), United Auto. Ins. Co. v. Garrido, Case No. 06-524 (11th Cir. Ct. Dec. 5, 2007) [15 Fla. L. Weekly Supp. 118a], Eckhardt v. 424 Hintze Mgt., LLC Case No. 1D07-56 (Fla. 1st DCA December 17, 2007) [32 Fla. L. Weekly D2966a] and Massie v. Progressive Express Insurance Company, 25 So.3d 584 (Fla. 1st DCA 2009) [34 Fla. L. Weekly D2364b].

The court first heard from Mr. Heath. Mr. Heath has been practicing for more than thirty years including more than 100 jury trials. For the past ten years, Mr. Heath has dedicated more than 50% of his practice to PIP cases. He is board certified, AV rated and known as one of “Florida’s Super Lawyers” for the past five years and the legal elite for the past two years. He is a published author on PIP issues, speaks often at PIP seminars, has been selected to lobby in Tallahassee regarding PIP issues, and is one of only two or three attorneys in the Escambia-Santa Rosa two-county area who will even accept PIP cases anymore. Multiple courts throughout the Panhandle of Florida and at least one court in Tallahassee, have qualified Mr. Heath as an expert in the area of PIP law awarding him $425.00/hour for his testimony. In addition, as a further asset to his clients, he is a certified mediator with a thriving practice in that area reflecting well on his reputation in the legal community. The parties have stipulated that 31.85 hours is reasonable for Mr. Heath’s work in this case and the court agrees. Mr. Heath testified that he has been routinely awarded $425.00/hour for his work on PIP cases throughout the Panhandle area of Florida, but that he would not handle PIP cases without the expectation of a multiplier.

Mr. Heath also testified that his paralegal, Lisa West, a Florida Registered Paralegal, with more than 25 years legal experience, of which at least 23 years has been as a litigation specialist, having spent the last 7 years dedicated solely to PIP cases, spent 29.10 hours on this case (other than secretarial tasks).

Mr. DiVale, plaintiff’s co-counsel, testified that he has more than twelve years experience. He specialized in PIP cases essentially from the beginning of his legal practice, working primarily with medical providers, especially radiology providers. He has handled more than 5000 PIP cases, reviewing files and patient records to make sure the medical providers were not underpaid. Through connections with another attorney and neighbor, he became acquainted with plaintiff and the issues involved in this case. He associated Mr. Heath to work together on these issues and together they drafted the complaint and filed this case in August, 2010. He testified that he has more than 58.15 hours invested in this case, believes that $350.00/hour is a reasonable rate for his work and that he would not specialize in and handle PIP cases without the expectation of a multiplier.

The court next heard from plaintiff’s expert, Artie Shimek. Mr. Shimek has practiced law for more than 27 years. He specializes in personal injury, wrongful death and other insurance related cases in a highly successful practice. For more than ten years he was known as one of the premiere PIP attorneys in Northwest Florida, but recently withdrew from that market. He has been qualified as an expert in PIP cases for many years and has both charged and been awarded $425.00/hour for his services as an expert. His case, Massie v. Progressive, is the current state of the law regarding attorneys fees and costs in the 1st DCA for PIP cases, and by his own testimony, it was the time, expense and problems presented in getting paid in that case which caused him to reevaluate whether he could justify handling PIP cases vs. other types of insurance related cases and found that it was not cost effective. Mr. Shimek testified that he became discouraged at the poor financial return (after all, this is a business) weighed together with the complexity of the cases, exacerbated by the extensive delays in getting paid due to the typically anticipated appellate aspect to most contested PIP cases that made PIP cases, even with the anticipation of a multiplier, unattractive on a professional/business level for his practice. Mr. Shimek has spent a great deal of time surveying other lawyers and keeping track of which attorneys handle PIP cases and why. Because of the extensive research he has completed, when combined with his personal experience in this area of the law, he is generally acknowledged as the expert in PIP fees and costs. Because of his own experiences, he knows the amount of time and experience required to handle PIP cases competently as well as the difficulty in prevailing and getting paid in this specific type of case.

Mr. Shimek testified that he reviewed the case file, the time records, his notes on PIP cases and the attorneys who handle them, the applicable case law and statutes and found that a reasonable number of hours for Mr. Heath was 31.85, for Mr. DiVale was 57.45 and for Ms. West 29.1. In addition, he reviewed the hourly rate which would be reasonable for each and testified that for Mr. Divale would be $350.00/hour, for Mr. Heath would be $450.00/hour and for Ms. West would be $105.00. That would make the lodestar for this case the sum of $20,107.50 for Mr. DiVale, $14.332.50 for Mr. Heath and $3,055.00 for Ms. West, plus interest from February 9, 2011, that is, $38,585.82. There was no testimony or evidence presented that costs requested were unreasonable and therefore, the court finds that the request for reimbursement of $110.32 in costs is reasonable.

The defendant vigorously cross-examined Mr. Shimek with regard to his findings as to a reasonable rate and number of hours for Mr. Heath and Mr. DiVale. Through cross-examination the defendant attempted to show that local attorneys who practice in those areas where billing is typically done on an hourly basis charge far less than either Mr. DiVale or Mr. Heath was requesting. However, the standard is a reasonable rate for attorneys with the same or similar experience doing the same or similar work. PIP cases are unique in the field of insurance-related civil cases. The amount of money at stake is almost exclusively a very small sum. There is no way to hire counsel to handle this type of case on an hourly basis or for a percentage of the recovery. Few cases seek to recover more than a couple of hundred dollars and rarely does the total amount reach or exceed $1,000.00. Payment for services rendered in a PIP case is limited to those cases where plaintiff’s counsel prevails and the amount of the attorney’s fee is limited to what a judge finds prevailing counsel can prove is a reasonable fee. Even then, payment of the “reasonable attorney’s fee” is delayed through the entirety of the case including any and all appeals. Therefore, to try to compare the hourly rate of an attorney who handles contract cases or adoptions or real estate closings or commercial litigation and gets paid on a monthly basis for work performed and billed to the client, is disingenuous at best. To practice in an area where the case law changes on a month-to-month basis and the statutes seemly change annually and payment is limited to what you can negotiate from opposing counsel or argue to a judge, is a unique category not readily comparable to any other area of the law.

That being said, it is apparent that Mr. Shimek carefully reviewed the training, experience and reputations of the two plaintiff’s attorneys in addition to the actual work performed in this specific case and the result obtained in reaching his recommendations to the court. The court therefore finds his testimony to be both credible and reasonable. He was able to compare Mr. DiVale, an Orlando attorney, with a local attorney, Eric Stevenson, who does handle PIP cases on a sporadic basis in the Escambia-Santa Rosa communities. They have similar experience (12 vs. 13 years), and although Mr. DiVale may command a higher rate in the Orlando area, when he practices in Northwest Florida, he is limited to the rates indigenous to this area. Mr. Shimek testified that both have a good understanding of PIP law but limited trial experience in that arena. Mr. Stevenson has routinely been awarded $350.00/hour in PIP cases and the court, having presided over cases where both Mr. Stevenson and Mr. DiVale have been counsel of record, agrees with Mr. Shimek finding the comparison to be a valid one.

As to Mr. Heath, it is undisputed that courts from Pensacola to Tallahassee have routinely awarded him $425.00/hour for his work both in PIP cases as counsel of record, and also for his testimony as an expert in the area of PIP law. For more than two years now, numerous courts have consistently found $425.00/hour reasonable for his work. During this time period, Mr. Heath has agreed to handle novel issues with exceptional results (such as here with this issue of first impression), created case law and generally had an impact on changing the complexion of PIP litigation both as attorney of record, lobbyist and seminar presenter. Therefore, Mr. Shimek successfully and reasonably justified a minor raise in Mr. Heath’s hourly rate from $425.00 to $450.00. Certainly from the issues presented, experience and expertise required, work performed, result achieved and risk involved, Mr. Heath in this case could and did justify a minimum rate of $450.00/hour.

Ms. West is well-known in the legal community for her longevity, expertise (especially in PIP cases where she is probably more knowledgeable than most lawyers) and has long been awarded an hourly rate of $105.00/hour. In fact, paralegals with her training, experience and reputation have long commanded an hourly rate of up to $135.00/hour. However, as Mr. Heath requested only $105.00 for Ms. West’s services and Mr. Shimek did not testify to more than the requested amount, the court is constrained to restrict the award accordingly.

Finally, the court must address the application (or not) of a multiplier to the $37,495.50 lodestar. Cases in the 1st DCA are governed by the holdings in Massie v. Progressive, 25 So.3d 584 (Fla. 1st DCA 2009) [34 Fla. L. Weekly D2364b] in conjunction with the holdings of Rowe, Quanstrom and Bell³. The 1st DCA in Massie upheld this court’s award of a multiplier finding that where an expert testifies that “. . .a party would have difficulty securing counsel without the opportunity for a multiplier. . .” the prevailing party has met the threshold for application of a multiplier. Id. Here the expert testified that it is the current state of PIP practice which causes the problem in finding competent counsel to handle a case without the expectation of a multiplier and there was no evidence presented that any attorney in the relevant community would accept a PIP case without the expectation of a multiplier. Defendant argued that it is the specific plaintiff’s difficulty in finding counsel that should be applied as held in Schultz, but the 5th DCA’s holding is not controlling here.

Mr. Shimek’s testimony established that in the Santa Rosa-Escambia legal community consisting of more than 800 attorneys, only three attorneys accept PIP cases on a regular basis. Even four years ago, there were twelve⁴ to fifteen lawyers willing to handle PIP cases, but this number has dwindled to only three due to ever developing and increasing difficulties in maintaining expertise and practicing in this area of the law exacerbated by delays in getting paid if and when the plaintiff prevails. It is generally known and accepted that plaintiff’s counsel, if and when they accept a case, still face two serious problems regardless of the merits of the case from the outset. First, they must press the case to get it heard quickly to avoid the dismissal required if the benefits exhaust while the case is pending. Then, if and when they prevail, they must face the reality that they will likely expend more hours of their time litigating payment than they spent in filing the case and prevailing through trial, settlement or summary judgment. Because there is no compensation for the time or expense in litigating the amount of attorney’s fees and costs, the incentive to accept the case to begin with has greatly diminished causing most competent lawyers to refrain from accepting PIP cases after they evaluate the value of any compensation once diluted by the uncompensated hours of litigation and time delays.

The undisputed testimony and evidence before the court (even when considering the proffer of defendant’s expert) is that there is no attorney in Northwest Florida who would handle PIP cases without an expectation of a multiplier. The small amount at controversy, the risk taking the case to begin with knowing there will be no payment without prevailing, no means of mitigating the risk, loss of time in uncompensated litigation for the fee, and delays in actually being paid especially when combined with the ever changing nature of PIP law requiring competent counsel to spend an inordinate amount of time keeping abreast of changes in both case law and statutes and as well as emerging issues has driven most lawyers away from a PIP practice. Therefore, in addition to being at high risk of non-payment, knowing that payment will be hotly contested, knowing that payment will be long-delayed even after prevailing, and that there will be no compensation for the litigating of the fee, counsel must also make the commitment to devote nearly all of their time to this one area of the law in order to stay current and therefore competent. It is no wonder that it is only the expectation of a multiplier which would permit an attorney to make a reasonable business decision to continue a PIP practice.

In this particular case, a case of first impression for this area of the state, and one which will no doubt have state-wide implications based on the pending appeal, and the lack of any appellate authority on the presented issues, there can be no credible argument against the fact that this case is one which created exceptional risk for the plaintiff. There is and was a 60-40 split state-wide on the issue at the trial court level so any DCA opinion will dramatically affect the entire legal community. The court finds especially compelling in determining which multiplier to apply the fact that the defense counsel argued at summary judgment that he had argued this issue about a dozen times before and that there was no way, once he explained the manner in which the defendant determined the amount to be paid, that the court could do anything other than find against the plaintiff and enter summary judgment for the defendant. That is, from the outset of the case, having been placed on notice by the billing invoice, the demand letter and the complaint filed, the defendant was willing to “go to the mat” defending their election to use a method of calculating the amount to be paid for medical services not mentioned in the written policy which defined the terms and conditions which applied to State Farm and their insured.

From the outset of this case, the defendant held steadfastly to the position that they were entitled to take certain reductions in the amount they paid for an MRI performed on their insured. The facts are not in dispute. Both sides agreed that the MRI was reasonable, necessary and related to the motor vehicle collision in November, 2009. Plaintiff billed State Farm for $1,294.00 for that service. State Farm paid only $545.10. The PIP statute requires an insurer to pay 80% of any reasonable, necessary and related medical expenses. This is a “shall” requirement in the statute. However, in 2008, the legislature authorized a second method of calculating reimbursement for medical expenses which is known as “accessing the fee schedule.” This authorization is a “permissive” statutory provision and plaintiff argues that the policy issued by State Farm does not have language permitting this second method of calculation. Because the policy had been renewed at least once after the “permissive provision” was added to the statute by the legislature, and because State Farm did not modify the policy to add their ability to “access the fee schedule,” plaintiff argued that they were required to reimburse 80% of any reasonable, necessary and related medical expense. This court found that because that language was not included in the contract, the court should not, in effect, add such language to the written agreement. Because the legislature did not make it mandatory, access to the permissive method should be required by the plain and unambiguous language of the contract.

The plaintiff also argued that even if the court found that State Farm could elect to use either statutory method regardless of the contract language (or lack thereof), they still paid the wrong amount because defendant utilized the OPPS schedule to further reduce the amount paid. The OPPS schedule applies to Medicare patients or healthcare providers seeking reimbursement from Medicare, neither of which applies here. The OPPS reduction is not mentioned anywhere in the PIP statute either as permissive or mandatory. After a contentious hearing, the court granted summary judgment for the plaintiff and defendant filed their notice of appeal. The appeal is still pending as of the time of this order.

Plaintiff’s expert argued that a multiplier of 1.5 to 2.0 should apply to this case. The defendant, in their proffer, argued that a multiplier was not necessary to obtain competent counsel, but if it were, the case was more likely than not to go in plaintiff’s favor from the outset and therefore the multiplier should be 1.0 to 1.5. There can be no doubt, from the credible evidence presented, that a multiplier is necessary to attract competent counsel to this case specifically and PIP cases in general. There can be no doubt that this case was “even at best from the outset” because of a novel issue(s) and by being a case of first impression with no binding legal authority and a fairly even split among the statewide county courts. Therefore a multiplier of 1.5 to 2.0 is applicable.

Further, when plaintiff filed this case, it was with the knowledge that this court would be handling the case⁵. This court has a history of finding that the insurance company is acting in the best interest of their insured when they find ways to make maximum reductions in any payments made because it stretches the utilization of the policy limits. Plaintiff, having practiced before this court for more than twelve years, is no doubt well-aware that this tendency gives any “outset analysis” a less favorable outlook. Therefore the court finds that this novel issue, with no controlling precedent, assigned by necessity to the only county court in Escambia County handling civil cases, is eminently qualified for the high end of the “even at best” multiplier when viewed from the outset. Therefore it is

ORDERED AND ADJUDGED that plaintiff shall recover from defendant attorneys fees in the amount of $77,171.64 which is a product of the lodestar multiplied by 2.0 plus interest at 6% per annum from February 9, 2011 and costs of $110.32 all of which shall accrue interest at the rate of 6% per annum for which let execution issue.

FURTHER ORDERED that plaintiff shall recover from defendant $3,400.00 as reimbursement for expert witness fees, the product of 8 hours at $425.00 for Mr. Shimek’s time which shall accrue interest at the rate of 6% per annum for which let execution issue.

__________________

¹The court cannot help but note that on June 21, 2011, the signature line on a document filed by defendant includes three attorney’s names: John Morrow, Matt Corker and Christopher Ramirez.

²In fact, an attorney from the Pensacola Office attended the small claims pre-trial conference on July 28, 2010, and participated in setting the case for jury trial on November 8, 2010.

³Although the defendant argued the Schultz case extensively, that is the law which applies to the 5th DCA, not the 1st DCA where Massie is controlling precedent.

⁴Typically defendants have brought Scott Dutton from South Florida to testify as their expert in attorney’s fees issues and this court has heard him opine on at least three occasions. He normally lists the 12-15 lawyers who used to handle PIP cases as proof that there should be no difficulty in obtaining competent counsel in Northwest Florida. Mr. Shimek testified that he recently contacted all of those lawyers named by Mr. Dutton and the two other attorneys who at least sporadically handled PIP cases today and not one of them would agree to handle a PIP case without the expectation of a multiplier.

⁵In Escambia County, there is a division of cases with four county judges splitting the criminal cases and one county judge handling all civil cases.

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