United States District Court, D. Connecticut
UNITED STATES OF AMERICA, et al, ex. rel. POONAM RAI, D.D.S. and ROBIN FITZGERALD, Plaintiffs,
v.
KS2 TX. P.C., et al, Defendants. Name Years Out of Law School Hourly Rate Attorneys Date Hours Entry Attorney/Paralegal Date Hours Entry
RULING ON MOTION FOR ATTORNEY FEES
JANET
BOND ARTERTON, U.S.D.J.
Relators
Poonam Rai, D.D.S., and Robin Fitzgerald
("Relators") brought this 40-count action to
recover damages and civil penalties on behalf of the United
States, as well as eleven Plaintiff States, under the Federal
False Claims Act ("FCA") and various State FCAs.
(Third Am. Compl. [Doc. #311 ¶ 1.)
1.
Background and Procedural History
On
January 16, 2018, the United States and Relators notified the
Court of the voluntary dismissal of this action pursuant to
separate Federal and State Settlement Agreements. (Not.
Voluntary Dismissal [Doc. # 81] at 1.) This Notice
specifically excepted from this dismissal "any claims by
Relators for reasonable expenses, costs and attorneys'
fees under 31 U.S.C. § 3730(d)," and under the
State FCAs. (Id. at 2.) On January 26, 2018, the
Court ordered that in light of the Notice of Dismissal, all
claims arising from the Covered Conduct as defined in the
parties' settlement agreements were dismissed with
prejudice, with the exception of Relator claims for expenses,
costs, and fees, and with the Court retaining jurisdiction to
enforce the terms of the settlement agreements. ([Doc. # 82]
at 1-2.) This Motion for Attorney Fees by Relators Rai and
Fitzgerald followed. ([Doc. # 96].)
Relators
seek attorney's fees, costs, and expenses under both the
FCA and the State FCAs, including Connecticut (Conn. Gen.
Stat. § 4-278(e)), District of Columbia (D.C. Code
§ 2-381.03(f)(1)(C)), Georgia (Ga. Code Ann. §
49-4-168.2(i)(1)), Indiana (Ind. Code §
5-11-5.5-6(a)(1)), Louisiana (La. Stat. Ann. §
46:439.4(C)(1)), Maryland (Md. Code Ann., Health-General
§ 2-605(a)(4)(2)), Massachusetts (Mass. Gen. Law ch. 12,
§ 5F(3)), New Mexico (N.M. Stat. Ann. §
27-14-9(A)), Oklahoma (Okla. Stat. tit. 63, §
5053.4(A)(3)), Texas (Tex. Hum. Res. Code Ann. §
36.110(c)), and Virginia (Va. Code Ann. § 8.01-216.7
(A)). (Id. at 1.)
Relators
concede that they filed this case after Relators Adam
Abendano ("Abendano") and Michael Greenwald
("Greenwald") filed their own Federal FCA actions
"against various defendants related to Kool Smiles[,
]" (id. at 2), but argue that those complaints
made no claims under any State FCAs. Relators alleged
"four [prevailing] theories of liability: 1) medically
unnecessary dental crowns, 2) medically unnecessary
extractions, 3) medically unnecessary pulpotomies, and 4)
violations of the Texas Medicaid 'First Dental Home'
program (the 'FDH' claim)." (Id. at 3
(citing Third Am. Compl.).) Relators' Complaint
"pled violations of [both] the Federal FCA and
violations of its State FCA analogues. (Id.)
With
respect to the first three of the prevailing theories of
liability, Abendano brought these claims as Federal FCA
claims before Relators did, although Relators brought
substantively identical claims as State FCA claims before any
other relator did so. Additionally, Relators were the first
to file the FDH claim.
"On
December 21, 2017, the United States, Defendants, and
Relators executed a settlement agreement[, ]" obligating
"Defendants to pay $23.9 million ($14, 244, 073 plus
interest to the federal government, and $9, 655, 926 plus
interest to the Plaintiff States)." (Id.
(citing Ex. 2 to Mot. Fees).)
2.
Relators' Attorney Fee Petition
Relators
represent that the total time expended by the Berger Firm is
$1, 197, 024, the total time for the Kreindler Firm is $39,
197, and the total time for predecessor counsel is $82, 500,
which sum up to $1, 318, 721. (Id. at 9.) However,
Relators "removed time for certain categories of work,
including, inter alia: a) time spent negotiating 'first
to file' issues with relators in other cases filed
against Kool Smiles, b) time spent negotiating
'relator's share' with the government, and c)
all time expended by predecessor counsel."
(Id. (emphasis in original).) Mr. Kreindler further
attests that the time records for his firm "reflect
reductions made after applying billing judgment to each time
and billing entry." (Kreindler Dec. [Doc. # 96-5] ¶
10.) With a total reduction of $380, 853, [1] Relators seek an
attorney's fee award of $937, 868. (Id.)
Relators also seek an award of $67, 345 in costs and expenses
(consisting of $39, 193 in expenses of the Berger Firm, $518
in expenses of the Kreindler Firm, and $27, 634 in expenses
of predecessor counsel). (Id. at 10.)
Defendants
"do not dispute that Plaintiffs are entitled to receive
some attorneys' fees and costs arising from the
settlement of this action" but contend that this claim
"is wildly bloated and excessive by any measure."
(Opp'n to Mot. Fees [Doc. # 102] at 1.)
According
to Defendants, "Plaintiffs are not prevailing relators
on most of the claims for which they seek attorneys' fees
and costs, and thus are not entitled to recover for work on
such claims, because they either (1) did not file them first,
or (2) were not successful on them, as required for recovery
under the fee-shifting provision of the False Claims Act
("FCA"), 31 U.S.C. § 3730(d)(1)."
(Opp'n to Mot. Fees at 1-2.) Defendants further contend
that the Relators' requested fee amount "is grossly
excessive, unreasonable and predicated on time entries that
are facially inadequate in a variety of ways[, ]" and
that any "award of fees and costs to Plaintiffs should
not exceed $112, 500.00." (Id. at 2.)
Defendants
argue that Relators' fee request is disproportionate
because "[t]he Texas FDH allegations were" the sole
"contribution by Plaintiffs to the allegations
encompassed by the Covered Conduct" in the Settlement
Agreement, with "Relator Abendano first fil[ing] the
remaining allegations in the Covered Conduct."
(Id. at 5.) Defendants note that under the federal
Settlement Agreement, Relator Abendano received a
"relator's share of approximately $1.9 million,
nearly four times the share collectively allocated to
Plaintiffs (approximately $512, 000)[.]" (Id.)
However, as Defendants also claim, "[u]nlike the federal
agreement, the settlement agreements with the participating
states do not allocate shares among the relators."
(Id. n. 2 (citing Pearlstein Aff.¶ 8).) Moreover,
Defendants argue, because Abendano settled his claim for fees
and costs for only $225, 000, Relators' claim for fees
and costs in excess of $1 million is plainly unreasonable.
(Id. at 6, 10.)
"In
the Second Circuit, '[t]he lodestar method is ordinarily
the starting point in determining the amount of fees that
maybe awarded.'" Pugach v. M&T Mortg.
Corp., 564 F.Supp.2d 153, 155 (E.D.N.Y. 2008) (quoting
Seitzman v. Sun Life Assurance Co. of Canada, Inc.,
311 F.3d 477, 487 (2d Cir. 2002)). "Under this method,
attorneys' fees are calculated by taking 'the number
of hours reasonably expended on the litigation multiplied by
a reasonable hourly rate.'" Id. (quoting
Hensley v. Eckerhart, 461 U.S. 424, 433 (1983))
(other citation omitted). "A district court's
'choice of rates [is] well within [its]
discretion.'" Id. (quoting Cabrera v.
Jakabovitz, 24 F.3d 372, 393 (2d Cir. 1994)).
a.
Reasonable Hourly Rate
In
determining what constitutes a reasonable hourly rate, this
Court "may use an out-of-district hourly rate-or some
rate in between the out-of-district rate sought and the rates
charged by local attorneys-in calculating the presumptively
reasonable fee if it is clear that a reasonable, paying
client would have paid those higher rates." Arbor
Hill Concerned Citizens Neighborhood Ass'n v. Cty. of
Albany & Albany Cty. Bd. of Elections, 522 F.3d 182,
191 (2d Cir. 2008). In the general run of cases, "[w]e
presume ... that a reasonable, paying client would in most
cases hire counsel from within his district, or at least
counsel whose rates are consistent with those charged
locally." Id. "This presumption may be
rebutted-albeit only in the unusual case-if the party wishing
the district court to use a higher rate demonstrates that his
or her retention of an out-of-dislrict aLLoniey was
reasonable under the circumstances as they would be reckoned
by a client paying the attorney's bill."
Id.
This
case was originally filed in Houston, Texas, and subsequently
was transferred to the District of Connecticut on motion by
the United States. Relators were represented initially by
James Moriarty, P.C., which seeks reimbursement of costs but
no fees, and then shortly after the case was initiated in
2011 became represented by Berger & Montague, P.C. (the
"Berger Firm") and Kreindler & Associates (the
"Kreindler Firm"). (Mot. Fees at 2.) Lead counsel
Daniel Miller of the Berger Firm seeks an hourly rate of $725
and Attorney Kreindler seeks an hourly rate of $600.
Defendants contend that all of the hourly rates sought by
attorneys and paralegals at the Berger Firm are excessive but
do not challenge Kreindler's rate.
Relators
support the reasonableness of their requested hourly rates
with the Declaration of Mr. Miller, ([Doc. # 96-2]), the
Declaration of Marc S. Raspanti, ([Doc. # 96-4]), and the
Declaration of Mr. Kreindler, ([Doc. # 96-5]). Mr. Miller
details his experience in FCA claims, including more than 16
years as a Deputy Attorney General for the Delaware
Department of Justice, where he "tried more than 125
cases to jury verdict[, ]" and 15 years of experience
investigating and litigating FCA cases. (Miller Dec. ¶
2.) He is a "past President of the National Association
of Medicaid Fraud Control Units[.]" (Id.) The
Bcrgcr Firm, as of the filing of the fee petition,
represented "FCA whistleblowers in federal courts across
the country, including in California, Connecticut, the
District of Columbia, Florida, Illinois, Maryland,
Massachusetts, Minnesota, New Jersey, New Mexico, New York,
Nevada, Pennsylvania, Rhode Island, South Carolina, and
Texas." (Id. ¶ 4.)
Mr.
Miller views his law firm as "one of the top complex
commercial litigation plaintiffs firms in the country."
(Id. ¶ 24.) The attorneys from the Berger Firm
who worked on this case range from being 5 years out of law
school to 60 years out of law school, with the median being
25 years out of law school. (Id. ¶ 25.) These
attorneys seek hourly rates ranging from $405 to $975, with a
median rate of $675. (Id.) Mr. Miller attests that
all of these attorneys focus their practice on complex
commercial litigation, and that "the rates charged for
each attorney are reasonable given their relative experience,
credentials, and professional acumen." (Id.
¶ 26.)
In his
Declaration, Marc S. Raspanti attests that he is a 1984 law
school graduate who has represented whistleblowers for
approximately 30 years, also "frequently act[ing] as
defense counsel in white collar fraud cases including health
care fraud, anti-kickback investigations, SEC violations, tax
prosecutions, political corruption, and defense contracting
cases." (Raspanti Dec. ¶¶ 2-4.) He has
"published more than two dozen articles regarding
whistleblower cases and ha[s] spoken at more than 80
conferences over a period of more than 25 years."
(Id. ¶ 5.) He "lecture[s] and comment [s]
frequently on the False Claims Act at national organizations,
law schools, and for national publications."
(Id.)
Mr.
Raspanti was "asked by the attorneys for the Relators in
this action to offer [his] opinion regarding whether the
hourly billing rates of the attorneys in the case at bar are
reasonable, and whether the work in this case was reasonable
at the time it was performed." (Id. ¶ 8.)
Mr. Raspanti notes that plaintiff-side FCA litigation
"is an extremely risky, complex and time-consuming
enterprise[, ]" in which "[virtually all of the
work is on a contingent basis, such that the lawyers that
undertake these cases bear most of the financial risk
involved, both in terms of their own time, and in terms of
out-of-pocket costs." (Id. ¶ 9.) Further,
attests Mr. Raspanti, "FCA cases have additional and
unique risks [, ]" including "procedural hazards
not present in many types of civil litigation, including the
risk of not being the 'first to file,' changes in
policy, practice and procedure from the Executive Branch, the
risk that the allegations have somehow been publicly
disclosed, and the risk of not being considered an original
source of the allegations." (Id. ¶ 10.)
"In short," he concludes, "FCA practice is
fraught with traps for the untrained or unwary."
(Id.)
Mr.
Raspanti claims familiarity with this case. (Id.
¶ 11.) He states that "Mr. Miller's
experience as a False Claims Act lawyer is deep, his
reputation is impeccable, and his abilities are in my opinion
stellar." (Id.) Accordingly, Mr. Raspanti
concludes that Mr. Miller's hourly rate of $725 is
"certainly in line with if not less than other FCA
experts of similar skill, experience, and reputation."
(Id.) Mr. Raspanti is "also very familiar with
[Mr.] Kreindler, having worked with and against him over many
years [, ]" and states that Mr. Kreindler is ...