20 Fla. L. Weekly Supp. 814a

Online Reference: FLWSUPP 2008JAKUInsurance — Personal injury protection — Attorney’s fees — Amount — Contingency risk multiplier — Cases litigating permissive fee schedule issue are public policy enforcement cases in which court may award contingency risk multiplier irrespective of whether availability of multiplier was necessary to obtain competent counsel — Where evidence shows that relevant market requires multiplier to obtain competent counsel, medical providers were unable to mitigate risk of loss, and cases involved important legal issue, providers are entitled to multiplier — In cases filed prior to dispositive Kingsway decision, multiplier of 2.0 is appropriate; in cases filed after Kingsway decision, multiplier of 1.25 is appropriate — Expert witness fee awarded

MRI ASSOCIATES OF ST. PETE d/b/a SAINT PETE MRI a/a/o FIKRETA JAKUPAI, Plaintiff(s) vs. GEICO INDEMNITY COMPANY, Defendant(s) County Court, 13th Judicial Circuit in and for Hillsborough County, Civil Division. Case No. 10-CC-032885, Division M. Consolidated for purpose of this Order with County Court Case Numbers: 10-CC-032885, 11-CC-021727, 10-CC-032890, 11-CC-021728, 10-CC-032893, 11-CC-021731, 10-CC-034120, 11-CC-021734, 10-CC-034130, 11-CC-021744, 10-CC-034131, 11-CC-021745, 11-CC-012521, 11-CC-021746, 11-CC-012523, 11-CC-021748, 11-CC-012525, 11-CC-021749, 11-CC-012526, 11-CC-021759, 11-CC-012529, 11-CC-021763, 11-CC-012531, 11-CC-021768, 11-CC-012532, 11-CC-021777, 11-CC-012533, 11-CC-021782, 11-CC-012534, 11-CC-021803, 11-CC-012536, 11-CC-022034, 11-CC-012537, 11-CC-022078, 11-CC-012539, 11-CC-022128, 11-CC-012541, 11-CC-022164, 11-CC-012543, 11-CC-022168, 11-CC-012544, 11-CC-022170, 11-CC-012547, 11-CC-022172, 11-CC-012550, 11-CC-022176, 11-CC-012551, 11-CC-022178, 11-CC-012554, 11-CC-022235, 11-CC-012556, 11-CC-022236, 11-CC-012575, 11-CC-022239, 11-CC-012580, 11-CC-022241, 11-CC-012581, 11-CC-022250, 11-CC-012584, 11-CC-022255, 11-CC-012586, 11-CC-022257, 11-CC-012591, 11-CC-022298, 11-CC-012592, 11-CC-022329, 11-CC-012594, 11-CC-032482, 11-CC-012603, 11-CC-032486, 11-CC-012607, 11-CC-032488, 11-CC-012630, 11-CC-032489, 11-CC-012632, 11-CC-032510, 11-CC-012635, 11-CC-032515, 11-CC-021708, 11-CC-032517, 11-CC-021710, 11-CC-032519, 11-CC-021713, 12-CC-002908, 11-CC-021714, 12-CC-003027, 11-CC-021721, 12-CC-003029, 11-CC-021725. May 30, 2013. Honorable Herbert M. Berkowitz, Judge. Counsel: Lorca Divale, The Physician Collections Group, P.A., Tampa; Michael A. Roe, Austin, Roe & Patsko, P.A., Tampa; David M. Caldevilla and Michael R. Bray, de la Parte & Gilbert, P.A., Tampa; and Scott Jeeves, Jeeves Law Group, P.A., St. Petersburg, for Plaintiffs. David S. Dougherty, Law Office of Ellen H. Ehrenpreis, Tampa, for Defendant.

ORDER DETERMINING PLAINTIFFS’ REASONABLEHOURLY RATES AND APPLICATION OF MULTIPLIERS

THIS CAUSE came before the Court on April 10, 2013 for a consolidated evidentiary hearing in the above-styled case and the other Division M cases listed above and on the attached “Exhibit A,” to determine the reasonable hourly rates and multipliers, if any, associated with the claims for reasonable attorneys’ fees and costs of the Plaintiffs, MRI Associates of St. Pete, Inc., MRI Associates of Palm Harbor, Inc., Dimensional Imaging, Inc., and Diagnostic Imaging Consultants of St. Pete, P.A., against the Defendants, Geico Indemnity Company, Government Employees Insurance Company, Geico General Insurance Company, and Geico Casualty Company. After observing the demeanor and credibility of the witnesses, weighing the testimony and other evidence presented, and considering the arguments presented at the hearing, as well as the parties’ post-hearing memoranda of law and proposed orders, it is hereby

ORDERED AND ADJUDGED as follows:

A. Introduction

1. In response to the Defendants’ prior motion seeking to consolidate the Plaintiffs’ claims for reasonable attorneys’ fees and costs, the motion to consolidate was denied. However, in the interest of judicial economy, this Court conducted a consolidated evidentiary hearing for the limited purposes of determining the reasonable hourly rates and multipliers, if any, associated with the Plaintiffs’ claims for reasonable attorneys’ fees and costs in this case and all Division M cases listed in the attached “Exhibit A”. The matter of the reasonable number of hours and costs per case will be decided at a later time.

B. Evidence considered

2. This Court conducted a 4½-hour consolidated evidentiary hearing.

3. The Plaintiffs presented the testimony of Lorca Divale, Esquire, the principal Plaintiffs’ attorney in these cases, and Craig Rothburd, Esquire. Mr. Rothburd testified as an expert on the issues of reasonable hourly rates for the attorneys involved, and on the application of a contingent fee multiplier. Plaintiffs also placed numerous documents into evidence, without objection.

4. The Defendants presented the testimony of David Kampf, Esquire, who testified as an expert on the issue of reasonable hourly rates for the attorneys involved, and on the applicability of a contingent fee multiplier.

5. In reaching the findings of fact contained herein, this Court has considered the demeanor and credibility of the witnesses and otherwise weighed the evidence presented.

C. Factors considered in awarding hourly rates and multipliers

6. In making the determinations below concerning the hourly rates and multipliers awarded, this Court has considered the factors set forth in Florida Rule of Professional Conduct 4-1.5(b), as well as all cases cited by the parties and/or provided by the parties for the Court’s consideration, as well as other applicable case law governing contingency fee multipliers and awarding of attorneys’ fees.

D. Reasonable hourly rates awarded

7. With respect to hourly rates, the Plaintiffs submitted the testimony of Mr. Divale (T 14-76) and Mr. Rothburd (T 76-113), an expert report (Exhibit 1 at Tab 17), the resumes of the various time keepers (Exhibit 1 at Tabs 9-16), various court orders of hourly rates awarded in other cases (Exhibit 2), and the parties’ responses to discovery requests (Exhibit 1 at Tabs 20-23). The Defendants presented the testimony of Mr. Kampf, but as to hourly rates, he only offered an opinion concerning the hourly rates of Mr. Basquill, Mr. Divale, and Mr. Roe (T 120-134).

8. After considering the evidence and the applicable factors, the Court finds that the greater weight of the evidence demonstrates that the reasonable hourly rates for Plaintiffs’ counsel and their paralegals in the above-styled case and all Division M cases listed in the attached “Exhibit A” are as follows:

Time Keeper	Craig Rothburd’s Opinion	David Kampf’s Opinion	Reasonable Hourly Rates Awarded by the Court
J. Basquill, Attorney	$225-300	$200	$ 225.00
M. Bray, Attorney	$175-250	No opinion	$ 175.00
D. Caldevilla, Attorney	$475-550	No opinion	$ 525.00
L. Divale, Attorney	$350-425	$325	$ 375.00
S. Jeeves, Attorney	$450-525	No opinion	$ 500.00
S. Levine, Paralegal	$125-175	No opinion	$ 125.00
A. Myers, Paralegal	$125-175	No opinion	$ 125.00
M. Roe, Attorney	$475-550	$375	$ 500.00

E. Standards applied

9. In Florida Patient’s Compensation Fund v. Rowe, 472 So.2d 1145 (Fla.1985) [10 Fla. L. Weekly 249], the Florida Supreme Court adopted the federal lodestar approach for awarding reasonable attorneys’ fees, and addressed the ability to recover a multiplier. The Florida Supreme Court subsequently refined the standards for recovering a multiplier in Standard Guaranty Insurance Co. v. Quanstrom, 555 So.2d 828 (Fla.1990) [15 Fla. L. Weekly S23].

10. In Quanstrom, the Florida Supreme Court identified three categories of cases, for the purpose of deciding when it is and is not appropriate to apply a lodestar multiplier: (a) public policy enforcement cases, (b) tort and contract cases, and (c) family law, eminent domain, and estate and trust proceedings. Id., 555 So.2d at 833-835. Under ordinary circumstances, only the first two categories are eligible to receive a multiplier. Id.

11. Under the first category of cases described by Quanstrom (public policy enforcement cases), the following 12 factors (also found in Florida Rule of Professional Conduct 4-1.5(b)(1)(A)-(H)) must be considered:

(1) the time and labor required; (2) the novelty and difficulty of the questions; (3) the skill requisite to perform the legal service properly; (4) the preclusion of other employment by the attorney due to acceptance of the case; (5) the customary fee; (6) whether the fee is fixed or contingent; (7) time limitations imposed by the client or the circumstances; (8) the amount involved and the results obtained; (9) the experience, reputation, and ability of the attorneys; (10) the “undesirability” of the case; (11) the nature and length of the professional relationship with the client; and (12) awards in similar cases.

Quanstrom, 555 So.2d at 834.

12. Under the second category of cases described by Quanstrom (tort and contract cases), the trial court must also consider three additional factors:

The second category concerns principally tort and contract cases. 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 are applicable, 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., 555 So.2d at 834. Accord, Bell v. U.S.B. Acquisition Co., 734 So.2d 403, 412 (Fla.1999) [24 Fla. L. Weekly S220a]. These additional factors do not apply to the first category of cases identified as public policy enforcement cases.

13. The Court finds that the instant cases fall within the “public policy enforcement” category of cases described by Quanstrom. As such, the Plaintiffs were not required to present evidence of whether the opportunity of a contingency fee multiplier was necessary in order for the Plaintiffs to have obtained competent counsel. Therefore, this Court may award the Plaintiffs a multiplier irrespective of whether a contingency fee arrangement was necessary in order for the Plaintiffs to have obtained competent counsel. Nonetheless, assuming arguendo that the instant cases only fall within the tort and contract category described in Quanstrom, this Court further finds that the greater weight of the evidence established that the relevant market requires a contingency fee multiplier to obtain competent counsel; that the Plaintiffs were unable to mitigate the risk of nonpayment in any way; and that the factors outlined in Rowe and Florida Rule of Professional Conduct 4-1.5(b)(1)(A)-(H), (including but not limited to the amount involved, the results obtained, and the existence of a contingency fee arrangement between the Plaintiffs and their counsel) weigh in favor awarding a multiplier to the Plaintiffs.

F. Plaintiffs are entitled to a multiplier

14. By way of background, all of the instant cases involve the same important legal issue of whether the Defendants can expressly promise in their insurance policy to pay PIP benefits based on the reasonable amount of a health care provider’s charges, but then rely on a subsequent statutory change to the fee schedule methodology not otherwise mentioned in the policy in order to justify paying a lower amount on a claim. This issue is also commonly known as “the Kingsway issue” or the “permissive fee schedule issue” (T 17, 27-28).

15. In Kingsway Amigo Ins. Co. v. Ocean Health, Inc., 63 So.3d 63 (Fla.4th DCA 2011) [36 Fla. L. Weekly D1062a], the Fourth DCA held a PIP insurance company cannot pay for health care expenses based on the permissive fee schedule method created in the 2008-2012 versions of Section 627.736(5)(a)2, Florida Statutes, when its insurance policy only promises to pay health care expenses based on the reasonable amount method of Section 627.736(1)(a) and (5)(a)1, Florida Statutes. The Kingsway decision was issued on May 18, 2011, and before that, the issue was generally referred to as the “permissive fee schedule issue”. The Third DCA subsequently agreed with Kingsway in Geico Indem. Co. v. Virtual Imaging Services, Inc., 79 So.3d 55 (Fla.3d DCA 2011) [36 Fla. L. Weekly D2597a] (“Virtual Imaging I”), and Geico Gen. Ins. Co. v. Virtual Imaging Services, Inc., 90 So.3d 321 (Fla.3rd DCA 2012) [37 Fla. L. Weekly D985b] (“Virtual Imaging II”). Although Geico has appealed the Virtual Imaging cases to the Florida Supreme Court, the Defendants confessed judgment in the instant cases in November 2012, approximately 18 months after Kingsway was issued in May 2011. Therefore, regardless of how the Florida Supreme Court rules in Geico’s pending appeal, the Plaintiffs are clearly the prevailing parties in the instant cases.

16. The great public importance of the permissive fee schedule issue has been acknowledged by the Florida courts and by Geico. In Virtual Imaging II, the Third DCA certified the question as a matter of great public importance, and Geico took that opportunity to appeal the Virtual Imaging II decision to the Florida Supreme Court, where it is currently pending (T 74-75). Likewise, before the question was certified as a matter of great public importance to the Florida Supreme Court, the issue had previously been certified as a matter of great public importance by a number of county court judges, including those described in Kingsway, 63 So.3d at 64, Virtual Imaging I, 79 So.3d at 56, and Virtual Imaging II, 90 So.3d at 322.

17. Here, the gravamen of the litigation involves the interpretation of the Legislature’s amendment of the “PIP” statute and the Defendants’ implementation of those changes. The Defendants’ method of implementation of these amendments was alleged to be contrary to the PIP statute in effect at the time the PIP policies in question were issued. The fact that these cases arise from contract relationships are only significant as the contracts establish privity between the parties to these lawsuits. Although the claims herein technically arise out of an alleged breach of these contracts, these lawsuits are founded not in any singular claim of a breach of its terms, but rather in the application of the PIP statute’s purpose of establishing the standards to be applied in the enforcement of public policy. Thus, the cases at bar are not ordinary “run-of-the-mill” PIP cases. The Plaintiffs, Geico, and the Florida courts have recognized the important public policy issues at play by having certified Kingsway and Virtual Imaging as cases involving matters of great public importance. Therefore, these cases are properly designated as category one cases under Quanstrom.

G. Amount of the multipliers

18. Under the guidelines set forth in Quanstrom, the amount of the multiplier awarded is determined as follows:

(a) If the trial court determines that success was more likely than not at the outset, it may apply a multiplier of 1.0 to 1.5;

(b) if the trial court determines that the likelihood of success was approximately even at the outset, it may apply a multiplier of 1.5 to 2.0; and

(c) if the trial court determines that success was unlikely at the outset of the case, it may apply a multiplier of 2.0 to 2.5.

19. The appropriate time frame for determining entitlement to a multiplier is when the client is seeking to employ counsel. Michnal v. Palm Coast Development, Inc., 842 So.2d 927, 934 (Fla. 4th DCA 2003) [28 Fla. L. Weekly D688b]. The cases identified in “Exhibit A” are identified by the date on which the Plaintiffs’ counsel were originally hired. This is important because some of the files listed in “Exhibit A” were opened before the Kingsway decision was issued on May 18, 2011, and some were opened after that date.

20. Based on the greater weight of the evidence, this Court finds that the Plaintiffs’ likelihood of success improved, as to the permissive fee schedule issue, after the Kingsway decision on May 18, 2011.

21. Pre-Kingsway cases: This Court finds that the greater weight of the evidence presented establishes that the Plaintiffs’ likelihood of success was approximately even at the outset of cases listed in Exhibit A that were opened prior to the Kingsway decision of May 18, 2011,¹ Accordingly, under the facts and circumstances of these cases, the Court finds that a reasonable and appropriate multiplier to be awarded to the Plaintiffs in the pre-Kingsway cases is 2.0.

22. Post-Kingsway cases: This Court finds that as to the permissive application issue, the greater weight of the evidence presented establishes that the Plaintiffs’ likelihood of success was more likely than not at the outset of cases listed in Exhibit A that were opened on or after the Kingsway decision of May 18, 2011.² Accordingly, under the facts and circumstances of these cases, the Court finds that a reasonable and appropriate multiplier to be awarded to the Plaintiffs in the post-Kingsway cases is 1.25.

H. Reasonable Fees of Attorneys’ Fees Expert

23. In addition to the foregoing, the Court finds that the Plaintiffs are entitled to an award of a reasonable fee for the services rendered by their expert witness, Craig Rothburd, Esquire, in the amount of $5,605, based on a reasonable hourly rate of $475 and a reasonable amount of time of 11.8 hours (T 95; Exhibit 1 at Tab 17). Mr. Rothburd’s expertise and opinions offered on the question of reasonable rates applicable to the attorneys involved with this litigation, and his opinions as to the likelihood of success of Plaintiffs’ claims at the outset of these cases, were very helpful to the Court. His expert opinions were also very helpful to the Court in analyzing the subject litigation in terms of the twelve elements outlined in the Florida Rules of Professional Conduct, 4-1.5(b)(1)(A)-(H), as incorporated in Quanstrom’s public policy enforcement case category.

I. Conclusion

24. This is a non-final order, and the Court reserves jurisdiction to determine any and all remaining aspects of the Plaintiffs’ claims for reasonable attorneys’ fees and costs in this case and all Division M cases listed in Exhibit A, to award interest, and to enter a final judgment in each case.

25. Further, counsel for the parties shall coordinate a time for a status conference with this Court to discuss whether a special master shall be appointed to conduct a fact finding process to make recommendations to the Court regarding the reasonable number of hours to be utilized in determining the appropriate lodestar to be applied in these cases; the Court will consider any other method to expeditiously and economically determine appropriate attorney’s fees and costs to be awarded herein.

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¹The cases identified in “Exhibit A” which were opened prior to the Kingsway decision of May 18, 2011 (i.e., the Pre-Kingsway cases) are Case Nos. 10-32885, 10-32890, 10-32893, 10-34120, 10-34130, 10-34131, 11-12521, 11-12523, 11-12525, 11-12526, 11-12529, 11-12531, 11-12532, 11-12533, 11-12534, 11-12536, 11-12537, 11-12539, 11-12541, 11-12543, 11-12544, 11-12547, 11-12550, 11-12551, 11-12554, 11-12556, 11-12575, 11-12580, 11-12581, 11-12584, 11-12586, 11-12591, 11-12592, 11-12594, 11-12603, 11-12607, 11-12630, 11-12632, 11-12635, 11-21708, 11-21710, 11-21713, 11-21714, 11-21721, 11-21725, 11-21727, 11-21728, 11-21731, 11-21734, 11-21744, 11-21745, 11-21746, 11-21748, 11-21749, 11-21759, 11-21763, 11-21768, 11-21777, 11-21782, 11-21803, 11-22034, 11-22078, 11-22128, 11-22164, 11-22168, 11-22170, 11-22172, 11-22176, 11-22178, 11-22235, 11-22236, 11-22239, 11-22241, 11-22250, 11-22255, 11-22257, 11-22298, 11-22329, 12-03027, and 12-03029.

²The cases identified in “Exhibit A” which were opened on or after the Kingsway decision of May 18, 2011 (i.e., the Post-Kingsway cases) are Case Nos. 11-32482, 11-32486, 11-32488, 11-32489, 11-32510, 11-32515, 11-32517, 11-32519, and 12-02908.

__________________

10-CC-032885 11-CC-021727

10-CC-032890 11-CC-021728

10-CC-032893 11-CC-021731

10-CC-034120 11-CC-021734

10-CC-034130 11-CC-021744

10-CC-034131 11-CC-021745

11-CC-012521 11-CC-021746

11-CC-012523 11-CC-021748

11-CC-012525 11-CC-021749

11-CC-012526 11-CC-021759

11-CC-012529 11-CC-021763

11-CC-012531 11-CC-021768

11-CC-012532 11-CC-021777

11-CC-012533 11-CC-021782

11-CC-012534 11-CC-021803

11-CC-012536 11-CC-022034

11-CC-012537 11-CC-022078

11-CC-012539 11-CC-022128

11-CC-012541 11-CC-022164

11-CC-012543 11-CC-022168

11-CC-012544 11-CC-022170

11-CC-012547 11-CC-022172

11-CC-012550 11-CC-022176

11-CC-012551 11-CC-022178

11-CC-012554 11-CC-022235

11-CC-012556 11-CC-022236

11-CC-012575 11-CC-022239

11-CC-012580 11-CC-022241

11-CC-012581 11-CC-022250

11-CC-012584 11-CC-022255

11-CC-012586 11-CC-022257

11-CC-012591 11-CC-022298

11-CC-012592 11-CC-022329

11-CC-012594 11-CC-032482

11-CC-012603 11-CC-032486

11-CC-012607 11-CC-032488

11-CC-012630 11-CC-032489

11-CC-012632 11-CC-032510

11-CC-012635 11-CC-032515

11-CC-021708 11-CC-032517

11-CC-021710 11-CC-032519

11-CC-021713 12-CC-002908

11-CC-021714 12-CC-003027

11-CC-021721 12-CC-003029

11-CC-021725EXHIBIT A

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