United States of America v. Healthsouth Corporation

District Court, D. Nevada·Decided March 11, 2020·No. 2:13-cv-01319·Unknown

Opinion

UNITED STATES DISTRICT COURT DISTRICT OF NEVADA *** UNITED STATES OF AMERICA ex. rel., JOSHUA LUKE, 2:13-cv-01319-APG-VCF Plaintiffs, vs. ORDER HEALTHSOUTH CORPORATION, et al.,

Defendant.

Before the Court are relator Joshua Luke, for the law firms Morgan Verkamp LLC and Law Office of Merril Hirsh PLLC, and Troutman Sanders LLP’s motions for attorneys’ fees. (ECF Nos. 242, 243, and 244). The motions are fully briefed (ECF Nos. 248, 249, 250, 251, and 252) and are both granted in part. I. Background Relator filed this action under seal on July 24, 2013, alleging in part that defendants (“HealthSouth”) submitted false claims for payments in violation of the False Claims Act (“FCA”), 31 U.S.C. § 3729 et seq. (ECF No. 1). The Washington, D.C. and Orange County, California offices of Troutman Sanders, LLP (“Troutman”) represented Dr. Luke from 2013 until the Court disqualified Troutman Sanders in 2017 due to a conflict-of-interest. (ECF No. 103). Relator continued to be represented by Merril Hirsh (“Hirsh’) and retained Morgan Verkamp, LLC (“Morgan”), an Ohio law firm whose practice focuses on False Claims Act cases. (ECF No. 244 at 5). The United States of America initially declined to intervene in this case, so the relator maintained the action. (ECF No. 34). On November 5, 2019, this Court dismissed all claims (except the claims for attorneys' fees and costs 1 under 31 U.S.C. § 3730(d)) pursuant to the terms of the settlement agreement entered into between the relator, the United States of America, and the defendants. (ECF No. 235). The relator argues that the Morgan and Hirsh law firms are entitled to reasonable fees and costs for work by five attorneys, two paralegals, and one investigator. (ECF No. 244-1 at 10). Defendants argue that Morgan and Hirsh’s fees are unreasonable because (1) the hourly rates are above Nevada market rates, (2) that the firms’ billing is “partner heavy”; (3) that Morgan’s paralegal and investigator rates are unsupported; (4) that the number of hours the firms request are unreasonable; and (5) that the firms are not entitled to the requested fees and costs. (ECF No. 249). The relator disputes all defendants’ assertions but voluntarily offers an across-the-board seven and a half percent lodestar reduction to account for any concerns regarding the firms’ billing practices. (ECF No. 25 at 6). The relator argues in support of the motion for fees and costs that: (1) there appear to be no attorneys practicing in Nevada who focus their practice on qui tam litigation on behalf of whistleblowers like the Morgan and Hirsh firms; and (2) that the defendants have offered no evidence to the contrary (defendants themselves are represented by two large national firms and have not disclosed their rates). (Id. at 3). Troutman argues it is entitled to all its fees and costs for the time period that it represented the relator, from March 13, 2013 through November 10, 2017. (ECF No. 242 at 1). The defendants argue that none of Troutman’s fees should be recoverable because the Court disqualified him due to a conflict of interest. (ECF No. 249 at 4). Troutman argues in its reply that dual representation does not automatically result in a conflict that bars attorneys’ fees. (ECF No. 252 at 2). Both the defendants and Troutman argue in the alternative that the Court could limit Troutman’s fees to those incurred before the conflict of interest arose. (ECF Nos. 249 at 4 and 252 at 5). Defendants argue in the alternative that Troutman’s hours must be reduced to account for the conflict of interest from 761.8 hours to 500.27, subtracting the hours Troutman worked after the conflict arose. (ECF No. 249 at 17). 2 Troutman does not dispute the defendants’ reduced hours in his argument in the alternative for fees prior to the conflict, but Troutman states that Troutman incurred fees of $199,647.50 prior to February 22, 2017. (ECF No. 252 at 5). Troutman also voluntarily reduces its fee request by an additional ten percent to account for any concerns about billing, duplication, specificity, or any other objections. (ECF No. 252-1 at 5). Troutman states that with his 10% voluntary deduction, his fees would be $179,682.75 prior to February 22, 2017. (ECF No. 252 at 5). Troutman, however, does not provide the Court with an updated lodestar calculation to show how many hours he calculated to obtain his figures. II. Analysis The FCA includes a fee-shifting provision that requires defendants to reimburse successful relators for expenses, fees and costs. 31 U.S.C. §3730(d)(2). The FCA entitles successful relators to an award of “reasonable expenses which the court finds to have been necessarily incurred, plus reasonable attorneys’ fees and costs.” Id. “[T]he most useful starting point for determining the amount of a reasonable fee is the number of hours reasonably expended on the litigation multiplied by a reasonable hourly rate” Hensley v. Eckerhart, 461 U.S. 424, 433 (1983); see also Carter v. Caleb Brett LLC, 757 F.3d 866, 868 (9th Cir. 2014)(“[A] reasonable fee award under a federal fee-shifting statute…a district court must first calculate the lodestar by multiplying the number of hours expended by the reasonable hourly rate.”). The district court may then adjust upward or downward based on a variety of factors. Hensley, 461 U.S. at 434. “[T]he fee applicant bears the burden of documenting the appropriate hours expended and hourly rates” and submitting “evidence supporting the hours worked and rates claimed.” Id. at 433, 437. The Court must also decide whether to increase or reduce the lodestar amount based upon factors 3 enumerated in Kerr v. Screen Extras Guild, Inc., 526 F.2d 67, 70 (9th Cir. 1975), 1 which is consistent with Local Rule 54-14; see also Blum v. Stenson, 465 U.S. 886, 896 n.11, 104 S. Ct. 1541, 79 L. Ed. 2d 891 (1984)) (emphasizing the importance of using the “market rate” in calculating attorneys’ fees). Out- of-market rates may be available, “if local counsel was unavailable, either because they are unwilling or unable to perform because they lack the degree of experience, expertise, or specialization required to handle properly the case.” Gates v. Deukmejian, 987 F.2d 1392, 1405 (9th Cir. 1992). A district court has discretion in determining what fees are reasonable.” United States ex rel. Cretney-Tsosie v. Creekside Hospice II, LLC, No. 2:13-cv-00167-APG-PAL, 2018 U.S. Dist. LEXIS 157961, at 6 (D. Nev. Sep. 17, 2018); citing to Chaudhry v. City of L.A., 751 F.3d 1096, 1100 (9th Cir. 2014). In exercising its discretion, “the court must provide a concise but clear explanation of its reasons for the fee award.” Chaudhry, 751 F.3d at 1100. Attorneys’ fees awards may include paralegal fees. See Missouri v. Jenkins by Agyei, 491 U.S. 274, 284, 109 S. Ct. 2463, 105 L. Ed. 2d 229 (1989); see also Agarwal v. Oregon Mut. Ins. Co., 2013 U.S. Dist. LEXIS 155647, 2013 WL 5882710, at 3 (D. Nev. Oct. 30, 2013) (awarding fees for paralegal work). In 2018 this Court found that reasonable Nevada market rates for paralegals in an FCA case to be $150 per hour and that reasonable Nevada market rates for attorneys in an FCA case to range from $300 to $600 per hour. Cretney

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United States of America v. Healthsouth Corporation, (D. Nev. 2020).

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