UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE
New Hampshire Hospital Association et al.
v. Civil No. 15-cv-460-LM Opinion No. 2019 DNH 057 Alex M. Azar,1 Secretary, U.S. Department of Health and Human Services et al.
O R D E R
In November 2015, several New Hampshire hospitals2 and the
New Hampshire Hospital Association (“NHHA”), a non-profit trade
association, brought this suit against the Secretary of Health
and Human Services (the “Secretary”), the Centers for Medicare
and Medicaid Services (“CMS”), and the Administrator of CMS.
Plaintiffs alleged that defendants set forth certain “policy
clarifications” regarding the method of calculating supplemental
Medicaid payments to certain hospitals. They alleged these
policy clarifications were issued in responses to frequently
asked questions posted on medicaid.gov, and that both the
1 Alex M. Azar became Secretary of the U.S. Department of Health and Human Services on January 29, 2018, replacing Thomas Price. See Fed. R. Civ. P. 25(d).
2 Plaintiff hospitals are Mary Hitchcock Memorial Hospital, LRGHealthcare, Speare Memorial Hospital, and Valley Regional Hospital, Inc. policies themselves and the manner in which they were
promulgated contradicted the plain language of the Medicaid Act
and violated the Administrative Procedure Act (“APA”).
On March 2, 2017, the court granted in part plaintiffs’
motion for summary judgment, holding that defendants’
enforcement of the policy clarifications set forth in the
responses to the frequently asked questions violated the APA.
N.H. Hosp. Ass’n v. Burwell, No. 15-cv-460-LM, 2017 WL 822094,
at *8-14 (D.N.H. Mar. 2, 2017) (“March 2 Order”). The court
permanently enjoined defendants from enforcing the policies in
the responses to the frequently asked questions. Id. at *12
n.16. Defendants appealed the March 2 Order, and the First
Circuit Court of Appeals affirmed.3 N.H. Hosp. Ass’n v. Azar,
887 F.3d 62 (1st Cir. 2018).
After the appeal concluded, NHHA moved for an award of
attorneys’ fees (doc. no. 64), arguing that it is entitled to
recover such fees under the Equal Access to Justice Act (“EAJA”
3 After the court issued the March 2 Order, defendants published a final rule regarding the calculation of the supplemental payments. See Medicaid Program: Disproportionate Share Hospital Payments—Treatment of Third Party Payers in Calculating Uncompensated Care Costs, 82 Fed. Reg. 16114–02, 16117 (Apr. 3, 2017) (“2017 Rule”). The 2017 Rule expressly included within its text the policies that had been set forth in the responses to the frequently asked questions. That rule has since been vacated. See Children’s Hosp. Ass’n of Texas v. Azar, 300 F. Supp. 3d 190 (D.D.C. 2018).
2 or “Act”), 28 U.S.C. § 2412.4 Defendants objected, arguing that
NHHA is not entitled to attorneys’ fees under the EAJA and, if
it is, that those fees must be substantially reduced.
While NHHA’s motion was pending, defendants moved for
“modification or, in the alternative, clarification of March
2017 permanent injunction” (doc. no. 69). In that motion,
defendants argued that the First Circuit’s decision affirming
the March 2 Order was “based on reasoning that differed from the
reasoning of this Court’s decision.” Doc. no. 69 at 8.
Defendants requested that the court modify or clarify its
permanent injunction to be in conformance with the First
Circuit’s decision.
Plaintiffs objected to defendants’ motion. In addition,
NHHA filed a supplement to its motion for attorneys’ fees (doc.
no. 77), in which it seeks additional fees incurred in
responding to defendants’ motion to modify or clarify the
injunction and in preparing the motion for fees. In response to
the supplement, defendants reiterate their arguments that NHHA
is not entitled to fees under the EAJA or, in the alternative,
that the court should significantly reduce those fees.
The court addresses defendants’ motion first before turning
to NHHA’s request for attorneys’ fees.
4 For reasons discussed further below, NHHA only, and not the plaintiff hospitals, moved for an award of attorneys’ fees. 3 I. Motion to Clarify or Modify Injunction
A. Background
Because the court has set forth the background of this case
in other orders, it assumes a general level of familiarity with
the facts and provides only a brief summary. Because Medicaid
payments received from the government often do not cover the
full costs of an indigent patient’s care, the Medicaid Act, 42
U.S.C. §§ 1396 et seq., authorizes the payment of additional
funds to hospitals that serve a high number of such patients.
Those payments to the hospitals are limited to each hospital’s
“costs incurred” in providing services to the indigent patients.5
The phrase “costs incurred” includes two specific sources of
payment that must be offset against the total cost of care,
neither of which is relevant to this case. Costs incurred may
further be defined “as determined by the Secretary” of the
United States Department of Health and Human Services.
States are required to provide to the Secretary an annual
report and audit on their DSH program. In 2008, the Secretary
promulgated a final rule implementing the statutory reporting
and auditing requirement (“2008 Rule”). The 2008 Rule did not
These payments are often referred to as “disproportionate- 5
share hospital” or “DSH” payments. 4 elaborate on the meaning of the phrase “costs incurred” as it is
contained in the Medicaid Act.
In 2010, the Secretary announced, in the form of answers to
“Frequently Asked Questions” posted on medicaid.gov (“FAQs 33
and 34”), that the payments to be offset against total costs in
calculating “costs incurred” also included reimbursements from
Medicare and private insurance. Plaintiffs brought this suit,
alleging that the policies set forth in the responses to FAQs 33
and 34 conflicted with the plain language of the Medicaid Act
and were promulgated in violation of the APA.
In its order granting in part plaintiffs’ motion for
summary judgment, the court held that defendants’ actions in
promulgating and enforcing the policies set forth in the
responses to FAQs 33 and 34 violated the APA. The court
permanently enjoined defendants from enforcing those policies
and stated that defendants “shall follow the policies and
procedures in effect before defendants issued FAQs 33 and 34,
until and unless those policies and procedures are replaced by
an enforceable and properly promulgated regulation.” Burwell,
2017 WL 822094 at *16. The First Circuit affirmed the court’s
decision.
5 B. Discussion
In their motion to modify or clarify the court’s permanent
injunction, defendants note that the First Circuit agreed with
this court’s holding in the March 2 Order that the policies set
forth in the responses to FAQs 33 and 34 “represented a
substantive policy decision that could not be adopted without
notice and comment” under the APA. Azar, 887 F.3d at 66. They
argue, however, that the First Circuit’s decision relied on
different reasoning than the March 2 Order, and that this
alternate reasoning requires modification or clarification of
the court’s permanent injunction.
Specifically, defendants point to this court’s directive in
the March 2 Order that they must “follow the policies and
procedures in effect before defendants issued FAQs 33 and 34,
until and unless those policies and procedures are replaced by
an enforceable and properly promulgated regulation.” Burwell,
2017 WL 822094 at *16 (emphasis added). According to
defendants, the court must modify or clarify that portion of its
injunction because that statement suggests that CMS had a
specific policy of not including Medicare or private insurance
payments in the costs-incurred calculation. Defendants argue
that the First Circuit’s order, in contrast, made it clear that
“CMS did not have any lawfully adopted policy governing the
proper treatment of third-party payments.” Doc. no. 69 at 12.
6 Thus, defendants ask the court to modify or clarify the
permanent injunction “to make clear that the injunction only
prohibits the defendants from enforcing the defendants’
preferred policy of requiring subtraction of Medicare and
private insurance payments, and does not additionally direct the
defendants to ‘follow’ the plaintiffs’ preferred policy of
requiring that such payments be disregarded.” Id.
Defendants base their motion on Federal Rule of Civil
Procedure 60(b)(5), which provides that a court may relieve a
party or its legal representative from a final judgment or order
if “applying it prospectively is no longer equitable.” The
Supreme Court explained in Horne v. Flores, 557 U.S. 433 (2009),
that:
Rule 60(b)(5) may not be used to challenge the legal conclusions on which a prior judgment or order rests, but the Rule provides a means by which a party can ask a court to modify or vacate a judgment or order if “a significant change either in factual conditions or in law” renders continued enforcement “detrimental to the public interest.” The party seeking relief bears the burden of establishing that changed circumstances warrant relief . . . .
Id. at 447 (citations omitted).
Defendants have not met their burden of showing that relief
under Rule 60(b)(5) is warranted. The First Circuit’s decision,
which affirmed this court’s decision on the “same ground,” Azar,
887 F.3d at 66, does not represent a significant change, or any
change at all, in the law.
7 The Medicaid Act specifies that a DSH payment cannot
exceed:
the costs incurred during the year of furnishing hospital services (as determined by the Secretary and net of payments under this subchapter, other than under this section, and by uninsured patients) by the hospital to individuals who either are eligible for medical assistance under the State plan or have no health insurance (or other source of third party coverage) for services provided during the year.
42 U.S.C. § 1396r–4(g)(1)(A) (emphases added). Thus, the
Medicaid Act specifies the two types of payments that can be
subtracted from the total costs incurred during the year by
hospitals: (1) “payments under this subchapter,” i.e., payments
made by Medicaid; and (2) payments made by uninsured patients.
The Medicaid Act also delegates to the Secretary the
authority to determine “costs incurred.” As this court and
every other court to consider the issue has held, the Secretary
may only make such a determination through a properly-
promulgated regulation. And, as this court and every other
court to consider the issue has held, the 2008 Rule did not
change the definition of “costs incurred.”
Nevertheless, after repeatedly and unsuccessfully
litigating that issue, defendants now seek to backdoor their
preferred policy with an argument that the First Circuit’s
decision changed the governing law. Defendants do not hide
their motive in doing so—they intend to leave open the
8 possibility that state governments could choose, if they so
desire, to require disproportionate-share hospitals to subtract
payments from Medicare and private insurance in the costs-
incurred calculation. See doc. no. 69 at 12-13 (“If the
requested modification or clarification is granted, CMS intends
to advise the New Hampshire State Government that there is no
operative federal policy governing the treatment of Medicare and
private insurance payments for the time periods governed by this
suit.”); id. at 13 (“It will then be left to the New Hampshire
State Government to determine how such payments should be
treated in the absence of a federal policy in the calculation of
the hospital-specific limit.”).
Defendants’ attempt to navigate around what amounts to
black-letter law is unpersuasive. The argument that the First
Circuit’s order satisfies the Rule 60(b)(5) standard is without
merit. Defendants’ motion is denied.
II. Motion for Attorneys’ Fees
NHHA requests an award of attorneys’ fees and costs under
the Equal Access to Justice Act, 28 U.S.C. § 2412(a)(1) and (d).
The EAJA “departs from the general rule that each party to a
lawsuit pays his or her own legal fees.” Scarborough v.
Principi, 541 U.S. 401, 404 (2004). “The EAJA renders the
United States liable for attorney’s fees for which it would not
9 otherwise be liable, and thus amounts to a partial waiver of
sovereign immunity.” Ardestani v. I.N.S., 502 U.S. 129, 137
(1991). Consequently, this waiver must be strictly construed in
favor of the government. Id. The Act’s purpose is “to ensure
that certain individuals, partnerships, corporations or other
organizations will not be deterred from seeking review of, or
defending against, unjustified governmental action because of
the expense involved.” Scarborough, 541 U.S. at 407 (internal
quotation marks and ellipsis omitted).
As relevant here, the EAJA provides:
a court shall award to a prevailing party other than the United States fees and other expenses . . . incurred by that party in any civil action . . . including proceedings for judicial review of agency action, brought by or against the United States in any court having jurisdiction of that action, unless the court finds that the position of the United States was substantially justified or that special circumstances make an award unjust.
28 U.S.C. § 2412(d)(1)(A). The Act requires that a party
seeking an award of fees under this section submit an
application establishing: (1) that it is a prevailing party; (2)
that it is “eligible to receive an award”; and (3) the amount
sought, “including an itemized statement from any attorney
representing . . . the party.” 28 U.S.C. § 2412(d)(1)(B); see
also Scarborough, 541 U.S. at 414. The party seeking fees must
also allege that the government’s position was not
“substantially justified.” 28 U.S.C. § 2412(d)(1)(B); see also
10 Scarborough, 541 U.S. at 414. Once that party makes such an
allegation, however, the burden of demonstrating that the
government’s position was indeed substantially justified shifts
to the government. Scarborough, 541 U.S. at 414-15.
NHHA moves for attorneys’ fees under the EAJA, arguing that
it meets the Act’s requirements. Defendants object, arguing
that NHHA is not “eligible to receive an award” under the EAJA
because it litigated the suit in cooperation with and for the
benefit of member hospitals that are not eligible for fees.6
Defendants also contend that, even if NHHA is eligible to
receive attorneys’ fees, its motion should be denied because
defendants’ position was substantially justified. In addition,
defendants argue that if the court awards NHHA attorneys’ fees,
those fees should be significantly reduced for several reasons.
6 Defendants do not dispute that NHHA was a “prevailing party” under the EAJA. See, e.g., Aronov v. Napolitano, 562 F.3d 84, 89 (1st Cir. 2009) (holding that a prevailing party under the EAJA is one that attained “a material alteration of the legal relationship of the parties and a judicial imprimatur on the change,” such as a judgment on the merits). And, as discussed below, although defendants take issue with the content of NHHA’s submission, they do not dispute that NHHA specified the amount of fees and costs it seeks and submitted with its motion an itemized billing statement from its attorneys. Therefore, the court does not address those factors. 11 A. Entitlement to Fees
Defendants argue that NHHA is not entitled to an award of
attorneys’ fees because it is not an eligible party under the
EAJA and because defendants’ position was substantially
justified. The court addresses each argument in turn.
1. Eligible Party
The EAJA defines an eligible party as “any partnership,
corporation, association, unit of local government, or
organization, the net worth of which did not exceed $7,000,000
at the time the civil action was filed, and which had not more
than 500 employees at the time the civil action was filed.” 28
U.S.C § 2412(d)(2)(B)(ii) (emphasis added). Where the party
seeking EAJA fees is an association, a majority of courts
addressing the issue have held that the association’s
eligibility is premised upon its net worth and number of
employees, regardless of the net worth or employment figures of
its members, either individually or collectively. See Diamond
Sawblades Mfrs. Coal. v. United States, 816 F. Supp. 2d 1342,
1351 (Ct. Int’l Trade 2012) (collecting cases); see also Nat’l
Ass’n of Mfrs. v. Dep’t of Labor, 159 F.3d 597, 602 (D.C. Cir.
1998); Texas Food Indus. Ass’n v. United States Dep’t of Agric.,
81 F.3d 578, 581 (5th Cir. 1996); Love v. Reilly, 924 F.2d 1492,
12 1494 (9th Cir. 1991). But see Nat’l Truck Equip. Ass’n v. Nat’l
Highway Traffic Safety Admin., 972 F.2d 669, 670 (6th Cir. 1992)
(interpreting EAJA as requiring aggregation of trade
association’s members’ net worth and employment figures to
determine whether it was an eligible party).
Defendants do not dispute, and the court agrees, that the
majority approach is more reasoned and that NHHA meets the
requirements under that approach. NHHA is a not-for-profit
trade association that advocates on behalf of its member
hospitals and health care delivery systems. Doc. no. 64-2 at 2.
It is registered in New Hampshire as a nonprofit corporation.
Id. At the time this action was filed, NHHA had approximately
eight employees and its net worth did not exceed $5,000,000.
Id. Therefore, NHHA satisfies the definition of an eligible
party under 28 U.S.C § 2412(d)(2)(B)(ii).
Nevertheless, defendants argue that NHHA is not eligible
for fees because it is not the “real party in interest” for the
purposes of awarding such fees. Doc. no. 68 at 9-10. They
contend that the four plaintiff hospitals—which they assert do
not qualify as eligible parties under the EAJA—essentially
controlled the litigation.7 NHHA counters that it is the real
7 Defendants provide no support for their contention that the four plaintiff hospitals are ineligible for attorneys’ fees under the EAJA. In its reply, NHHA states that two of the plaintiff hospitals—Speare Memorial Hospital and Valley Regional 13 party in interest because it paid all the attorneys’ fees
incurred on behalf of plaintiffs in this litigation. It also
asserts that there is insufficient evidence in the record that
the plaintiff hospitals actually controlled the litigation.
The parties do not cite, and the court is not aware of, any
First Circuit case applying the real-party-in-interest test to
the EAJA. Because both parties assume that the real-party-in-
interest test is relevant here, however, the court conducts it.
To determine the real party in interest for purposes of fees,
the court considers whether there is a clear arrangement among
the plaintiffs regarding the responsibility for fees. See Am.
Ass’n of Retired Persons v. E.E.O.C., 873 F.2d 402, 405-06 (D.C.
Cir. 1989). Absent a clear fee agreement among the plaintiffs,
a district court may consider a “variety of factors” to
determine the real party in interest. Id. at 405-06; Design &
Prod., Inc. v. United States, 20 Cl. Ct. 207, 212 (1990)
(applying “totality of the facts” approach to determine the real
party in interest).
Here, there is no evidence of an express fee agreement
between plaintiffs. However, the evidence in the record shows
Hospital, Inc.—are eligible parties under the Act. See doc. no. 72 at 2 n.1. Because, as discussed further below, NHHA is an eligible party under the EAJA and may recover attorneys’ fees, the court assumes without deciding that the four plaintiff hospitals are not eligible for attorneys’ fees under the Act. 14 that (1) the same law firm, Nixon Peabody LLP (“Nixon Peabody”),
represented all five plaintiffs; and (2) NHHA paid Nixon Peabody
for all legal fees incurred in this litigation for the benefit
of its members, including the other plaintiffs. See doc. nos.
64-2 at 3, 64-4 at 3. Such an arrangement, without more, has
been found to be sufficient to establish that the plaintiff that
paid the legal fees was the “real party in interest” and
eligible to recover fees under the EAJA. See Unification Church
v. I.N.S., 762 F.2d 1077, 1082 (D.C. Cir. 1985) (“Whatever the
outcome of our consideration of fees here, then, the individual
appellants will not pay the fees. If we deny fees, the Church
will pay the fees. If we award fees, the INS will pay the fees.
The Church is the beneficiary of any award of fees, not the
individual appellants, and thus the Church can fairly be
characterized as the real party in interest.”).
Nevertheless, defendants argue that “there is good reason
to believe that NHHA’s members actually controlled the
litigation.” Doc. no. 68 at 6. They note that (1) all five
plaintiffs were represented by the same counsel; (2) a senior
executive of plaintiff LRGHealthcare was the chair of NHHA until
two weeks before the suit was filed, and billing records
submitted by NHHA indicate that he remained closely involved
after he was no longer the chair of NHHA; (3) the billing
records show that Nixon Peabody worked closely with the
15 plaintiff hospitals independent of NHHA; and (4) NHHA’s
affidavits “do not rule out” that the plaintiff hospitals
reimbursed or indemnified the association for the fees paid.
Id.
Contrary to defendants’ argument, they offer no legitimate
reason to believe that the plaintiff hospitals actually
controlled the litigation. First, there is no evidence that any
hospital reimbursed or indemnified NHHA for the fees paid.
Further, although the billing records show that Nixon Peabody
had contact with the principals of the four plaintiff hospitals
independent of NHHA, see, e.g., doc. no. 64-8 at 1-20, they also
demonstrate that Nixon Peabody had contact with NHHA independent
of the plaintiff hospitals, see, e.g., doc. no. 64-8 at 36.
Defendants do not explain why Nixon Peabody’s contact with
plaintiffs other than NHHA supports their contention that those
plaintiffs actually controlled the litigation.
The court’s review of the billing records reveals nothing
to indicate that any of the plaintiff hospitals exercised
superior control over Nixon Peabody and/or litigation decisions.
Cf. United States v. Lakeshore Terminal and Pipeline Co., 639 F.
Supp. 958, 962 (E.D. Mich. 1986) (concluding that fee applicant
was not real party in interest where it was a wholly owned
subsidiary of another company, the two companies shared offices
and same president, and non-party parent company was “active[ly]
16 involve[d]” in litigation). In fact, the records show that,
although all plaintiffs were in contact with Nixon Peabody and
involved in the litigation, Nixon Peabody most frequently
contacted Steven Ahnen, the President of NHHA, especially on
matters of strategy. See, e.g., doc. no. 64-8 at 17, 48.
Defendants’ contention that NHHA was not the real party in
interest for purposes of recovering fees under the EAJA is
speculative and unsupported. Based on the evidence in the
record, the court concludes that NHHA has shown that it is the
real party in interest.
2. Substantial Justification for Defendants’ Position
As required by the EAJA, NHHA alleged in its fee
application that defendants’ position in this litigation was not
“substantially justified.”8 Doc. nos. 64 at 2, 64-1 at 6-12.
Therefore, NHHA is entitled to a fee award unless defendants
have carried their burden of demonstrating by a preponderance of
the evidence that their position in this litigation was
substantially justified. See Saysana v. Gillen, 614 F.3d 1, 5
(1st Cir. 2010).
8 NHHA also alleged that no “special circumstances” exist that would make an award of fees unjust. Defendants do not argue to the contrary. 17 The position of the United States is “substantially
justified” if it “has a reasonable basis in law and in fact” or,
in other words, is “justified to a degree that could satisfy a
reasonable person.” Pierce v. Underwood, 487 U.S. 552, 565, 566
n.2 (1988). “If the government reasonably believes the action
or inaction is required by law, then, by definition it cannot be
the basis for an award of EAJA fees.” McLaughlin v. Hagel, 767
F.3d 113, 117 (1st Cir. 2014) (internal quotation marks
omitted). The government’s position can be substantially
justified “even if a court ultimately determines the agency’s
reading of the law was not correct.” Saysana, 614 F.3d at 5
(internal quotation marks omitted). In determining whether
defendants’ position was substantially justified, the court
should consider defendants’ pre-litigation and litigation
positions “holistically.” McLaughlin, 767 F.3d at 117; see also
Saysana, 614 F.3d at 5 (“[The court] must arrive at one
conclusion that simultaneously encompasses and accommodates the
entire civil action.” (internal quotation marks omitted)).
Defendants have not satisfied their burden to show that
their position was substantially justified. Defendants’
introduction of their policies in the responses to FAQs 33 and
34 was successfully challenged by hospitals across the country
as improper under the APA. At no point prior to or during this
litigation have defendants been able to legitimately point to a
18 source for those policies other than the FAQs themselves.9 Thus,
defendants’ position—that the policies in the FAQs were proper
because they merely reflected CMS’s longstanding policy—was not
substantially justified.
In arguing that their position was substantially justified,
defendants point to two cases that they claim “closely
parallel[]” this case—Saysana, 614 F.3d at 5, and Aronov, 562
F.3d at 88-99. Neither case, however, supports the government’s
argument.
In Saysana, the First Circuit addressed a request for fees
under the EAJA which followed a plaintiff’s successful challenge
to the Board of Immigration Appeals’ (“BIA”) interpretation of
the Immigration and Nationality Act, 8 U.S.C. § 1226. In
denying the request for fees, the First Circuit noted:
the crux of the Government’s position, from the outset of the litigation, was that, in light of the Board's decision in Matter of Saysana, the district court was required to apply Chevron [to the BIA’s interpretation of § 1226]. In its opinion, however, the district court did not apply Chevron; it did not explain why that analysis was inapplicable, and, indeed, it did not mention Chevron.
9 Repeating their failed arguments from this case and other cases, defendants assert that a 2002 letter to State Medicaid directors and the Preamble to the 2008 Rule set forth the policies in question. As the court explained in the March 2 Order, neither piece of evidence could reasonably be read to support defendants’ arguments. 19 Saysana, 614 F.3d at 6. The First Circuit further stated: “We
cannot say that the Government’s argument with respect to the
applicability of Chevron was not substantially justified.
Indeed, in deciding the merits of this action, we determined
that the Chevron analysis was implicated by the Board's
decision.” Id. Thus, the court held that the government’s
“position was not unreasonable.” Id. at 7.
That is not the case here. Unlike in Saysana, the crux of
defendants’ position here was not that the court was required to
apply Chevron. Rather, it was that the policies set forth in
the responses to FAQs 33 and 34 were promulgated in a
procedurally proper manner. For the reasons discussed above and
in the March 2 Order, defendants’ position throughout this
litigation lacked a reasonable basis in law and fact.
Therefore, Saysana does not help defendants in this case.
Defendants’ reliance on Aronov is equally unavailing. In
that case, the plaintiff argued that the terms of the applicable
statute and regulation required the United States Citizenship
and Immigration Service (“USCIS”) to act on an application for
citizenship within 120 days of the applicant’s citizenship
interview examination. Aronov, 562 F.3d at 87. When the USCIS
failed to act on the plaintiff’s application within the required
120-day timeframe, the plaintiff sued, and the parties quickly
settled. Id. The plaintiff then moved for attorneys’ fees
20 under the EAJA, and the district court granted the motion. Id.
at 86.
The First Circuit reversed, holding that the plaintiff was
not a prevailing party (because the parties had settled the
case) and, in any event, that defendants’ position was
substantially justified. Id. at 88-99. The court noted that the
defendants were operating “under two statutory mandates,” one of
which could lead the USCIS to “reasonably believe it does not
violate the statute by not acting within 120 days” of the
plaintiff’s application. Id. at 97.
Defendants’ actions here are not analogous to those taken
by the defendants in Aronov. As the First Circuit stated in
that case, the “test is whether a reasonable person could think
the agency position is correct.” Id. at 94. Here, no
reasonable person could think that defendants had the right to
promulgate the challenged policies in the manner in which they
did.
In sum, the court concludes that NHHA is entitled to an
EAJA award of attorneys’ fees. The court next turns to
determining the amount of that award.
B. Amount of Award
Defendants argue that any fee award should be reduced on
the following grounds: (1) NHHA is seeking fees for certain
21 activities that are categorically not payable under the Act; (2)
plaintiffs achieved only limited success on their claims; (3)
some of NHHA’s billing entries cannot be evaluated because they
are too vague or redacted; and (4) NHHA’s billing entries reveal
unnecessary or unreasonable spending. Doc. no. 68 at 15-21.
Before addressing defendants’ grounds for a fee reduction,
the court first discusses the appropriate rate for fees.
Although defendants do not contest NHHA’s proposed rate, because
the appropriate rate requires a cost-of-living enhancement, the
court addresses the issue here.
1. Appropriate Rate
NHHA requests a fee award for 1,889.2 hours of attorney
work. The attorneys working on this case billed these hours at
rates ranging from $350 per hour to $475 per hour. The EAJA
provides that “attorney fees shall not be awarded in excess of
$125 per hour unless the court determines that an increase in
the cost of living or a special factor . . . justifies a higher
fee.” 28 U.S.C. § 2412(d)(2)(A). NHHA requests that the court
adjust the fee award by increasing the EAJA standard hourly
reimbursement rate to reflect a cost-of-living adjustment.
The $125 per hour cap was enacted in March 1996, over
twenty years ago. See Castaneda-Castillo v. Holder, 723 F.3d
48, 76 (1st Cir. 2013). Given the passage of time and that the
22 government does not oppose NHHA’s request for a cost-of-living
adjustment, the court finds the requested enhancement is
appropriate. See id. The court calculates and applies the
cost-of-living adjustment here as did the First Circuit in
Castaneda-Castillo. See id. at 76-77. This adjustment will
reflect the increase in the cost of living experienced in the
Northeast geographic area since March 1996, as established by
the Bureau of Labor Statistics (“BLS”). See id. at 76.
The Annual Consumer Price Index for all Urban Consumers
(“CPI-U”) in the Northeast in March 1996 was 162.8.10 In this
case, Nixon Peabody attorneys performed work in 2015, 2016,
2017, and 2018. See generally doc. no. 64-8. The CPI-U in the
Northeast region for those years respectively was 252.185,
254.850, 259.538, and 265.139.11 The court divides each of these
numbers by 162.8 and multiplies each result by $125 to arrive at
10 Defendants do not contest the use of the Northeast region’s CPI-U to determine the proper cost-of-living adjustment.
11 Some of this data was offered by NHHA in the form of a chart generated through the BLS’s website. See doc. no. 64-7 at 2. This data can also be found by visiting the BLS website. See https://www.bls.gov/cpi/data.htm . While there, one can use the “One Screen Data Search” tool to search the CPI-U for the Northeast region for the years 1996 through 2018. The court takes judicial notice of the data represented for those years on the BLS website. See Fed. R. Evid. 201(b)(2), (c)(1) (providing that the court may take judicial notice on its own of a fact “that is not subject to reasonable dispute because” the fact “can accurately and readily be determined from sources whose accuracy cannot reasonably be questioned”). 23 the adjusted hourly rate for each year: $193.63 (2015); $195.67
(2016); $199.27 (2017); and $203.57 (2018). These rates apply
consistently to all the attorneys that worked on the case.
NHHA also requests reimbursement for fees incurred by
paralegals. NHHA appears to assume that the same statutory rate
of $125 per hour applies to paralegal work. See doc. no. 64-4
at 9. The Supreme Court has held that a party entitled to an
award of EAJA fees may recover its paralegal fees from the
government at prevailing market rates. Richlin Sec. Serv. Co.
v. Chertoff, 553 U.S. 571, 590 (2008). The same is true of
other individuals who contribute to the attorneys’ work product,
such as law clerks or administrative assistants. See Castaneda-
Castillo, 723 F.3d at 77. Other district courts in the First
Circuit have recently found the prevailing market rate for
paralegal services to be below the $125-per-hour attorney rate.
See, e.g., Rosemary C. v. Berryhill, No. 1:17-CV-00282-GZS, 2018
WL 6634348, at *3 (D. Me. Dec. 19, 2018), report and
recommendation adopted, No. 1:17-CV-00282-JDL, 2019 WL 456169
(D. Me. Feb. 5, 2019) (awarding paralegal fees at rate of $105
per hour); Colon v. Berryhill, No. 17-CV-12053-ADB, 2018 WL
5982019, at *2 (D. Mass. Nov. 14, 2018) (awarding paralegal fees
at rate of $90 per hour).
NHHA has not offered any evidence of the prevailing market
rate for paralegal fees. Its submissions demonstrate that the
24 paralegals who worked on this case billed their time at between
$210 to $250 per hour. See doc. no. 64-5 at 2. Given that $125
is only slightly higher than recent market rates awarded for
paralegal work in other district courts in the First Circuit and
because defendants have not objected to that rate, the court
awards fees for paralegal work at $125 per hour.
The court now turns to defendants’ arguments as to a
reduction in fees.
2. Activities not payable under the Act
Defendants identify four categories of activities reflected
in NHHA’s attorneys’ billing records that they argue are
“categorically not payable” under the EAJA: (1) amounts spent
seeking administrative relief from CMS prior to this litigation;
(2) amounts spent in dealing with the New Hampshire State
government outside of this litigation; (3) amounts spent
opposing the New Hampshire State government’s efforts in this
lawsuit; and (4) amounts spent in lawsuits other than this one.
a. Fees incurred related to administrative proceedings
First, defendants argue that the EAJA authorizes recovery
of fees incurred in any civil action but does not apply to fees
incurred seeking administrative relief prior to litigation.
25 NHHA counters that the EAJA allows a prevailing party to recover
for pre-litigation work, including, in this case, NHHA’s pursuit
of administrative relief from CMS. NHHA relies primarily on
Sullivan v. Hudson, 490 U.S. 877 (1989), to support its
position.
In Hudson, the Supreme Court held that, under some
circumstances, “administrative proceedings may be so intimately
connected with judicial proceedings as to be considered part of
the ‘civil action’ for purposes of a fee award [under the
EAJA].” Id. at 892. Subsequently, in Melkonyan v. Sullivan,
501 U.S. 89 (1991), the Court clarified that Hudson “stands for
the proposition that in those cases where the district court
retains jurisdiction of the civil action and contemplates
entering a final judgment following the completion of
administrative proceedings, a claimant may collect EAJA fees for
work done at the administrative level.” Id. at 97; see also
Glenwood W. v. Soc. Sec. Admin. Comm’r, No. 1:17-CV-00353-JAW,
2018 WL 3132595, at *4 (D. Me. June 26, 2018) (“It is true that
fees for services rendered at the administrative level are non-
compensable under the EAJA in the absence of a court-ordered
remand.” (internal quotation marks omitted)).
This case does not fall within Hudson’s reach. NHHA’s
administrative petition to CMS to withdraw the FAQs preceded
this litigation. Further, NHHA does not contend, and the record
26 does not show, that NHHA was required to exhaust administrative
remedies with CMS prior to pursuing this litigation. See
Friends of Boundary Waters Wilderness v. Thomas, 53 F.3d 881,
888 (8th Cir. 1995). Therefore, NHHA is not entitled to recover
attorneys’ fees for services performed during those
administrative proceedings.12
b. Fees incurred in dealing with New Hampshire State government outside of this litigation
Next, defendants argue that NHHA cannot claim attorneys’
fees incurred in its dealings with the New Hampshire State
government (“State”) outside of this lawsuit. NHHA counters
that “communications and negotiations with the State—a party to
the litigation—were unavoidable and necessary.” Doc. no. 72 at
6.
Neither NHHA nor defendants offer any case law to support
their positions as to whether time spent dealing with the State
outside of this litigation should be compensable. Given the
case law cited above concerning a party’s pre-litigation work,
however, the court agrees with defendants’ position.
Defendants note that NHHA also seeks to recover certain 12
costs associated with the administrative proceedings. For the same reasons, NHHA is not entitled to recover such costs under the EAJA. 27 First, although NHHA describes the State as a party to this
litigation, that is incorrect. As discussed further below,
although the State moved to intervene in this case, plaintiffs
objected, see doc. no. 49, and the court denied the State’s
motion in the March 2 Order. Second, as with its pursuit of
administrative relief from CMS, NHHA was not required to
negotiate with the State before instituting this litigation.
Indeed, as plaintiffs argued in their objection to defendants’
motion to dismiss, the State was certain to follow defendants’
lead in determining the appropriate method to calculate
uncompensated care costs. See doc. no. 25-1 at 5-12.
NHHA offers no support for its contention that fees
incurred in connection with extra-litigation efforts with the
State, a non-party to this action, should be compensable under
the EAJA. Therefore, it has not satisfied its burden to show
that it is entitled to attorneys’ fees in relation to those
efforts. See Knudsen v. Colvin, No. 2:14-CV-155-JHR, 2015 WL
4628784, at *3 (D. Me. July 31, 2015) (noting that in an
application for fees under the EAJA, “it is the plaintiff who
has the burden to demonstrate that the fees that he seeks are
reasonable”).
28 c. Fees incurred in opposing the State’s efforts in this lawsuit
Third, defendants argue that NHHA cannot be awarded fees
for time its attorneys spent opposing the State’s efforts in
this lawsuit. Specifically, defendants contend that NHHA should
not be compensated for fees associated with NHHA’s opposition to
and motion to strike the State’s motion to intervene or its
opposition to the State’s request to file an amicus brief. NHHA
argues that it can recover such fees because defendants did not
oppose the State’s efforts to intervene or file an amicus brief
and that the State’s efforts were a “logical outgrowth” of this
litigation.
Defendants rely primarily on Love v. Reilly, 924 F.2d 1492
(9th Cir. 1991) to support their argument. In Love, the
plaintiffs successfully sought a preliminary injunction against
the Environmental Protection Agency (“EPA”) to stop the banning
of a pesticide. The EPA sought an expedited appeal, and certain
intervenors filed a motion to stay the preliminary injunction
pending the appeal. Although the EPA would have benefitted from
the stay, it took no position on the intervenors’ motion. The
district court denied the motion, and later awarded attorneys’
fees under the EAJA against the EPA for the work incurred by
plaintiffs’ attorneys attributable to opposing the intervenors’
motion to stay.
29 The Ninth Circuit reversed, holding that the district court
erred in awarding attorneys’ fees under the EAJA for those
efforts. Relying on Avoyelles Sportsmen's League v. Marsh, 786
F.2d 631 (5th Cir. 1986), the Ninth Circuit held that “where
plaintiffs are litigating an issue and are opposed only by” a
party other than the federal government, “a fee award against
the government would be manifestly unfair and contrary to
historic fee-shifting principles.” Love, 924 F.2d at 1496
(internal quotation marks and citation omitted).
As in Love, the intervenor in this case took a position
that was not adverse to that of defendants, but defendants did
not join in or take a position on the intervenor’s motions.
Therefore, it would be “unjust” to award fees against defendants
for NHHA’s attorneys’ work in opposing the State’s efforts to
intervene and file an amicus brief in this case. Id.; see Sw.
Ctr. for Biological Diversity v. Bartel, No. 98-CV-2234 BJMA,
2007 WL 2506605, at *8-9 (S.D. Cal. Aug. 30, 2007) (refusing to
award fees incurred in opposing third party’s intervention when
federal defendants did not take position adverse to plaintiffs);
see also Watson v. Cty. of Riverside, 300 F.3d 1092, 1097 (9th
Cir. 2002) (under a different fee-shifting statute, trial court
properly denied fees incurred opposing intervention of third
party where defendant did not join in motion to intervene, and
30 intervenor’s actions were not made necessary by defendant’s
position in the litigation).
d. Amounts spent on lawsuits other than this lawsuit
Defendants next argue that NHHA cannot recover fees
associated with lawsuits other than the instant case. They
point specifically to entries in NHHA’s itemized statement that
show attorneys’ fees incurred in connection with a separate case
in front of this court, New Hampshire Hosp. Ass’n v. Azar, No.
17-cv-349-LM (D.N.H. 2017). In that case, which plaintiffs
instituted after the court entered judgment in the instant
action, plaintiffs challenged the 2017 Rule which expressly
included within its text the policies that had been set forth in
the responses to the frequently asked questions.13 NHHA responds
that the subsequent lawsuit “must be viewed as intimately
related to this litigation” and, as such, it is entitled to
attorneys’ fees associated with that litigation. Doc. no. 72 at
NHHA provides no support for the theory that the EAJA
permits a party to recover attorneys’ fees incurred in a
separate litigation, even one arising out of a similar subject
The court denied the parties’ cross-motions for summary 13
judgment without prejudice after the 2017 Rule was vacated. 31 matter. Indeed, after defendants published the 2017 Rule,
plaintiffs in this case moved to alter or amend the court’s
judgment to enjoin defendants from enforcing the 2017 Rule and
the policies reflected therein.
In denying plaintiffs’ motion, the court held:
Plaintiffs’ complaint in this action challenged the policies in FAQs 33 and 34, and alleged that defendants’ implementation and enforcement of those policies violated the APA. The allegations in the complaint necessarily required the court to analyze defendants’ policies through the prism in which they were promulgated: the FAQs. The court’s analysis in the March 2 order was limited to defendants’ authority to implement and enforce the policies based on the manner and process in which defendants adopted them. See, e.g., Encarnacion v. Astrue, 568 F.3d 72, 78 (2d Cir. 2009) (“Whether a court defers to an agency’s interpretation ‘depends in significant part upon the interpretative method used and the nature of the question at issue.’” (quoting Barnhart v. Walton, 535 U.S. 212, 222 (2002))). The complaint did not challenge the policies as contained in the 2017 Rule and, indeed, that Rule was promulgated after the court’s March 2 order and after judgment was entered. Therefore, there is no basis for amending or altering the court’s judgment. Accordingly, plaintiffs’ motion is denied.
Doc. no. 56 at 9-10. Thus, as the court held, the complaint in
this case challenged defendants’ implementation of the policies
in FAQs 33 and 34, and the court’s analysis in the March 2 Order
on the parties’ cross-motions for summary judgment was limited
to that specific challenge. NHHA is not entitled to recover
attorneys’ fees for work performed in connection with a separate
litigation that began after the court entered judgment in this
32 case.14 See Castaneda-Castillo, 723 F.3d at 72; Lundin v.
Mecham, 980 F.2d 1450, 1461-63 (D.C. Cir. 1992).
In addition, defendants note that NHHA’s billing records
reflect work done on cases in other jurisdictions, including in
state court. See, e.g., doc. no. 64-8 at 23 (billing entry for
“work on preparation of State Court action”). NHHA does not
explain those entries in its reply. To the extent NHHA seeks to
recover fees associated with any case outside of this court’s
jurisdiction, that request is denied. See, e.g., Lundin, 980
F.2d at 1461 (“[A] court may not award fees under EAJA for work
performed in other jurisdictions . . . .”).
3. Plaintiffs’ limited success in this case
Defendants next argue that NHHA’s fee award should be
discounted because plaintiffs achieved only limited success on
their claims. Plaintiffs’ complaint set forth four counts, all
of which alleged violations of the APA: (1) violation of 5
U.S.C. § 706(2)(C) (Count I); (2) violation of 5 U.S.C. §§
706(2)(A), (D) (Count II); (3) violation of 5 U.S.C. §§
706(2)(A), (D) (Count III); and (4) violation of 5 U.S.C. §
706(2)(A) (Count IV). At the summary judgment stage, plaintiffs
14 As defendants note, NHHA also appears to seek to recover certain copying and filing costs incurred in connection with the second suit. For similar reasons, NHHA is not entitled to recover costs incurred in connection with that suit. 33 abandoned Count IV. In the March 2 Order, the court held that
plaintiffs were entitled to summary judgment on Counts I and II
and that defendants were entitled to summary judgment on Count
III. Defendants contend that NHHA’s request for fees must be
reduced to reflect the fact that plaintiffs were successful on
only two of their four claims.
The court disagrees. If a plaintiff has achieved only
limited or partial litigation success, “the product of hours
reasonably expended on the litigation as a whole times a
reasonable hourly rate may be an excessive amount” for a fee
award. Dalles Irrigation Dist. v. United States, 91 Fed. Cl.
689, 703 (Fed. Cl. 2010) (quoting Hensley v. Eckerhart, 461 U.S.
424, 436 (1983)). However, “[a] plaintiff need not prevail on
every contention raised in the lawsuit to recover a full fee.”
Id. “Litigants in good faith may raise alternative legal
grounds for a desired outcome, and the court’s rejection of or
failure to reach certain grounds is not a sufficient reason for
reducing a fee.” Id. (quoting Hensley, 461 U.S. at 435). In
determining whether a fee award should be reduced based on
partial or limited success, the court “should focus on the
significance of the overall relief obtained by the plaintiff in
relation to the hours reasonably expended on the litigation.”
Id. at 704 (quoting Hensley, 461 U.S. at 435).
34 The court finds that, based on the substantial relief
plaintiffs obtained, reduction of fees on the ground that
plaintiffs were successful on only two of their claims is
inappropriate. Plaintiffs raised four claims in their
complaint. All four claims alleged that the policies reflected
in FAQs 33 and 34 violated the APA and sought the same outcome:
an injunction prohibiting enforcement or implementation of the
policies embodied in FAQs 33 and 34.
That is precisely the relief plaintiffs received from this
court and that was upheld by the First Circuit. See Burwell,
2017 WL 822094, at *16; Azar, 887 F.3d at 77. The fact that
plaintiffs achieved the full relief that they sought is not
undermined by the fact that plaintiffs dropped Count IV at the
summary judgment stage, that this court granted summary judgment
to defendants on Count III, or that the First Circuit’s opinion
affirming this court’s order focused only on Count II. See
Sakhawti v. Lynch, 839 F.3d 476, 480 (6th Cir. 2016) (declining
to limit fees to those related to single claim addressed in
prior appeal where plaintiff “obtained the most relief that she
could have received, and indeed that she requested, on her
appeal”).15
15 In addition, defendants argue that NHHA is not entitled to recover attorneys’ fees with regard to time spent on any unsuccessful motion or even any unsuccessful argument set forth in any motion. The court declines defendants’ invitation to 35 Accordingly, the court declines defendants’ request to
reduce NHHA’s requested fee award on the basis of allegedly
partial or limited success.
4. Vague or redacted billing entries
Defendants next argue that any fee award should be
discounted because some of the billing entries in NHHA’s
itemized statement are worded in general terms or are redacted
“in a way that makes it impossible to tell whether they relate
to reasonable expenditures for which fees are authorized under
EAJA.” Doc. no. 68 at 19.
An application for fees under the EAJA must include “an
itemized statement from any attorney or expert witness
representing or appearing on behalf of the party stating the
actual time expended and the rate at which fees and other
expenses were computed.” 28 U.S.C. § 2412(d)(1)(B). The
records submitted in support of any fee request should be clear
enough to “allow[] the paying party to dispute the accuracy of
the records as well as the reasonableness of the time spent.”
Lipsett v. Blanco, 975 F.2d 934, 938 (1st Cir. 1992) (alteration
deny NHHA’s request for attorneys’ fees for time spent relating to any argument that was not ultimately successful. For the reasons stated above, the EAJA does not impose such a high burden on a plaintiff. 36 in original) (quoting Calhoun v. Acme Cleveland Corp., 801 F.2d
558, 560 (1st Cir. 1986)).
As defendants note, many of the entries in NHHA’s itemized
statement are heavily redacted, and many entries lump together
multiple distinct activities, some of which may be related to
matters that fall outside the purview of the EAJA, as discussed
above. See doc. no. 64-9. NHHA did not respond to defendants’
arguments regarding the nature of its billing entries.
The court agrees with defendants that certain billing
entries should either be unredacted or broken down to detail
specific tasks. As discussed more fully below, NHHA and
defendants shall confer and attempt to reach an agreement as to
which of the billing entries are compensable under the EAJA in
light of the court’s order.16
5. Unnecessary and/or unreasonable spending
Finally, defendants request that the fee award be reduced
to account for what they categorize as “unnecessary or
unreasonable spending.” Doc. no. 68 at 20. Specifically,
defendants claim that many of plaintiffs’ filings were excessive
in length and that plaintiffs’ attorneys spent an inordinate
amount of time writing certain pleadings and preparing for
16 Defendants raise the same issue concerning redactions with regard to the billing records included with NHHA’s supplement to its request for attorneys’ fees (doc. no. 77). 37 certain hearings. NHHA does not respond to defendants’
arguments.
This case presented issues of critical importance to
plaintiffs, and many of the filings had to be completed in an
expedited manner. Nothing in the record suggests that the hours
billed in preparing filings or arguments were objectively
unreasonable. The court will not reduce NHHA’s requested fees
based on defendants’ arguments that certain filings were too
lengthy or that attorneys spent too much time preparing for oral
argument on the parties’ motions for summary judgment.
Defendants point to particular entries, however, in which
the time spent by NHHA’s attorneys seems excessive. For
example, they point to an entry in which an attorney billed more
than eighteen hours to prepare “graphics” for the preliminary
injunction hearing.17 Therefore, NHHA shall review the itemized
statement and reduce the request for fees as to certain entries,
where appropriate.
C. Summary
NHHA has shown that it is entitled to recover attorneys’
fees and costs under the EAJA, and defendants have not carried
17 To the extent plaintiffs’ attorneys used graphics during the hearing, they were not a significant part of plaintiffs’ presentation. 38 their burden to show that their position was substantially
justified. For those reasons, the court grants NHHA’s motion to
the extent it seeks to recover attorneys’ fees and costs at the
rates set forth above in accordance with this order.
Under the EAJA, the district court “retains substantial
discretion in fixing the amount of an EAJA award.” Comm’r,
I.N.S. v. Jean, 496 U.S. 154, 163, (1990). In determining a
reasonable fee award, the court may identify specific hours that
should be eliminated, or it may reduce the total attorney hours
by a percentage. See Conservation Force v. Salazar, 916 F.
Supp. 2d 15, 30 (D.D.C. 2013); Stromness MPO, LLC v. United
States, 140 Fed. Cl. 415, 431 (Fed. Cl. 2018);
As discussed above, defendants raise certain legitimate
concerns regarding NHHA’s request for fees and costs. For
example, NHHA seeks, but is not entitled to recover, attorneys’
fees and costs related to: (1) administrative proceedings; (2)
dealing with the State outside of this litigation; (3) opposing
the State’s efforts in this case; and (4) lawsuits other than
the instant action. In addition, defendants’ complaints that
certain entries are vague, over-redacted, or show unnecessary
fees incurred, are valid.
The parties shall confer and attempt to reach an agreement
as to the appropriate award of attorneys’ fees and costs in
accordance with the parameters of this order. NHHA and
39 defendants shall notify the court as to whether they have
reached an agreement within 45 days. To the extent they are
unable to reach an agreement, NHHA shall file a revised motion
for attorneys’ fees in light of this order within 14 days of the
day notification is provided to the court. Defendants shall
then have 14 days to object.
CONCLUSION
For the foregoing reasons, defendants’ motion for
modification or, in the alternative, clarification of March 2017
permanent injunction (doc. no. 69) is denied. NHHA’s motion for
attorneys’ fees and costs (doc. no. 64) is granted to the extent
NHHA seeks to recover fees and costs under the EAJA at the rate
provided in and in accordance with the holding of this order.
accordance with the parameters of this order. Within 45 days,
NHHA and defendants shall notify the court if they have reached
an agreement. To the extent they are unable to reach an
agreement, NHHA shall file a revised motion for attorneys’ fees
40 within 14 days of the day notification is provided to the court.
Defendants shall have 14 days to object.
SO ORDERED.
__________________________ Landya B. McCafferty United States District Judge
March 28, 2019
cc: Counsel of Record