The Issue Is the practice of the Respondent, Agency for Health Care Administration (Agency), to decline Medicaid-funded compensation for emergency medical services provided to undocumented aliens once the patients have reached a point of stabilization an unpromulgated rule? The Petitioners' Proposed Final Order identifies the Agency's use of limited InterQual criteria to determine medical necessity as an issue in this proceeding. But the Petition for Determination of Invalidity of Non-Rule Policy does not raise this issue. Neither party's pre-hearing statement identifies it as an issue. Consequently, this Order does not consider or determine whether the Agency's limitation on the use of InterQual criteria is an "unpromulgated rule."
Findings Of Fact Proceedings Before the Division of Administrative Hearings and the First District Court of Appeal In the beginning this was an action by the Hospitals aimed at stopping Agency efforts to recoup reimbursement of Medicaid payments to the Hospitals for emergency services provided to undocumented aliens once the patients have reached a point of “stabilization.” The issue of whether the Agency could apply the “stabilization” standard to the Hospital claims for Medicaid payment for services provided indigent aliens recurred in Agency claims against hospitals throughout the state to recoup Medicaid payments. Hospitals challenged Agency claims in individual proceedings under section 120.569, which the Agency referred to the Division for disputed fact hearings. Duane Morris, LLP (Duane Morris), led by Joanne Erde, represented the hospitals in the individual proceedings. The Hospitals collectively engaged Duane Morris to represent them in this proceeding challenging the Agency’s stabilization standard as an unpromulgated rule. Joanne B. Erde, Donna Stinson, and Harry Silver were the Hospital’s lawyers in this proceeding. Ms. Erde is an experienced lawyer who has focused her practice in health care. Ms. Stinson is an experienced lawyer who concentrated her practice in health care and administrative law litigation before the Division. The Agency does not question their expertise. Mr. Silver is an experienced lawyer with no Florida administrative law experience. His role in the case was minimal. Depositions taken in one of the individual reimbursement cases were significant evidence in this proceeding. Those depositions make it clear that the Hospitals’ counsel was tuned into the unpromulgated rule issue and using discovery in that case to gather and identify the evidence that they would need in this case. Representation of the Hospitals in individual reimbursement actions provided Hospitals’ counsel the advantage of preparing with level of detail before filing the petition. The engagement letters recognize this stating: “We have an understanding of the facts underlying this matter and have substantial knowledge concerning the law governing the issues in this case.” This well-developed understanding of the facts should have minimized the need for discovery and preparation in this proceeding. Counsel were well positioned to prosecute this matter efficiently. Likewise, counsel’s “substantial knowledge concerning the law governing the issues in this case” should have minimized the need for time spent in research. This is not what happened. The pre-existing representation in the reimbursement cases provided another obvious and significant benefit to the Hospitals and their counsel. Since counsel represented the individual hospital in the separate reimbursement matters, the Hospitals could band together to jointly finance one case that would resolve the troublesome point of “stabilization” issue more consistently and more cheaply than if they litigated it in each and every case. As the basically identical engagement agreements between each hospital and counsel state: “Because many hospitals’ interests in [sic] are similar or identical as it relates to the Alien Issue and in order to keep legal costs to a minimum, each of the participants in the [hospital] Group will [sic] have agreed that it wishes this firm to represent them in a Group.” Because of counsel’s pre-existing relationships with the Hospitals, litigating this matter should have continued or enhanced the client relationships. The time required for this matter could not result in lost business opportunities. In fact, by consolidating the issues common to all the clients and their cases, counsel freed up time to work on other matters. Presentation of the issue for resolution in a single case also saved the Hospitals the greater cost of disputing the issue in each case where the Agency sought reimbursement. The Hospitals and counsel dealt with the only possible downside of the representation by including disclosures about joint representation and a waiver of conflict claims in the engagement letters. This was not a contingent fee case. The agreement provided for monthly billing and payment from counsel’s trust account. Each group member made an initial payment of $10,000 to the trust account. Any time the trust account balance dipped below $15,000, each group member agreed to contribute another $10,000 to the trust account. For counsel, this representation was about as risk free as a legal engagement can be. The Hospitals and their counsel knew from the outset that they would have to prove their reasonableness of their fees and costs if they prevailed and wanted to recover fees. The Petition for Determination of Invalidity of Non-Rule Policy seeks an award of fees and costs. They could have adjusted their billing practices to provide more detail in preparation for a fees dispute. An "unpromulgated rule challenge" presents a narrow and limited issue. That issue is whether an agency has by declaration or action established a statement of general applicability that is a "rule," as defined in section 120.52(16), without going through the required public rulemaking process required by section 120.54. The validity of the agency's statement is not an issue decided in an "unpromulgated rule challenge." Courts have articulated the legal standards for unpromulgated rule challenges frequently. See, e.g., Coventry First, LLC v. Off. of Ins. Reg., 38 So. 3d 200, 203 (Fla. 1st DCA 2010); Dep’t of Rev. v. Vanjaria Enters., 675 So. 2d 252 (Fla. 5th DCA 1996); and the cases those opinions cite. The facts proving the “stabilization” standard were easy to establish. Many Agency documents stated the shift to the “stabilization” standard. Documents of Agency contractors did also. Two examples of how clear it was that the Agency was applying a new standard were the Agency’s statements in its 2009-2010 and 2010-2011 reports to the Governor on efforts to control Medicaid fraud and abuse. The reports describe the “stabilization” standard as “more stringent” and certain to recover millions of dollars for the Agency. As the Agency’s reports to the Governor indicate, the stakes were high in this matter. For the Hospitals and other hospitals collectively affected by the Agency’s effort to recoup past payments by applying the “stabilization” standard, $400,000,000 was at stake. This matter did not present complex or difficult issues, legally or factually. The Order of Pre-Hearing Instructions requiring parties to disclose documents and witnesses and update the disclosures alleviated the discovery demands present in other litigation. The Agency’s failure to fully comply with the pre- hearing instructions and unfounded Motion in Limine added some additional time demands for the Hospital’s counsel. Nonetheless the issues were narrow, and the facts were essentially undisputed, if not undisputable. This matter did not require extraordinary amounts of time for discovery or preparation. Ordinarily challenges to rules or unpromulgated rules impose time pressures on the attorneys because of the requirement in section 120.56 that the hearing commence within 30 days of assignment to the Administrative Law Judge. The time constraint was not a factor in this case. The Hospitals requested waiver of the time requirement to permit more time for discovery. The Agency agreed, and the undersigned granted the request. Thus the Hospitals had the time their counsel said they needed to prepare for the hearing. The appeal imposed no time constraints. Both parties received extensions of time for their filings. Seventeen months passed between filing the notice of appeal and oral argument. Time for the Administrative Proceeding The total number of hours claimed for the services of the three lawyers, their claimed hourly rate, and the total fees claimed appear below. Joanne B. Erde 458.20 hours $550.00 rate $252,010.00 Donna Stinson 136.20 hours $455.00 rate $61,971.00 Harry Silver 93.40 hours $550.00 rate $51,370.00 Total 687.80 hours $365,351.00 The Hospitals’ counsel’s billing records are voluminous. For the proceeding before the Division, the Hospitals’ counsel’s invoices list 180 billing entries for the work of three lawyers. A substantial number of the entries are block billing. In block billing, all of a lawyer’s activities for a period of time, usually a day, are clumped together with one time total for the entire day’s service. It is an acceptable form of billing. But block billing presents difficulties determining the reasonableness of fees because a single block of time accounts for several different activities and the invoice does not establish which activity took how much time. Here are representative examples of the block billing entries from the Division level invoices: August 20, 2012 (Erde) – Conference call with ALJ; telephone conference with AHCA attorney; telephone conference with newspaper reporters – 2.0 hours September 16, 2012 (Erde) – Review depositions; prepare opening remarks; develop impeachment testimony – 5.50 September 27, 2012 (Erde) – Intra-office conference; finalize interrogatories; work on direct – 8.50 October 2, 2012 (Stinson) – Review and revise Motion in Limine; Telephone conferences with Joanne Erde and Harry Silver; review emails regarding discovery issues - `2.60 October 19, 2012 (Erde) – Intra-office conference to discuss proposed order; Research Re: other OIG audits; research on validity of agency rules – 2.10 hours November 9, 2012 (Erde) – Conference with ALJ; Intra-Office conference to discuss status; further drafting of proposed order – 7.70 hours. November 19, 2012 (Stinson) – Final Review and Revisions to Proposed Final order; Telephone conferences with Joanne Erde to Review final Changes and comments; Review AHCA’s proposed order and revised proposed order – 3.20 hours. Many of the entries, block or individual, do not provide sufficient detail to judge the reasonableness of the time reported. “Prepare for deposition and hearing,” “review depositions,” “review new documents,” “review draft documents,” “intra-office conference” and “attention to discovery” are recurrent examples. Senior lawyers with more expertise and higher billing rates are expected to be more efficient. This, the fact that the matter was not complicated, the relative simplicity of the issue, and the fact that the Hospitals’ counsel already had a great deal of familiarity with the facts and law involved, all require reducing the number of hours compensated in order for them to be reasonable. For this matter, in these circumstances, the claimed number of hours is quite high. The claimed 687.80 hours amounts to working eight hours a day for 86 days, two of which were the hearing. This is not reasonable. A reasonable number of hours for the proceedings before the Division is 180. That is the equivalent of 22.5 eight-hour days. That is sufficient to handle the matter before the Division from start to finish. The number includes consideration of the worked caused by the needless difficulties presented by the Agency in discovery and with its Motion in Limine. Time for the Appellate Proceeding The fees that the Hospitals seek for the appeal are broken down by hours and rates as follows: Joanne B. Erde 255.10 hours $560.00 $142,856.00 Joanne B. Erde 202.80 hours $580.00 $117,624.00 Donna Stinson 88.50 hours $460.00 $40,710.00 Donna Stinson 67.10 hours $500.00 $33,550.00 W.D. Zaffuto 48.30 hours $435.00 $21,010.50 Rob Peccola 10.90 hours $275.00 $2,997.50 Rob Peccola 17.50 hours $300.00 $5,250.00 L. Rodriguez- Taseff 6.20 hours $520.00 $3,224.00 L. Rodriguez- Taseff 19.50 hours $545.00 $10,627.50 Rachel Pontikes 38.20 hours $515.00 $19,673.00 Total 754.10 hours $397,522.50 For the appellate proceeding, the invoices present 341 entries, a substantial number of which are block billing for work by six lawyers. Here are representative examples from the appellate level invoices: May 16, 2013 (Erde) – Reviewed AHCA’s initial brief; intra- office conference to discuss; preliminary review of record – 2.90 May 24, 2013 (Erde) – Intra-office conference to discuss response to brief; preparation to respond to brief – 2.50 May 30, 2013 (Erde) – Attention to Appeal issues; finalize request for extension; brief research re jurisdictional issues – 1.60 June 18, 2013 (Peccola) – Strategy with J. Erde regarding research needs; review/analyze case law cited in answer brief; conduct legal research regarding documentary evidence and exhibits on appellate review; write email memo to J. Erde regarding same – 2.00 July 19, 2013 (Zaffuto) – Revise/draft Answer Brief; discuss extension of time with H. Gurland; research appellate rules regarding extension of time and staying proceedings pending ruling on motion; review appendix to answer brief; instructions to assistant regarding edits and filing of answer brief and appendix prepare answer brief for filing; call to clerk regarding extension of time review initial brief by AHCA and final order by ALJ – 5.50 August 14, 2013 (Erde) – Intra-office conference to discuss brief; further revised brief – 5.80 August 15, 2013 (Stinson) Reviewed appellees' answer brief; discussed language in answer brief with Joanne Erde – 2.50 October 9, 2013 (Stinson) – Review draft motion to relinquish regarding admission of exhibit; exchange e-mails with Joanne Erde; telephone conference with Joanne Erde – 1.60 October 10, 2013 (Erde) – Attention to new motion re relinquishing jurisdiction; review of revisions; further revisions – 6.00 October 30, 2013 (Erde) – Research re: AHCA’s current behavior; intra-office conference to discuss status of action at DOAH - .70 November 7, 2013 (Peccola) – Strategy with J. Erde regarding Appellees’ response in opposition to Appellant’s motion for supplemental briefing; conduct research regarding same; draft same; look up 1st DCA local rule on appellate motions and email same to J. Erde – 3.60 December 5, 2013 (Erde) – Research Re: supplemental briefing issues; research to find old emails from AHCA re: inability to produce witnesses -.90 January 21, 2014 (Rodriguez-Taseff) – Working on Supplemental Answer Brief – legal argument re authentication and cases distinguishing marchines [sic]; editing facts – 6.70 February 3, 2014 (Erde) – Review and revise response to motion for further briefing; intra-office conference to discuss same – 2.20 May 2, 2014 (Pontikes) – Continue to review relevant case law regarding the definition of an unpromulgated rule; continue to analyze the briefs and the arguments; continue to draft an outline of the argument discussed – 5.00 June 5, 2014 (Erde) – draft email to group regarding AHCA’s settlement offer; reviewed supplemental settlement offer from AHCA; draft email to group re same – 1.70 June 11, 2014 (Erde) – Attention to finalizing response to AHCA’s notice of dismissal and filing of fee petition; memo to members of group – 8.00 July 21, 2014 (Erde) – completed motion for rehearing re: fees as sanctions; drafted status report for DOAH regarding status of DCA opinion; drafted status report in companion case; emails with AHCA re: withdrawing pending audits – 6.90 July 21, 2014 (Peccola) – Strategy with D. Stinson and J. Erde regarding motion for rehearing; revise/edit same; review/revise edit notices in trial court 1.20. The descriptive entries in the invoices for the appellate representation also lack sufficient detail. Examples are: “begin preparation to respond to AHCA”s brief,” “attention to appeal issues,” “preparation to draft answer brief,” and “research and draft answer brief.” For the appellate proceedings, Duane Morris added four lawyers, none with experience in Florida administrative or appellate matters. W.D. Zaffuto, L. Rodriguez-Taseff, and Rachel Pontikes are senior level lawyers in Duane Morris offices outside of Florida. Rob Peccola is a junior level lawyer from a Duane Morris office outside of Florida. The apparent result is those lawyers spending more time on issues than the more experienced Ms. Erde and Ms. Stinson would. One example of this is a July 19, 2013, billing entry where a lawyer spent time researching “appellate rules regarding extension of time and staying proceedings pending ruling on motion.” The two lawyers primarily responsible for this matter, both laying claim to Florida appellate expertise, would only need to quickly check the Florida Rules of Appellate Procedure to confirm their recollection of the rules, something that would probably take less time than it took to make the time entry and review the draft bill. Hospitals’ also filed a puzzling motion that presents a discreet example of needless attorney time billed in this matter. The Hospitals expended 21.8 hours on a Motion for Rehearing of the court’s order awarding them fees and costs. The court’s opinion and the Final Order stated that fees and costs were awarded under section 120.595(4)(a), Florida Statutes. Yet the Hospitals’ motion fretted that fees might be assessed under section 120.595(4)(b), which caps fees at $50,000. The court denied the motion. Two things stand out when reviewing the invoices for the appellate proceeding. The first is that the appeal took more hours than the trial proceeding. A trial proceeding is generally more time-consuming because of discovery, a hearing much longer than an oral argument, witness preparation, document review, and preparing a proposed order. The second is the sheer number of hours. Hospitals’ counsel seeks payment for 754.10 hours in the appellate proceeding. This is 66.3 more than for the Division proceeding. It included a two day hearing, trial preparation, research, and preparing a 37 page proposed final order. In eight-hour days the claimed hours amount to a staggering 94.26 days. That amounts to one lawyer working on the appeal for eight hours a day for three months. Of this time, 613.5 hours were spent by Ms. Erde and Ms. Stinson, lawyers with expertise in the subject area, who had prepared the case for hearing, who participated in the hearing, who closely reviewed the entire record for preparation of their proposed final order, who researched the issues before the hearing and for the proposed final order, and who wrote the proposed final order. With all this knowledge and experience with the record and the law, handling the appeal should have taken less time than the proceeding before the Division.2/ One factor supports the appellate proceeding taking as many hours, or a few more hours, than the administrative proceeding. It is the Agency’s disputatious conduct over a scrivener’s error in the Final Order which erroneously stated that the Agency’s Exhibit 1 had been admitted. The Agency’s conduct increased the time needed to represent the Hospitals in the appeal. The Agency relied upon the exhibit in its initial brief, although it twice cited page 359 of the transcript where the objection to the exhibit was sustained. Also the Agency’s and the Hospitals’ proposed final orders correctly stated that Agency Exhibit 1 had not been admitted. The Hospitals’ Answer Brief noted that Agency Exhibit 1 had not been admitted. The transcript of the final hearing and both parties’ proposed final orders were clear that the exhibit had not been admitted. Yet the Agency argued in its Reply Brief that it had been. This required the Hospitals to move to remand the case for correction of the error. The Agency opposed the motion. The court granted the motion. The Final Order was corrected and jurisdiction relinquished back to the court. The Agency used this as an opportunity to trigger a new round of briefing about whether Exhibit 1 should have been admitted. This has been considered in determining the reasonable number of hours for handling the appeal. A reasonable number of hours for handling the appeal is 225. Converted to eight-hour days, this would be 28.13 days. For the appeal, Duane Morris attributes 28.4 hours of the work to a junior lawyer. This is 3.8 percent of the total time claimed. Applying that percentage to 225 hours, results in 8.6 hours attributed to the junior lawyer with the remaining 216.45 hours attributed to senior lawyers. Attorneys and Fees Each party presented expert testimony on the issues of reasonable hours and reasonable fees. The Agency presented the testimony of M. Christopher Bryant, Esquire. The Hospitals presented the testimony of David Ashburn, Esquire. As is so often the case with warring experts, the testimony of the witnesses conflicts dramatically. Mr. Bryant opined that a reasonable rate for senior lawyers, such as Ms. Erde and Ms. Stinson, ranged between $350 and $450 per hour. The reasonable rate for junior lawyers was $200 per hour. Mr. Ashburn opined that the reasonable hourly rate for senior lawyers ranged between $595 and $700 and the reasonable rate for junior lawyers was between $275 and $300. The contrast was the same for the opinions on the reasonable number of hours needed to handle the two stages of this litigation. Mr. Bryant testified that the administrative proceeding should have taken 150 to 170 hours and that the appeal should have taken 175 to 195 hours. Mr. Ashburn testified that the Hospitals’ claimed 687 hours for the proceeding before the Division and 754.10 hour for the appellate proceeding were reasonable. The Hospitals argue that somehow practicing in a large national law firm, like Duane Morris justifies a higher rate. The theory is unpersuasive. A national law firm is nothing special. There is no convincing, credible evidence to support a conclusion that lawyers from a national firm in comparison to smaller state or local firms provide better representation or more skilled and efficient lawyering that justifies a higher rate. Based upon the evidence presented in this record, a reasonable rate for the senior lawyers participating in this matter is $425 per hour. A reasonable rate for the junior lawyer participating in this matter is $200.00. Fee Amounts A reasonable fee amount for representation in the proceeding before the Division of Administrative Hearings is $76,500. A reasonable fee amount for the proceeding before the First District Court of Appeal is $93,701.25. Costs Hospitals seek $6,333.63 in costs. The evidence proves these costs are reasonable. The Agency does not dispute them.
The Issue The issue for determination is whether Intervenors are entitled to reasonable attorney fees and costs pursuant to Section 120.595, Florida Statutes (2003).1
Findings Of Fact Petitioner is an insurer and carrier within the meaning of Subsections 440.02(4) and 440.02(38), Florida Statutes (2005), and Florida Administrative Code Rule 69L-7.602(1)(w).2 Petitioner is licensed in the state as a workers' compensation insurance carrier (carrier).3 Respondent is a state agency within the meaning of Subsection 440.02(3), Florida Statutes (2005), and Florida Administrative Code Rule 69L-7.602(1)(b). In relevant part, Respondent is responsible for resolving reimbursement disputes between a carrier and a health care provider. Intervenors are health care providers within the meaning of Subsection 440.13(1)(h), Florida Statutes (2005), and Florida Administrative Code Rule 69L-7.602(1)(u). Each Intervenor is a health care facility within the meaning of Subsection 440.13(1)(g), Florida Statutes (2005). Intervenors seek an award of attorney fees and costs against Petitioner pursuant to Sections 57.105 and 120.595, Florida Statutes (2003). The proceeding involving Section 57.105, Florida Statutes (2003), is the subject of a separate Final Order entered on the same date as this Recommended Order. The scope of this Recommended Order is limited to Section 120.595, Florida Statutes (2003). Intervenors allege that Petitioner is the "non- prevailing adverse party" in an underlying proceeding and participated in the underlying proceeding for an "improper purpose" as the quoted terms are defined, respectively, in Subsections 120.595(1)(e)3. and 120.595(1)(e)1., Florida Statutes (2003). The underlying proceeding involves eight consolidated Petitions for Administrative Hearing. Petitioner filed each Petition for Administrative Hearing after Respondent determined Petitioner had improperly discounted the amount of reimbursement Petitioner paid for hospital services that Intervenors provided to eight patients from March 13, 2004, through February 11, 2005. From April 13 through May 23, 2005, Respondent issued separate orders directing Petitioner to pay the disputed amounts pursuant to Subsection 440.13(7), Florida Statutes (2005). From June 1 through June 21, 2005, Petitioner filed eight separate Petitions for Administrative Hearing. The eight petitions were subsequently consolidated into one underlying proceeding. Petitioner is the non-prevailing adverse party in the underlying proceeding. On December 8, 2005, Petitioner filed a Notice of Voluntary Dismissal in the underlying proceeding. On December 9, 2005, Intervenors filed their motion for attorney fees based on Section 120.595, Florida Statutes (2003). The formal hearing in the underlying proceeding was set for January 18, 2006. The ALJ amended the issue for the formal hearing to exclude the original reimbursement dispute and to limit the scope of the formal hearing to the fee dispute. The ALJ did so to avoid delay in the resolution of the proceeding. The fee dispute at issue in this proceeding includes only six of the original eight reimbursement disputes because Intervenors were not the medical providers in two of the original eight disputes.4 In the six reimbursement disputes involving Intervenors, Respondent ordered Petitioner to pay additional reimbursements in the aggregate amount of $54,178.52. Approximately $51,489.27 of the $54,178.52 in additional reimbursement involved inpatient hospital services provided to one patient.5 The remaining $2,689.25 in additional reimbursement involved outpatient hospital services in the emergency room.6 Subsection 440.13(12), Florida Statutes (2005), mandates that a three-member panel must determine statewide schedules for reimbursement allowances for inpatient hospital care. The statute requires hospital outpatient care to be reimbursed at 75 percent of "usual and customary" charges with certain exceptions not relevant to this proceeding. Notwithstanding the statutory mandate to schedule reimbursement rates for hospital inpatient services, the inpatient services at issue in the underlying proceeding were apparently unscheduled inpatient services. By letter dated April 13, 2005, Respondent ordered Petitioner to pay Intervenor, Holmes Regional Medical Center, Inc. (Holmes), an additional reimbursement in the amount of $51,489.27. The total reimbursement to Holmes was 75 percent of the charges that Holmes submitted to Petitioner for reimbursement.7 Respondent interprets Subsection 440.13(12), Florida Statutes (2005), to authorize reimbursement of both unscheduled inpatient hospital services and outpatient hospital services at the same rate. There is no dispute that Respondent reimburses unscheduled inpatient hospital services and outpatient hospital services at 75 percent of the "usual and customary" charges. The dispute in the underlying proceeding was over the meaning of the phrase "usual and customary" charges. Petitioner challenged the interpretation asserted by Respondent and Intervenors. Respondent and Intervenors contended that the quoted statutory phrase means Intervenors' usual and customary charges evidenced in a proprietary document identified in the record as the "charge master." Each Intervenor maintains its own charge master, and the information in each charge master is proprietary and confidential to each Intervenor. Petitioner asserted that the statutory phrase "usual and customary" charges means the usual and customary charges imposed by other hospitals in the community in which Intervenors are located. Petitioner maintains a data base that contains information sufficient to determine the usual and customary charges in each community. Petitioner did not participate in the underlying proceeding for an improper purpose within the meaning of Subsection 120.595(1)(e)1., Florida Statutes (2003). Rather, Petitioner presented a good faith claim or defense to modify or reverse the then-existing interpretation of Subsection 440.13(12), Florida Statutes (2005). Petitioner had a reasonable expectation of success. The statutory phrase "usual and customary" charges is not defined by statute. Nor has the phrase been judicially defined. Respondent bases its interpretation of the disputed phrase on two agency final orders and relevant language in the Florida Workers' Compensation Reimbursement Manual for Hospitals (2004 Second Edition) (the Manual). The Manual is developed by the Florida Department of Financial Services (DFS).8 The Manual interprets the quoted statutory phrase to mean the "hospital's charges." However, after the effective date of the Manual in 2004, DFS developed a proposed change to the Manual that, in relevant part, interprets "usual and customary" charges to mean the lesser of the charges billed by the hospital or the median charge of hospitals located within the same Medicare geographic locality.9 The trier of fact does not consider the new interpretation of the disputed statutory phrase as evidence relevant to a disputed issue of fact. As Respondent determined in an Order to Show Cause issued on February 16, 2006, and attached to Intervenors' PRO, "what constitutes 'usual and customary' charges is a question of law, not fact." The ALJ considers the new interpretation proposed by DFS for the purpose of determining the reasonableness of the interpretation asserted by Petitioner in the underlying proceeding. The ALJ also considers the new DFS interpretation to determine whether the interpretation asserted by Petitioner presented a justiciable issue of law. Intervenors assert that Petitioner's improper purpose in the underlying proceeding is evidenced, in relevant part, by Petitioner's failure to initially explain its reduced reimbursement to Intervenors with one of the codes authorized in Florida Administrative Code Rule 69L-7.602(5)(n) as an explanation of bill review (EOBR). None of the EOBR codes, however, contemplates a new interpretation of the statutory phrase "usual and customary" charges. Intervenors further assert that Petitioner's improper purpose in the underlying proceeding is evidenced, in relevant part, by Petitioner's failure to respond to discovery. However, responses to discovery would not have further elucidated Petitioner's rule-challenge. Petitioner stated eight times in each Petition for Administrative Hearing that Florida Administrative Code Rule 69L-7.501, the DFS rule incorporating the Manual by reference: [S]hould be read to allow recovery of 75% of the usual and customary fee prevailing in the community, and not 75% of whatever fee an individual provider elects to charge. Respondent and Intervenors were fully aware of the absence of statutory and judicial authority to resolve the issue. Petitioner did raise at least one factual issue in each Petition for Administrative Hearing. Petitioner alleged that Respondent's decision letters ordering Petitioner to pay additional reimbursement amounts had no legal effect because Respondent acted before each provider requested and received the carrier's reconsidered reimbursement decision. The absence of a formal hearing in the underlying proceeding foreclosed an evidential basis for a determination of whether each provider in fact requested and received a reconsidered reimbursement decision before the date Respondent ordered Petitioner to pay additional reimbursements. In this fee dispute, Petitioner presented some evidence to support the factual allegation and thereby established the presence of a justiciable issue of fact. It is not necessary for Petitioner to present enough evidence to show that Petitioner would have prevailed on that factual issue in the underlying proceeding. If the letters of determination issued by Respondent were without legal effect, Petitioner would not have waived its objections to further reimbursement within the meaning of Subsection 440.13(7)(b), Florida Statutes (2005). A determination that Petitioner did, or did not, submit the required information is unnecessary in this proceeding. During the formal hearing in this proceeding, Petitioner called an expert employed by a company identified in the record as Qmedtrix. The testimony showed a factual basis for the initial reimbursement paid by Petitioner. It is not necessary for Petitioner to show that this evidence was sufficient to prevail on the merits in the underlying case. The evidence is sufficient to establish justiciable issues of fact in the underlying case. In this proceeding, Petitioner submitted some evidence of justiciable issues of fact in the underlying proceeding. Petitioner need not submit enough evidence in this fee dispute to show Petitioner would have prevailed on these factual issues in the underlying proceeding. Intervenors are not entitled to a presumption that Petitioner participated in this proceeding for an improper purpose in accordance with Subsection 120.595(1)(c), Florida Statutes (2003). Although Petitioner was the non-prevailing party in two previous administrative hearings involving the same legal issue, the two proceedings were not against the same prevailing hospital provider and did not involve the same "project" as required in the relevant statute. Intervenors seek attorney fees in the amount of $36,960 and costs in the amount of $2,335.37 through the date that Petitioner voluntarily dismissed the underlying proceeding. Absent a finding that Petitioner participated in the underlying proceeding for an improper purpose, it is unnecessary to address the amount and reasonableness of the attorney fees and costs sought by Intervenors. If it were determined that Petitioner participated in the underlying proceeding for an improper purpose, the trier of fact cannot make a finding that the proposed attorney fees and costs are reasonable. Such a finding is not supported by competent and substantial evidence. The total attorney fees and costs billed in the underlying proceeding were charged by six or seven attorneys or paralegals employed by the billing law firm. However, the fees and costs at issue in this proceeding exclude any time and costs charged by paralegals and include only a portion of the total fees and costs charged by the attorneys. The total amount of time billed and costs incurred in the underlying proceeding is evidenced in business records identified in the record as Intervenors' Exhibits 20-23. However, those exhibits do not evidence the reasonableness of the fees and costs billed by the attorneys.10 Either the testimony of the billing attorneys or the actual time slips may have been sufficient to support a finding that the attorney fees and costs are reasonable. However, Intervenors pretermitted both means of proof. Intervenors asserted that the time slips contain information protected by the attorney-client privilege. However, Intervenors neither submitted redacted time slips nor offered the actual time slips for in-camera review. Nor did Intervenors allow the attorneys to testify concerning unprivileged matters. The absence of both the testimony of the attorneys and the time slips is fatal. The fact-finder has insufficient evidence to assess the reasonableness of the fees and costs, based on the novelty and difficulty of the questions involved. Intervenors' expert opined that the attorney fees and costs are reasonable. The expert based her opinion, in relevant part, on her review of the actual time slips maintained by each attorney. However, Petitioner was unable to review the time slips before cross-examining the expert. In lieu of the actual time slips, Intervenors submitted a summary of the nature of the time spent by each attorney. The summary is identified in the record as Intervenors' Exhibit 2. Petitioner objected to Intervenors' Exhibit 2, in relevant part, on the ground that it is hearsay. The ALJ reserved ruling on the objection and invited each side to brief the issue in its respective PRO. The paucity of relevant citations in the PROs demonstrates that neither side vigorously embraced the ALJ's invitation. Intervenors' Exhibit 2 is hearsay within the meaning of Subsection 90.801(1)(c), Florida Statutes (2005).11 The author of Intervenors' Exhibit 2 summarized the unsworn statements of attorneys from their time slips and submitted those statements to prove the truth of the assertion that the time billed was reasonable. Intervenors made neither the attorneys nor their time slips available for cross examination.12 Even if the summary were admissible, the summary and the testimony of its author are insufficient to show the attorney fees and costs were reasonable. The insufficiency of the summary emerged during cross-examination of its author. The author is the lone attorney from the billing law firm who testified at the hearing. Q. What other information did you look at to decide what time to actually bill . . .? A. The information I used was the information from the actual bill. Q. If we look at the first entry . . . were you the person that conducted that telephone conference? A. No, I wasn't. Transcript (TR) at 510-511. Q. In other words, [the entries] go with the date as opposed to the event [such as a motion to relinquish]? A. That's correct. Q. So if I wanted to know how much time it took you to actually work on the motion to relinquish, I would have to look at each entry and add up all the hours to find out how long it took you to do one motion. Is that how I would do that? A. It would be difficult to isolate that information from this record, we bill and explain in the narrative what work is performed each day, and unless that was the single thing worked on for several days, there would be no way to isolate the time, because we don't bill sort of by motion or topic. . . . Q. Well, if I'm trying to decide whether the time billed is reasonable, wouldn't I need to know how much time was spent on each task? A. I'm not sure how you would want to approach that. . . . Looking at this document, it does not give you that detail. It doesn't provide that breakout of information. Q. Is there a way for us to know who you spoke with on those entries? A. The entry . . . doesn't specify who participated in the conference. I don't recall what the conference entailed . . . . And many of these entries are from months ago, and I can't specifically recall on that date if I was involved in a conference and who else might have been there. . . . And so my guess is where the conference is listed on a day when lots of activity was performed on behalf of the client, most of it in this case was research. TR at 516-521.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Respondent enter a final order denying the motion for attorney fees and costs. DONE AND ENTERED this 27th day of April, 2006, in Tallahassee, Leon County, Florida. S DANIEL MANRY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 27th day of April, 2006.
The Issue At issue in this proceeding is the amount of reasonable expenses, including reasonable attorney’s fees, that should be awarded as a consequence of the filing of a claim for benefits under the Florida Birth-Related Neurological Injury Compensation Plan.
Findings Of Fact Background 1. Heather Nicole Hosken (Heather) is the natural daughter of Cynthia and Brian Hosken, and was born September 4, 1993, at Cape Canaveral Hospital, Cocoa Beach, Brevard County, Florida. 2. Within a few days of Heather’s birth, NICA was advised by the office of the "participating physician", who provided obstetrical services during Heather’s delivery, that she might qualify for coverage under the Plan. Consequently, NICA, through its executive director Lynn Dickinson, spoke with the Hoskens by telephone and, by letter of September 27, 1993, advised them as follows: Per our telephone conversation of this date, enclosed please find two medical information release forms. One of these forms is for the mother’s medical records, the other form is for your daughter’s medical records. Please complete these forms and return them to us, so that we may obtain medical records to assist you in filing a NICA claim. For your review, I am enclosing a copy of Section 766.301-766.316, Florida Statutes, which is the law that governs the Florida Birth-Related Neurological Injury Compensa- tion Association. zit you have any questions, please contact me. 3. Thereafter, Ms. Dickinson spoke with the parents by telephone and made arrangements to meet with them in the area of their residence; however, Mr. Hosken subsequently cancelled the appointment stating that he would contact Ms. Dickinson again in the future. Notwithstanding such advice, neither Ms. Dickinson nor NICA received any further contact regarding this potential claim until in or about April 12, 1994, when Mr. Frederick Feins’ office, now counsel for the Hoskens, contacted NICA to inquire about, inter alia, the procedure for filing claims. Finally, on June 8, 1994, Mr. Feins’ office again contacted NICA by telephone regarding the information needed for the claim (petition) for benefits, and NICA provided, by letter of June 8, 1994, a draft petition for counsel’s benefit. To further assist counsel, the letter provided: Dear Mr. Fein: 4 Enclosed is a draft petition which may be used for your convenience. Please complete and forward to Ann Cole, Division of Administrative Hearings, 1230 Apalachee Park- way, Tallahassee, Florida 32399-1550 along with $15.00 (payable to Division of Administrative Hearings) for the filing fee. Please send us a courtesy copy along with completed medical authorization release forms for the mother and the infant. We have enclosed blank authorization forms for your convenience. Please send us a complete copy of the mother’s prenatal records, labor and delivery records and a copy of the baby’s nursery notes/records. Please do not delay filing your claim while waiting for records or bills. We can obtain them for you. We will also request all outstanding bills. If you have any questions or if I may assist you in any way to expedite this or any other claim, please contact me. 4. On June 27, 1994, Mr. Fein, on behalf of the claimants, filed a petition with the Division of Administrative Hearings ("DOAH") for compensation under the Florida Birth-Related Neurological Injury Compensation Plan (the "Plan"), and on or about July 12, 1994, DOAH served the Florida Birth-Related Neurological Injury Compensation Association ("NICA") with a copy of the claim. The petition that was filed substantially mirrored the draft petition NICA had provided petitioner’s counsel. 5. Respondent, NICA, following service of a copy of the petition, evaluated the claim and arranged for a _ medical examination to assess whether Heather was currently "permanently and substantially mentally and physically impaired" so as to qualify for benefits under the Plan. That examination was conducted by Michael Duchowny, M.D., a pediatric neurologist associated with Miami Children’s Hospital, on September 20, 1994, and he rendered his report to NICA on or about September 26, 1994, concluding that Heather’s "neurologic examination reveals evidence of a profound developmental delay affecting both motor and cognitive functioning. [Heather] has not progressed past the newborn and the prognosis for neurologic function is extremely guarded. I believe that her deficits are relatively fixed and that the long term prognosis is extremely poor." 6. Following its receipt of Dr. Duchowny’s report, NICA determined the claim to be compensable, and by letter of October 7, 1994, advised claimants’ counsel as follows: Dear Mr. Fein: As per Section 766.305(3), Florida Statutes, the Association agrees that Heather Hosken suffered a birth-related neurological injury as defined in Section 766.302(2), Florida Statutes. A copy of Dr. Duchowny’s medical evaluation is attached. We are prepared to provide medical benefits as provided by Section 766.31(1) (a) and are willing to offer the full $100,000.00 as provided in Section 766.31(1) (b). Please forward to this office, your detail of time and expense records for the above stated claim so that we may reach agreement on reasonable attorney’s fee and costs as per Section 766.31(1)(c), Florida Statutes. Also, please contact me so that we may discuss how the funds will be disbursed. Moreover, on November 4, 1994, NICA telefaxed a draft stipulation to claimants’ counsel so NICA’s agreement to accept the claim for compensation could, consistent with the provisions of Section 766.305(6), Florida Statutes, be approved by the Hearing Officer. 7. A stipulation, which substantially comported with the draft stipulation forwarded by NICA, was ultimately executed by the parties on December 29, 1994, and filed with DOAH on January 6, 1995. By final order of January 17, 1995, the stipulation was approved by the Hearing Officer, and all disputes between the parties were resolved with the exception of the amount of reasonable expenses, including attorney’s fees, that should be awarded. The claim for attorney’s fees and_expenses 8. Pertinent to the claim for attorney’s fees, the time records of the law firm of Thornton, Davis & Murray, P.A., counsel for petitioners, reflect that from March 18, 1994, to January 30, 1995, the following time had been logged, by the individual indicated, on petitioner’s file: NAME HOURS LOGGED Calvin F. David (attorney) 12.00 Frederick J. Fein (attorney) 127.75 Holly S. Harvey (attorney) 43.50 Jeffrey B. Shalek (attorney) 6.00 Jinny E. Anderson (paralegal) -50 Naomi G. Berjah (paralegal) 29.00 [Petitioner’s exhibit 1).? 9. At hearing, Mr. Fein acknowledged that some of the hours contained in the firm’s time records should not be considered as an expense of pursuing the claim, including the hours spent negotiating a fee agreement with the federal government to pursue a claim against NICA to recover benefits paid by the government, researching the entitlement to fees under the Federal Medical Recovery Act, conversations with referral counsel regarding the status of the claim, and any time expended in seeking recovery of attorney’s fees in this proceeding. 10. The actual entries or hours that Mr. Fein conceded were not germane to the claim were not identified at hearing but, post-hearing, Mr. Fein submitted a proposed "order awarding attorney’s fees and costs" which reflected a claim for 122.00 hours on behalf of Mr. Fein as opposed to the 127.75 hours reflected on the time records for the period of March 18, 1994, to January 30, 1995. No time was deducted for any other attorney or paralegal. The "order" did not, however, identify the entries to which the 5.75 hour reduction related, and the reduction made falls far short of the time identified by Mr. Fein’s expert as excludable or, on examination of the time records, is suspect and remains unexplained. li. Here, substantial time has been dedicated to reviewing the time records entry by entry, and line by line. Based on that review, it must be concluded that the time logged is grossly excessive for this NICA claim and includes a substantial amount of time that is inadequately explained or unrelated to the NICA claim. 12. In concluding that the time logged is excessive for this NICA claim, it is observed that the claim was straight- forward, lacked any novel aspects, and the earliest medical reports disclosed that Heather was profoundly impaired, mentally and physically. Moreover, NICA assisted the claimants in filing the claim, expeditiously processed the claim, promptly accepted the claim for compensation, and, but for the claim for attorney's fees, did not contest any matter regarding compensability or benefits. 13. The reliability of the time logged or, stated differently, the reliability of the records as an accurate indication of the time reasonably dedicated to the claim, is further rendered suspect based on the firm's practice of recording all time in quarter (.25) hour segments. This practice, particularly when coupled with the firm’s practice of lumping every task performed on a given day by a lawyer or paralegal into a single entry, leads to inflated hours and unreliable records.° 14. Among the time that is facially unrelated to the NICA claim is that time logged between August 4, 1994, and December 13, 1994, wherein the time records reflect numerous entries by Mr. Fein, Jeffrey P. Shalek, Holly S. Harvey, and J.E. Anderson, for work related to representing the federal government in pursuit of a claim against NICA and research related to the Federal Medical Recovery Act which, based on the context of those entries, each with the other, is clearly related to the federal representation and not to the NICA claim.* 45. First, with regard to the time recorded by Jeffrey P. Shalek on August 4, September 20, and September 28, 1994, totaling 6.00 hours, such time is patently related to the federal claim. Second, with regard to the time recorded for Holly Ss. Harvey between November 10 and November 22, 1994, in the amount of 43.50 hours, such time is all related to researching the Federal Medical Recovery Act and when read, particularly in conjunction with Mr. Fein’s time, is patently related to the federal claim.°? Third, with regard to the time recorded for g.E. Anderson of November 30 and December 13, 1994, totalling .50 hours, it is observed that the entry of December 13, 1994, for .25 hours again patently relates to the federal claim. The other entry for J.E. Anderson of November 30, 1994, of one-quarter (.25) hour for “update of pleading index" is rejected as de minimus, not shown to be related to the NICA claim, and not shown to have been necessary. 16. Next, with regard to the time recorded by Calvin F. David, totaling 12.00 hours, it is observed that the time recorded for April 6, August 4, August 9, August 30, and October 14, 1994, totaling 4 hours, did not reasonably relate to the NICA claim but, rather, related to the federal representation, revising the contingency contract with the client, and a review of the "charges printout." 17. Finally, as to the time recorded by Mr. Fein that did not reasonably relate to the NICA claim, are the time charges of March 23 (11.00 hours), August 4 (3.00 hours), August 10 (1.00 hour), August 30 (2.00 hours), September 19 (.50 hours), September 30 (.50 hours), October 5 (.50 hours), October 14 (2.00 hours), October 19 (2.50 hours), October 21 (1.00 hour), October 24 (1.00 hour), October 31 (1.50 hours), November 1 (2.00 hours), November 3 (.50 hours), November 7 (.50 hours), November 18 (1.00 hour), November 22, 1994 (1.00 hour), and January 24, 1995 (1.00 hour). As to the March 23, 1994, charge of 11.00 hours, it relates to "Travel to Melbourne. Attendance at meeting with Wolfman and plaintiffs. Travel back to office." Notably, the infant was born in Brevard County, petitioners reside in Brevard County, and there was no showing that competent or able counsel was not available in that area. Given that proper venue was Brevard County, Section 766.307(1), Florida Statutes, and there was no showing that counsel was unavailable in that area to 10 represent petitioners, travel time cannot be recovered. See, In re Florear, Inc., 16 B.R. 726 (S.D. Fla. 1982). Moreover, since there is no proof of record as to how long the conference took with the clients, that item cannot be separately addressed. As for the time recorded for January 24, 1995, that was a status conference with referring counsel and, considering it occurred after resolution of the claim, there was no proof that it was relevant to the filing of the claim. As to the remaining hours, they were facially incurred with respect to anticipated representation of the federal government on claims against NICA, or were so intertwined with those claims as not to be divisible. Accordingly, petitioners have failed to demonstrate that these 32.50 hours were reasonably expended in pursuit of the claim for compensation. ° 18. Reducing the hours claimed, as set forth in paragraph 8, by the foregoing hours that are clearly objectionable, leaves the following hours, by individual, that must still be addressed. NAME HOURS Calvin F. David (attorney) "8.00 Frederick J. Fein (attorney) 97.25 Naomi G. Berjah (paralegal) 29.00 19. With regard to the entries made for Ms. Berjah, as well as those for Mr. David and Mr. Fein that have not heretofore been rejected, the firm’s practice of lumping every task performed on a given day by the lawyer or paralegal into a single entry with only the gross hours noted for the day, renders it impossible to discern, absent further explanation, the time dedicated to any particular task. Moreover, such practice, when Mr. Fein’s 11 entries include tasks which are not related to the NICA claim, such as representing the federal government, conferring with the referring attorney regarding the status of the case, preparing contingency contracts, or exploring the possibility of opting out of NICA through the "bad faith" exception or otherwise, ’ renders it impossible, absent speculation, to derive an accurate picture of the hours dedicated to the NICA claim. 20. The unreliability of the firm’s time records, as a gauge of the number of hours reasonably expended in pursuit of the NICA claim, is, as heretofore noted, intensified by the firm’s practice of recording all time in quarter (.25) hour segments. This practice, by its very nature, leads to inflated hours and unreliable records. 21. In reaching the foregoing conclusions, the expert opinion of Michael Eidson, Esquire, has not been overlooked. His conclusion as to the relationship of the time claimed to the subject claim, as well as the necessity and reasonableness of the time expended, is not, however, persuasive. Indeed, Mr. Eidson assumed the number of hours recorded related to the claim for compensation and, essentially, accepted the integrity of the number of hours claimed; however, when made aware, he readily conceded that time recorded incident to, inter alia, representing the federal government was not relevant to the NICA claim. Accordingly, since the record demonstrates that much of the time expended was not relevant to the NICA claim and that the firm’s time records are otherwise not reliable, Mr. Eidson’s opinion that the hours claimed were reasonably and necessarily expended is rejected. 12 22. Given the proof, the testimony of John Kelner, Esquire, is credited, and his opinion that the reasonable number of hours necessarily required to pursue this simple claim for compensation benefits was between 20 and 40 hours is accepted. Giving petitioner’s counsel the full benefit of doubt, and considering his relative inexperience, 40 hours are found to be reasonable in this case. 23. The next consideration in establishing a reasonable fee is the determination of the market rate" or prevailing hourly rate, or range of hourly rates, charged in the community by lawyers of reasonably comparable skill, experience and reputation, for similar services. 24. In deriving the market rate, careful consideration has been accorded the hourly rates referenced in the affidavit of Mr. Fein for the lawyers and paralegals employed by his firm. {Petitioners’ exhibit 1] Those rates are, however, excessive, and bear no reasonable relationship to the prevailing rate in the community, when the fee basis is hourly billing for time worked. 25. With regard to Mr. Fein, the $210.00 hourly rate he seeks to ascribe to his services is patently not a real world rate but, rather, an in-house rate used in contingency fee cases where his contract with the client accords him the option of a contingency percentage or a court awarded reasonable fee, which even is higher, at his option. That rate is clearly illusory since it bears no reasonable relationship to the market rate in the community or to those cases Mr. Fein has handled on which the fee basis is hourly billing for time worked. In such cases, 13 which Mr. Fein describes as insurance defense, he has billed "as high as 185 an hour and ... as low as 155 an hour." Given that Mr. Fein was not admitted to the Florida Bar until 1989, has yet to be lead counsel on any case that has been tried, and bills in quarter hour segments, it is doubtful that he could even command that rate. 26. As for the rates ascribed to the other attorneys, with the exception of Calvin David, and paralegals who worked on this case, as set forth in Mr. Fein’s affidavit, they suffer the same disparities and bear no reasonable relationship to the market when the fee basis is hourly billing for time worked. 27. Given the record, the proof offered on behalf of petitioners is rejected as unpersuasive, and the opinion of John Kelner that the range of rates in the community for similar services, considering the experience of the personnel who worked on this claim, would be a blended or mixed fee of $100.00 to $150.00 per hour. Here, a mixed rate of $150.00 per hour is accepted as a reasonable rate in the community for the services rendered, 28. Finally, petitioners’ attorneys incurred certain expenses for which they seek recovery as reasonably incurred in connection with pursuing the claim for compensation. Such costs total $5,354.42. ([Petitioners’ exhibit 1] NICA does not object to the filing fee of $15.00, medical expert fee of $1,050.00, cost for obtaining the medical records of Dr. Pettit of $10.00, and copy service charge of $2,256.40 incurred between May 4, 1994, and September 27, 1994, for Heather’s medical records. 14 Accordingly, such expenses totaling $3,331.40 are awarded, without further discussion. 29. The expenses opposed by NICA are (1) courier service fees of $40.95, (2) mileage expense of $7.43, (3) copy service expense of February 14, 1995, of $266.50, (4) travel expenses of $281.64 for Mr. Fein’s trip to Orlando, (5) the cost of photocopies at the firm of $687.90, (6) phone charges of $395.06, (7) postage of $53.54, and (8) the cost of Westlaw research of $290.00. As to items (1), (2), (Ss), (6), (7), and (8), there was no independent proof as to what services these expenses were incurred for and, therefore, the reasonableness of the amount or the need to incur those expenses has not been established. Moreover, it is as likely that they were incurred incident to the firm’s efforts to represent the federal government as its representation of petitioners and, if mixed, which is likely, cannot be allocated. As to item (3), the copy services of February 14, 1995, it is observed that such expense was incurred subsequent to the resolution of petitioner’s claim. Accordingly, there being no other showing concerning that cost, its relevance to the claim or reasonableness has not been shown. As to item (4), the travel expenses of Mr. Fein’s trip to Orlando, such is presumed to refer to his meeting with his clients in Melbourne on March 23, 1994. Consistent with the conclusion that time spent traveling to meet with his clients is not recoverable, so also is the conclusion that the travel expense is not recoverable. In re Florcar, Inc., 16 B.R.- 726 (S§.D. Fla. 1982). Accordingly, none of the expenses to which NICA has objected are recoverable. 15 The "cap" or maximum award of attorney’s fees and expenses recoverable in this case 30. Pursuant to the provisions of Section 766.31(1) (c), Florida Statutes, petitioners are entitled to recover and NICA is obligated to pay reasonable expenses incurred in connection with the filing of the claim, including reasonable attorney’s fees. In establishing the award of attorney’s fees, the Hearing Officer is constrained to base such award on the six factors contained in subsection 766.31(1)(c), discussed infra. 31. Here, notwithstanding petitioners’ entitlement to an award of reasonable attorney’s fees and expenses as prescribed by statute, the proof demonstrates they entered into a contingency fee contract with Mr. Fein’s firm. Pursuant to that agreement, following resolution of their claim, they resolved their obligation for fees and expenses to the firm by payment of 33 1/3 percent of the $100,000 they received in compensation of the claim. According to Mr. Fein, his firm has recovered all attorney’s fees and expenses from petitioners to which the firm is entitled or petitioners are obligated to pay, and that whatever is awarded here is to be paid to petitioners as reimbursement. 32. Given such circumstances, the maximum award that could be made in this case is an award for expenses, including reasonable attorney’s fees, not to exceed a total award of $33,333.00, and not the fee award of $46,345.00 and expense award of $5,591.25 sought at hearing. (Petitioner's proposed order, page 3]. See, Lane v_ Head, 566 So.2d 508 (Fla 1990), Florida Patient’s Compensation Fund v. Rowe, 472 So.2d 1145, 1151 (Fla. 16 1985), Government Employees Insurance Co. v. Robinson, 581 So.2da 230 (Fla. 3d DCA 1991), Erickson Enterprises, Inc. v- Louis Wahl & Sons, 422 So.2d 1085 (Pla. 3d DCA 1982), and Trustees of Cameron -. Brown Investment Group v. Tavormina, 385 So.2d 728 (Fla. 3d DCA 1980). Given the award made, such restraint is not, however, significant to these proceedings.
Conclusions For Petitioners: Frederick J. Fein, Esquire Thornton, Davis & Murray, P.A. World Trade Center, Suite 2900 80 Southwest Eighth Street Miami, Florida 33130 For Respondent: David W. Black, Esquire Atkinson, Diner, Stone, Black & Mankuta, P.A. Post Office Drawer 2088 1946 Tyler Street Hollywood, Florida 33022-2088
Other Judicial Opinions A party who is adversely affected by this final order is entitled to judicial review pursuant to Sections 120.68 and 766.311, Florida Statutes. Review proceedings are governed by the Florida Rules Of Appellate Procedure. Such proceedings are commenced by filing one copy of a notice of appeal with the Agency Clerk Of The Division Of Administrative Hearings and a second copy, accompanied by filing fees prescribed by law, with the appropriate District Court of Appeal. See, Section 120.68(2), Florida Statutes, and Florida Birth-Related Neurological Injury Compensation Association v. Carreras, 598 So.2d 299 (Fla. ist DCA 1992). The notice of appeal must be filed within 30 days of rendition of the order to be reviewed. 23
The Issue Whether the petitioner's application for renewal of his community association manager's license should be granted or denied.
Findings Of Fact Based on the oral and documentary evidence presented at the final hearing and the entire record of this proceeding, the following findings of fact are made: Mr. Richter is a licensed community association manager, having been issued license number 1,439 by the Department in 1988. Mr. Richter's community association manager's license was renewed by the Department in 1990 and 1992. Mr. Richter is also licensed by the Department of Business and Professional Regulation as a real estate broker and as a Certified Public Accountant. The Department of Business and Professional Regulation, through its Division of Florida Land Sales, Condominiums, and Mobile Homes, is the state agency charged with the administration of chapter 468, part VIII, Florida Statutes, and is specifically responsible for reviewing and approving applications for renewal of community association manager's licenses. The Bureau of Condominiums carries out this function. Community association manager's license renewal applications for the 1994 renewal year were required to be postmarked no later than September 30, 1994. On or about September 15, 1994, Mr. Richter mailed his completed 1994 license renewal application to the Department, together with a check made payable to the Department in the amount of $50.00, the required license renewal fee. In late November 1994, Mr. Richter telephoned the Department and inquired about the status of his renewal application. He spoke with Donald Sapp, an employee of the Bureau of Condominiums, who told him that the Department was behind in processing renewal applications for community association manager's licenses. The Department completed processing applications for the 1994 renewal period in mid-January 1995. On February 17, 1995, Mr. Richter telephoned the Bureau of Condominiums and advised Mr. Sapp that he had not received his 1994 license and that the check he wrote for the fee had not cleared his bank. Mr. Sapp stated that he would look into the matter and call Mr. Richter back. On February 21, 1995, Mr. Sapp telephoned Mr. Richter and advised him that the Department had no record of having received his 1994 license renewal application and check. Mr. Sapp asked Mr. Richter to send the Department a copy of his check register for the period including September 15, 1994, a copy of his bank statements for September, October, and November 1994, and a copy of a stop payment order on the check he wrote for the license renewal fee. On February 22, 1995, Mr. Richter sent Mr. Sapp, via Airborne Express, a copy of his check register and of the requested bank statements. He refused to place a stop payment order on his check, however. On March 10, 1995, Mr. Richter sent the Department a replacement check in the amount of $50.00 for the 1994 license renewal application fee. This check was received and, in accordance with standard procedure, deposited by the Department. Mr. Richter completed all of the continuing education hours required for license renewal prior to September 30, 1994. Mr. Richter has proven by a preponderance of the evidence that he timely mailed his 1994 license renewal application and that he should be granted a community association manager's license for 1994-1996.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is: RECOMMENDED that the Department of Business and Professional Regulation enter a Final Order finding that Michael Richter's 1994 community association manager's license renewal application was postmarked prior to the September 30, 1994, deadline and granting Mr. Richter's application for a renewal license for 1994-1996. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 2nd day of April 1996. PATRICIA HART MALONO Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 2nd day of April 1996.
The Issue The issue to be resolved in this proceeding is the amount of attorney’s fees to be paid by Respondent, Agency for Persons with Disabilities (“APD” or the “Agency”), to the Petitioners, G.B., Z.L., through his guardian K.L., J.H., and M.R.
Conclusions This matter is related to the promulgation of proposed rules 65G-4.0210 through 65G-4.027 (the “Proposed Rules”) by the Agency in May 2013 in its effort to follow the mandate issued by the Florida Legislature concerning the iBudget statute, section 393.0662, Florida Statute (2010). Petitioners challenged the Proposed Rules in DOAH Case No. 13-1849RP. The Proposed Rules were upheld by the Administrative Law Judge, but Petitioners appealed the Final Order to the First District Court of Appeal (the “Court”). The Court’s decision was rendered July 21, 2014. G.B. v. Ag. for Pers. with Disab., 143 So. 3d 454 (Fla. 1st DCA 2014). The Fee Order was entered by the Court on the same date. The Fee Order had been entered upon the filing of a motion for appellate attorney’s fees filed with the Court by Appellants/Petitioners. The motion set forth three bases for an award of fees, to wit: Section 120.595(2), Florida Statutes, which provides: Challenges to Proposed Agency Rules Pursuant to Section 120.56(2).– If the appellate court or the administrative law judge declares a proposed rule or portion of a proposed rule invalid pursuant to s. 120.56(2), a judgment or order shall be rendered against the agency for reasonable costs and reasonable attorney’s fees, unless the agency demonstrates that its actions were substantially justified or special circumstances exist which would make the award unjust. An agency’s actions are “substantially justified” if there was a reasonable basis in law and fact at the time the actions were taken by the agency. If the agency prevails in the proceedings, the appellate court or administrative law judge shall award reasonable costs and reasonable attorney’s fees against a party if the appellate court or administrative law judge determines that a party participated in the proceedings for an improper purpose as defined by paragraph (1)(e). No award of attorney’s fees as provided by this subsection shall exceed $50,000. Section 120.595(5), Florida Statutes, which provides: Appeals.– When there is an appeal, the court in its discretion may award reasonable attorney’s fees and reasonable costs to the prevailing party if the court finds that the appeal was frivolous, meritless, or an abuse of the appellate process, or that the agency action which precipitated the appeal was a gross abuse of the agency’s discretion. Upon review of the agency action that precipitates an appeal, if the court finds that the agency improperly rejected or modified findings of fact in a recommended order, the court shall award reasonable attorney’s fees and reasonable costs to a prevailing appellant for the administrative proceeding and the appellate proceeding. Section 120.569(2)(e), Florida Statutes, which provides: All pleadings, motions, or other papers filed in the proceeding must be signed by the party, the party’s attorney, or the party’s qualified representative. The signature constitutes a certificate that the person has read the pleading, motion, or other paper and that, based upon reasonable inquiry, it is not interposed for any improper purposes, such as to harass or to cause unnecessary delay, or for frivolous purpose or needless increase in the cost of litigation. If a pleading, motion or other paper is signed in violation of these requirements, the presiding officer shall impose upon the person who signed it, the represented party, or both, an appropriate sanction, which may include an order to pay the other party or parties the amount of reasonable expense incurred because of the filing of the pleading, motion, or other paper, including a reasonable attorney’s fee. The Court did not specifically address which of Petitioners’ stated bases for award of attorney’s fees was being relied upon when granting Petitioners’ motion. Petitioners assert that it must therefore be presumed that the Court granted the request for fees on the basis of all three of Petitioners’ bases. There is no other support for that presumption, as the Fee Order is silent on the issue. It could equally be presumed that only one of the bases was relied upon by the Court. Thus, a determination of the appropriate basis for fees is critical in the determination of the amount of fees to be awarded, as will be set forth more particularly below. The Fee Order establishes only that attorney’s fees are awarded, with leave for the parties to determine the appropriate amount or, failing to do so, obtain direction from an Administrative Law Judge on the matter. There is no issue as to whether Petitioners are entitled to fees or costs, only the amount to be awarded. DOAH has jurisdiction over the parties and the subject matter of this proceeding under the August 6, 2014, Mandate of the First DCA, and under section 120.595(2). Although it is herein determined that section 120.595(2) is the appropriate provision to be considered for fees in this case, each of the other statutory sections argued in Petitioners’ motion for fees will be addressed nonetheless. Section 120.595(5) If section 120.595(5) is to be the basis for fees, it must be shown that Respondent is guilty of a “gross abuse” of its discretion. “Gross abuse” is not defined in statute. As stated by the Court in Allstate Floridian Insurance Co. v. Ronco Inventions, LLC, 890 So. 2d 300, 302 (Fla. 2d DCA 2004), “The troublesome nature of our review here is the admittedly high ‘gross abuse of discretion’ standard. . . . However, we have no definition of what a ‘gross’ abuse of discretion includes or how it differs from an abuse of discretion. We can only assume that it is more egregious than a typical abuse of discretion.” The Court cited Canakaris v. Canakaris, 382 So. 2d 1197 (Fla. 1980), in which the Supreme Court iterated that if reasonable men could differ on an issue, there was no abuse of discretion to act one way or the other. Other courts, looking at the issue of “abuse of discretion” in administrative matters, have struggled with a definitive description or definition. In Citizens to Preserve Overton Park, Inc., et al. v. Volpe, Secretary of Transportation, 401 U.S. 402; 91 S. Ct. 814; 23 L. Ed. 2d 136 (1971), the Court was trying to determine whether the Transportation Secretary had acted within his discretion. The Court decided it “must consider whether the decision was based on clear error or judgment. [citations omitted] Although this inquiry into the facts is to be searching and careful, the ultimate standard of review is a narrow one. The Court is not empowered to substitute its judgment for that of the agency.” Id., at 416. And, as found by another Court, whether an act is arbitrary, capricious, or an abuse of discretion is “far from being entirely discrete as a matter of the ordinary meaning of language. . . . Rather than denoting a fixed template to be imposed mechanically on every case within their ambit, these words summon forth what may best be described as an attitude of mind in the reviewing court one that is ‘searching and careful’ . . . yet, in the last analysis, diffident and deferential.” Natural Res. Def. Council, Inc., et al. v. Sec. and Exch. Comm'n, et al., 606 F.2d 1031, 1034, U.S. App. DC (1979). In Ft. Myers Real Estate Holdings, LLC, v. Department of Business and Professional Regulation, 53 So. 3d 1158 (Fla. 1st DCA 2011), the Court awarded fees under section 120.595(5). In that case, the agency denied party status to the applicant for services. The Court said, “The position taken by the Division in the dismissal order, and maintained in this appeal, is so contrary to the fundamental principles of administrative law that, by separate order, we have granted Appellant’s motion for attorney’s fees under section 120.595(5), Florida Statutes.” The Court did not, however, define gross abuse of discretion any more specifically than that. Likewise, in Salam v. Board of Professional Engineers, 946 So. 2d 48 (Fla. 1st DCA 2006), the Court found that an agency’s intentional delay on acting upon a petition for formal administrative hearing warranted fees under the statute. The Salam Court did not further define gross abuse of discretion; it merely found that such abuse existed under the circumstances of the case. Gross abuse of discretion must, by definition, be more difficult to ascertain than simple abuse of discretion. Gross abuse implies that the Agency first believed its intended action was improper, yet engaged in the action despite that knowledge. That is, that the Agency acted intentionally to do something it knew to be wrong. Proof of such intent would be extremely difficult.1/ One need only look at the plain language of the Court’s opinion in the rule challenge appeal at issue here to see that there was no gross abuse of discretion. The Court ultimately held that although the Agency’s rules “directly conflict with and contravene the Legislature’s clear language” concerning development of an algorithm to assist with the distribution of funds to needy Floridians, “[W]e recognize the difficulty in adhering to the Legislature’s command to create an algorithm solely capable of determining each client’s level of need. Further, we accept that [Respondent] is attempting to find a reasonable way to administer funds to the tens-of-thousands of people in need that it assists.” G.B. et al., supra, 143 So. 3d 454, 458. Nothing in that language suggests that the Agency knew its proposed rule was improper or that it was doing anything intentionally wrong. Rather, the language of the Court’s decision indicates that Respondent was certainly attempting to exercise its discretion properly in the adoption of the Proposed Rules. Despite the Agency’s attempts to justify the rules both at final hearing and on appeal, the Court found that the Proposed Rules did not comport with the specific authorizing statute. That failure did not, ipso facto, establish that there was a gross abuse of the Agency’s discretion. Besides, upon hearing all the testimony and reviewing the evidence, the undersigned initially upheld the Proposed Rule; that, in and of itself, is some indication that the Agency’s efforts were legitimate. Thus, in the present matter, there is no rational basis for finding that gross abuse of discretion was involved in the Court’s award of attorney’s fees. Section 120.569(2)(e) As for section 120.569(2)(e), there is no evidence to support Petitioners’ contention that the proposed rule addressed in the rule challenge proceeding (DOAH Case No. 13-1849RP) was interposed for any improper purpose. The appellate court said, “[W]e accept that APD is attempting to find a reasonable way to administer funds to the tens-of-thousands of people in need that it assists.” Id. Clearly, the Agency did not act for an improper purpose; its best efforts to follow the Legislative mandate for an iBudget simply fell short. The Proposed Rules contravened certain specific requirements of the governing statute. In order to find a way to meet its mandate, the Agency made a Herculean effort, yet failed. Although Petitioners argue that an “improper purpose” was implied by the Court in the Fee Order, there is no substantive support for that position. Not only was APD’s attempt to find a “reasonable way” to discharge its responsibility found wanting by the Court, experts in the field who testified at the underlying hearing disagreed as well. There was no dispute about the intended purpose of the Proposed Rules, only as to how that intent was to be effectuated. There was never any dispute as to the Proposed Rules’ intended purpose; they were meant to find a way to serve the tens-of-thousands of people in need. There is nothing in any of the Agency’s actions in this case that would be even arguably described as “interposed for any improper purposes, such as to harass or to cause unnecessary delay, or for frivolous purpose or needless increase in the cost of litigation.” This attorney’s fee section does not apply to the facts of this case. Section 120.595(2) Finally, in section 120.595(2), the Legislature has declared that if an appellate court or administrative law judge declares all or part of a proposed rule invalid, an order will be entered awarding reasonable attorney’s fees and costs (unless the agency demonstrated that its actions were substantially justified). The Court ultimately concluded that the proposed rules “directly conflict with and contravene the Legislature’s clear language.” That being the case, the Court seems to be finding that the Agency’s actions--promulgating the Proposed Rules--was not substantially justified, even if the Court did recognize the difficulty faced by APD in its efforts to comply with the statutes at issue. By process of elimination, section 120.595(2) is the basis for the Court’s award of attorney’s fees in the present case. That being so, the award is capped at $50,000. The Agency has conceded that Petitioners are entitled to at least $50,000 in fees, as well as costs in the amount of $41,609.65. There remains the issue of whether each of the four Petitioners is entitled to an award of the maximum fee. In their (singular) Petition for Administrative Determination of the Invalidity of Proposed Rules, the parties sought the following relief: That a Final Order be entered finding the Proposed Rules to be an invalid exercise of delegated legislative authority; and That Petitioners be awarded their reasonable attorney’s fees; and Such other relief as the Administrative Law Judge deems appropriate. That is, the relief sought by each of the Petitioners was the same: invalidation of the proposed rules. It cannot be argued that each Petitioner in his or her own right was seeking individual redress or damages. Collectively, they wanted the proposed rules invalidated so that they could return to the status quo concerning their benefits from the State. In fact, only one of the four Petitioners presented testimony at the underlying administrative hearing as to the impact of the Proposed Rules. There was no issue as to each Petitioner’s standing in the underlying administrative hearing. As stated by the Agency in its Proposed Final Order in that case: “Petitioners are each recipients of Medicaid Services under the DD waiver program and have been or will be transitioned to the iBudget system. Stip., pp. 23-24. Thus, Petitioners have standing to challenge the substance of the Proposed Rules.” Petitioners contend that each of the 25,000-plus recipients of benefits from the Agency could have filed petitions challenging the Proposed Rule. That is true. But in the rule challenge proceeding there were four petitioners (ostensibly representing those other 25,000), each seeking the same relief, i.e., invalidation of the proposed rules. And only one of those, K.L., testified at final hearing in the underlying rule challenge proceeding. Thus, there is no justification for an award of fees to each of the Petitioners under section 120.595(2). In light of the findings and conclusions above, and based upon the Order as stated below, the issue of contingency multipliers is not relevant to the discussion of fees herein. As a general rule in Florida, fees and costs incurred in litigating entitlement to attorney’s fees are collectible although time spent litigating the amount of the award is not compensable. See, e.g., State Farm Fire & Cas. Co. v. Parma, 629 So. 2d 830, 833 (1993). § 92.931, Fla. Stat.; Stokus v. Phillips, 651 So. 2d 1244 (Fla. 2d DCA 1995). Inasmuch as the Agency does not dispute entitlement to attorney’s fees, no fees for the fee case are warranted. The amount of fees sought in this administrative rule challenge by the Petitioners is, as set forth in their Proposed Final Order: $255,614.39 for the DOAH rule challenge proceeding; $154,662.35 for the appeal but also applied a contingent multiplier for a total of $309,324.70; $62,850.00 for the fee case but also applied a contingent multiplier for a total of $94,275.00; and $41,609.65 in taxable costs, for a total of approximately $660,000.00. While the amount of fees and costs allowed under the appropriate statute is well less than what Petitioners sought, it has been deemed legally sufficient by statute.
Findings Of Fact Petitioner and Respondent agree that Respondent is entitled to attorney's fees and costs incurred for the period extending from the filing of the Respondent's notice of appeal to the filing of his appellate brief. The appropriate amount involved is: $3,232.50 - for attorney's fees 431.60 - for costs $3,664.10 - TOTAL Petitioner and Respondent agree that Respondent is entitled to attorney's fees and costs incurred for the period extending from the filing of the appellate brief to the end of appeal. The appropriate amount involved is: $1,950.00 - for attorney's fees 333.94 - for costs $2,283.94 - TOTAL The total amount to which Respondent is entitled for attorney's fees and costs relating to his appeal of the agency's Final Order is $5,948.04. Respondent's counsel at the administrative hearing, Steven D. Kastner, on April 15, 1984; submitted a statement in which he itemized 57.75 hours of service to Respondent on his case from initial consultation on September 2, 1983 through a post-hearing memorandum of law submitted on April 3, 1984. The statement reflects an hourly rate of $75.00 which, when multi-plied by the number of hours expended- results in a basic amount due of $4,331.25. However, Respondent had already paid $2,400.00 which would result in a net due of $1,931.25 were it not for a letter of equal date from Mr. Kastner which acknowledges the negotiated fee rate of $60.00. Consequently, the real net amount due is $1,065.00 and this figured added to the $2,400.00 already paid in, result in a total fee to hearing and memo of $3,465.00. Petitioner does not challenge the $60.00 hourly rate charged by Mr. Kastner. However, the limited information contained in Mr. Kastner's statement, makes it impossible to determine the legitimacy of the hourly breakdown. Even Mr. Lambert recognized this difficulty and admits the likelihood that it may be insufficient evidence to support the claim filed. Furthers Mr. Lambert's motion for attorney's fees, filed on January 7, 1985; referred only to the fees and costs incurred for the work accomplished prior to the filing of the appellate brief. The supplement filed on January 28, 1986, after the entry of the Court's October 11, 1985 Order, also referred to appellate fees and costs and for the first time, referred to Kastner's fees and costs. It is to the inclusion of Kastner's fees and costs that Petitioner objects. A review of the materials submitted to the undersigned fails to reveal any indication that the action of Petitioner; Department of Insurance and Treasurer was a gross abuse of the agency's discretion. No such abuse was found either by the hearing officer at the original hearing or by the Court on appellate review.
