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28 Fla. L. Weekly Supp. 143a

Online Reference: FLWSUPP 2802GUZM

Insurance — Personal injury protection — Attorney’s fees — Prevailing insured — Award of fees and costs — Contingency fee multiplier is appropriate in case involving benefits-exhausted defense in Tampa Bay area — Contingency risk multiplier of 2.0 applied — Discussion of Quanstrom factors

MEDICAL SPECIALISTS OF TAMPA BAY, LLC d/b/a GULF COAST INJURY CENTER, a/a/o Alonzo Guzman-Giron and Antonia Gomez, Plaintiff, v. OCEAN HARBOR CASUALTY INSURANCE COMPANY, Defendant, County Court, 6th Judicial Circuit in and for Pasco County. Case No. 51-10-CC-001145-WS-O. March 27, 2014. Paul E. Firmani, Judge. Counsel: Lawrence H. Liebling, Liebling & Liebling, Safety Harbor, for Plaintiff. Steven T. Sock, Dutton Law Group, P.A., Tampa, for Defendant.]

[AFFIRMED. 28 Fla. L. Weekly Supp. 96a]

ORDER AND FINAL JUDGMENT AWARDING ATTORNEY’S FEES AND COSTS

THIS CAUSE came before the Court for an evidentiary hearing on January 23, 2014 upon the motions of Plaintiff, Medical Specialists of Tampa Bay, LLC d/b/a Gulf Coast Injury Center a/a/o Alonzo Guzman-Giron and Antonia Gomez (GCIC), for an award of trial and appellate attorney’s fees and costs against Defendant, Ocean Harbor Casualty Insurance Company (Ocean Harbor).

Appearances

Lawrence H. Liebling and Arthur Liebling, of Liebling & Liebling, on behalf of GCIC.

Steven S. Sock, Esq., of the Dutton Law Group, on behalf of Ocean Harbor.

History of the Case

GCIC is a provider of medical services. Ocean Harbor issues automobile insurance policies. The subject policy in this case provided Personal Injury Protection (PIP) coverage as required by § 627.736, Fla. Stat. (2008) (Florida Motor Vehicle No-Fault Law). Ocean Harbor’s insured, Alonzo Guzman-Giron (Guzman), was injured in an automobile accident and sought treatment at GCIC’s facilities. GCIC submitted claims to Ocean Harbor for care provided to its insured. Ocean Harbor made partial payment and notified GCIC that benefits were exhausted. GCIC engaged Arthur Liebling, Esq., to pursue payment of its denied bills on a contingent statutory fee basis. Arthur Liebling associated Lawrence H. Liebling, Esq.¹, of Liebling & Liebling, to handle the litigation.

Ultimately, this Court denied Ocean Harbor’s motion for summary judgment on its benefits exhausted defense and granted GCIC’s motion for final summary judgment. Ocean Harbor appealed to the Appellate Division of the Sixth Judicial Circuit in and for Pasco County. The Appellate Division affirmed this Court’s denial of Ocean Harbor’s motion for summary judgment on its benefits exhausted defense, affirmed the summary judgment for GCIC, and remanded solely for entry of individual rulings on each of Ocean Harbor’s remaining affirmative defenses [26 Fla. L. Weekly Supp. 534a]. Upon remand, Ocean Harbor filed a confession of judgment in the trial court and acknowledged GCIC’s entitlement to attorney’s fees and costs. The Appellate Division granted GCIC’s entitlement to appellate attorney’s fees as well and remanded to this Court for determination of the amount.

An evidentiary hearing on GCIC’s motions for trial and appellate attorney’s fees and costs was held before this Court on January 23, 2014.

Witnesses

Witnesses for GCIC included its office manager, David Auslander; its attorneys-of-record, Lawrence H. Liebling and Arthur Liebling, and its expert witness, Donald A. Smith, Jr., Esq.

Ocean Harbor called David B. Kampf, Esq., as its expert witness.

Mr. Smith was admitted to The Florida Bar in 1978 and practices primarily in representing attorneys in grievance and disciplinary proceedings regarding professional conduct and fee disputes. Mr. Smith is not engaged in PIP litigation.

Mr. Kampf was admitted to The Florida Bar in 1992 and practices primarily in the areas of personal injury and insurance defense, including PIP cases. Mr. Kampf testified that in the PIP arena, he exclusively represents and defends insurance companies and that his firm has defended approximately 10,000 cases.

The Court has considered the extensive testimony of the fee experts in this case. Mr. Smith testified that Mr. Liebling reasonably billed 87.5 hours at the trial level and 45.6 hours for the appeal, and that a rate of $450.00 to $500.00 per hour is reasonable. Mr. Smith also testified that a contingency fee multiplier of 2.0 to 2.5 would be appropriate. Mr. Kampf testified that reasonable time expended by Mr. Liebling in this case would have been approximately 42 hours for the trial level and 16 hours for the appeal, and that his hours should accordingly be reduced by nearly 60%. Mr. Kampf opined that a reasonable rate to be awarded would be $300.00 to $325.00 per hour, and that no contingency fee multiplier is warranted.

Findings of Fact and Conclusions of Law

Having reviewed the trial and appellate record herein, heard the arguments of counsel, and considered each of the lodestar factors in Florida Patient’s Compensation Fund v. Rowe, 472 So.2d 1145 (Fla. 1985) and Standard Guaranty Ins. Co. v. Quanstrom, 555 So.2d 828 (Fla. 1990), as codified in Rule 4-1.5, Rules Regulating The Florida Bar, the Court makes the following findings of fact and conclusions of law:

Lawrence H. Liebling was admitted to The Florida Bar in 1983 and has been a solo practitioner in the Tampa Bay area for nearly thirty years. Mr. Liebling has practiced civil trial and appellate law throughout his career in the areas of insurance, personal injury, business, real estate and family law litigation. Since 2008, while continuing to maintain his own practice, Mr. Liebling has also represented health care providers in PIP actions and appeals in association with Arthur Liebling, Esq., under the name, Liebling & Liebling. All of the legal services rendered to GCIC in the instant action, including the defense of Ocean Harbor’s appeal of the final judgment in GCIC’s favor, were performed by Mr. Liebling.

Throughout the trial and appellate proceedings in this case, Ocean Harbor was represented by the Dutton Law Group, a well established and experienced PIP defense firm in the state of Florida. Although Mr. Kampf described this case as not a “slam dunk” for the Plaintiff but “not one to defend” involving facts not in dispute, Ocean Harbor and its counsel clearly had a different view and staunchly opposed GCIC’s suit at every stage. Ocean Harbor denied liability and asserted various affirmative defenses including exhaustion of benefits. In correspondence and motions, defense counsel on at least two occasions warned Plaintiff’s Counsel they would seek attorney fee sanctions against GCIC and its counsel for maintaining a frivolous action in the face of Ocean Harbor’s benefits exhausted defense. An attorney with lesser experience and ability could certainly have thrown in the towel at this point. Nevertheless, Mr. Liebling worked diligently to establish the facts and bring an evolving area of the 2008 PIP law into focus as applied to Ocean Harbor’s unique policy provisions. When final summary judgment was ultimately entered in GCIC’s favor, Ocean Harbor filed a motion for rehearing which was denied. Ocean Harbor appealed the final judgment, arguing reversible error and reasserting all of its affirmative defenses. As a result of Mr. Liebling’s arguments on appeal, Ocean Harbor’s benefits exhausted defense was resolved in GCIC’s favor in a unanimous opinion of the Appellate Division of the Circuit Court, which remanded solely for entry of individual rulings on Ocean Harbor’s remaining defenses.

Following remand, Ocean Harbor filed a confession of judgment in the trial court and acknowledged GCIC’s entitlement to reasonable attorney’s fees and costs. The Appellate Division subsequently granted GCIC’s entitlement to appellate attorney’s fees as well and remanded for determination of the amount. While the Court finds that a large number of hours were expended in countering the Defendant’s aggressive defense of the claim, the Court also finds that a certain number of hours claimed for research at the trial and appellate stage were unsupported or repetitive or excessive.

Based on credible and convincing evidence, the Court finds that Counsel’s expenditure of 70.5 hours at the trial level and 30.1 hours for the appeal, for a total of 100.6 hours was reasonable and necessary in this action.

The Court finds that $350.00 per hour is a reasonable rate of compensation to award the Plaintiff in this case, producing a lodestar of $35,210.00.

In determining whether to apply a contingency fee multiplier in this case, this Court has considered the following factors:

(1) whether the relevant market requires a contingency fee multiplier to obtain competent counsel; (2) whether the attorney was able to mitigate the risk of nonpayment in any way; and (3) whether any of the factors set forth in Rowe are applicable, especially, the amount involved, the results obtained, and the type of fee arrangement between the attorney and his client.

Quanstrom, 555 So.2d at 834.

The Court is mindful that the product of the reasonable hours expended times the hourly rate provides a suitable foundation for an objective structure. See Rowe Supra at 1150. The Federal lodestar approach establishes a strong presumption that the lodestar represents the reasonable fee. See Pennsylvania v. Delaware Valley Citizens’ Counsel for Clean Air 483 US 711, 107 S. Ct 3078, 997 L.Ed 2d 585(1987). Ultimately the rules regulating the Florida Bar require that all fees awarded by the Court be reasonable. See Progressive Express Insurance Co. v. Donald Schultz 948 So.2d 1027 (5th DCA 2007) [32 Fla. L. Weekly D548b]

The Court notes that recently a County Court decision within the 2nd District Court of Appeal, specifically MRI Assoc. of St. Pete d/b/a St. Pete MRI a/a/o Fikreta Jakupai v. Geico Indem. Co. 20 Fla. L. Weekly Supp. 814a (13th Jud. Cir. in and for Hillsborough County May 30th, 2013) has held that cases similar to the current case are more properly to be included in the public policy enforcement cases category as opposed to the tort and contract cases category as delineated in Quanstrom. As such the Plaintiff would not need to establish the additional elements that would be required by the tort and contract cases. While the Court finds that this is a compelling argument, the Court is basing its decision on the fact that the Plaintiff has satisfied the various elements necessary under the second category for the purposes of Quanstrom.

This Court finds that the relevant market of competent PIP attorneys in the Tampa Bay area require a contingency fee multiplier in order to accept a benefits exhausted case on a contingent statutory fee basis, and that it is unlikely Arthur Liebling or Lawrence H. Liebling or any other lawyers would have accepted the instant benefits exhausted case from GCIC on a contingent statutory fee basis without the potential for a contingency fee multiplier. The Court is persuaded that GCIC, as a matter of sound business practice and economic necessity, are unable to pay competent attorneys on an hourly basis to pursue collection of hundreds of relatively small dollar amount PIP claims and that it would have been extremely difficult, if not impossible, for GCIC to locate any competent attorney who would accept this benefits exhausted case on a contingent statutory fee basis without the possibility of a multiplier.

The Court further finds that GCIC’s counsel was unable to mitigate the risk of nonpayment in any way. Given the relatively small amounts involved in individual PIP claims and the high cost of litigation against insurers, the contingent fee agreement is the only feasible arrangement between providers and attorneys in PIP collection actions. Mr. Smith testified he had contracted at least nine lawyers who specialized in PIP cases and none would have taken the case on a contingency fee basis without a multiplier in a benefits exhausted case. Mr. Kampf was unable to name a single case in his experience where a provider paid its PIP counsel on an hourly basis, prevailed against the carrier, and then sought reimbursement of fees already paid. The Court discounts as non-realistic the argument that GCIC could have contributed $100.00 to $500.00 toward the prosecution of the suit, which would merely have only covered the cost of filing and serving the complaint. Nevertheless, GCIC’s counsel did seek to mitigate the risk of nonpayment by serving the statutory presuit demand for the amounts due. As Mr. Kampf conceded, once suit was filed, GCIC’s counsel had no way to mitigate the risk of nonpayment.

As to the remaining factors delineated in Rule 4-1.5 the (B) the Court finds the following factors not to be applicable:

(2) The likelihood that the acceptance of the particular employment will preclude other employment by the lawyer;

(5) The time limitations imposed by the client or by the circumstances and, as between attorney and client, any additional or special time demands or requests of the attorney by the client;

(6) The nature and length of the professional relationship with the client.

As to the remaining factors provided for in Rule 4-1.5, the Defendant’s expert, Mr. Smith’s stated that there was nothing novel or complex about the present case as a result of the Coral Imaging decision in 2006. See Coral Imaging Services v. Geico Indemnity Insurance Company 955 So.2d 11 (3rd DCA 2006) [31 Fla. L. Weekly D2478a]

However while the Coral Imaging decision settled cases where the insurance carrier chose to pay claims on an untimely basis therefore depriving the provider of a claim that was filed on a timely basis, the issues involved in the present case deal with the methodology of payment when there is a conflict between the statutory provision and the policy itself. In fact Defendant’s memorandum of law at the trial stage does not once mention the Coral Imaging decision.

The issues regarding the methodology of payment continued to be in flux on this issue until after the present lawsuit was filed. The present lawsuit was filed on March 19th, 2010 prior to the Kingsway Amigo decision which was decided May 18th, 2011. See Kingsway Amigo Ins. Co. v. Ocean Health, Inc. 63 So.3d 63 (Fla. 4th DCA 2011) [36 Fla. L. Weekly D1062a] and Geico Indem. Co. v. Virtual Imaging Services, Inc. 79 So.3d 55 (Fla. 3rd DCA 2011) [36 Fla. L. Weekly D2597a]. This was followed by Geico Gen. Ins. Co. v. Virtual Imaging Services, Inc. 90 So.3d 321 (Fla. 3rd DCA 2012) [37 Fla. L. Weekly D985b] which was ultimately affirmed by the Supreme Court at . . .So.3d. . .2013 WL 3332385 (Fla. 2013), 38 Fla. L. Weekly S517a.

The Court finds that this case was novel if not complex. In Kingsway Amigo Ins. Co. v. Ocean Health, Inc., 63 So.3d 63 (Fla. 4th DCA 2011) [36 Fla. L. Weekly D1062a], the Fourth District was the first to address an insurer’s practice of limiting all bills to 200% of Medicare Part B under § 627.736(5)(a)2.f. (2008) when the sole payment methodology in the policy required payment of “all reasonable expenses” as provided in § 627.736(1)(a). The Court stated, “[w]e agree with the trial court that these statutes are unambiguous and that their plain language allows an insurer to choose between two different payment calculation methodology options. . . . The applicable policy made no reference to the permissive methodology of subsection 627.736(5)(a)2. . . . . We reject Kingsway’s argument that, because the PIP statute is incorporated into the policy, it had the unilateral right to ignore the only payment methodology referenced in the policy.” 63 So.3d at 67.

In this case, Ocean Harbor did not choose between the two payment methodologies authorized under the 2008 statute as in Kingsway, it utilized both methodologies. The policy provided that MRI bills “shall not exceed the applicable limitations for such expenses as prescribed by the Florida Motor Vehicle Law,” while all other reasonable medical expenses would be allowed as billed. Ocean Harbor’s dual payment methodologies presented this Court with an issue of first impression since such language had not previously been construed in any published decision addressing the permissive fee limitations in § 627.736(5)(a)21 (2008). Plaintiff Counsel’s arguments at the trial and appellate level helped establish new precedent that the mandatory and permissive payment methodologies in the 2008 PIP statute could be applied in pari materia to different enumerated medical expenses where the policy expressly so provides.

Florida law is clear that once a carrier pays out all contracted-for benefits, it owes nothing more. Thus, the benefits exhausted defense is often insurmountable. Plaintiff’s Counsel after obtaining Ocean Harbor’s policy in discovery ultimately established that Ocean Harbor breached its policy when it failed to limit its insured’s total MRI bills of $7,200.00 to 200% of Medicare Part B, gratuitously overpaid $3,201.68 to the imaging provider, combined the overpayment with proper payments to reach the $10,000.00 policy limit, then denied payment of $1,636.32 to GCIC, claiming that benefits were exhausted. As to the “results obtained” criteria of Rule 4-1.5(4) not only did Counsel secure the $1,636.32 wrongfully withheld from his client, the remaining benefits of $1,565.36 were restored to the insured’s account and made available for additional treatment.

Counsel represented GCIC on a contingent statutory fee basis as required by the needs of his client. He not only bore the risk of not being paid for his labor and recouping his costs for two years of trial and appellate litigation, he was confronted with multiple warnings of sanctions. Many attorneys might have dismissed this action as demanded by defense counsel or not filed suit at all, rather than risk such liabilities.

Based on the above findings, this Court determines that a multiplier is necessary and justified in this case.

The appropriate time frame for determining entitlement to a multiplier is when the client is seeking to employ counsel. See Michnal v. Palm Coast Development, Inc. 842 So.2d 927 (Fla. 4th DCA 2003) [28 Fla. L. Weekly D688b]. The Court notes that at the time that Plaintiff retained counsel the case appeared to be a plain “benefits exhausted” case and was prior to the Kingsway decision which was issued on May 18th, 2011.

Quanstrom permits the Court to apply a maximum lodestar multiplier of 2.0 or 2.5 in a contract action where success was unlikely at the outset. The Court however believes a multiplier of 2 is appropriate. Such an award serves the public policy underlying § 627.428. See Ivey v. Allstate Ins. Co., 774 So.2d 679, 684 (Fla. 2000) [25 Fla. L. Weekly S1103a] (“the purpose of this provision is to level the playing field so that the economic power of insurance companies is not so overwhelming that injustice may be encouraged because people will not have the necessary means to seek redress in the courts”).

Based upon the foregoing findings, this Court determines that the reasonable fee to be awarded Lawrence H. Liebling in this case is $70,420.00 (100.6 hours x $350.00 per hour x 2.0 multiplier).

Mr. Liebling reasonably and appropriately advanced taxable trial costs of $575.00 and taxable appellate costs of $51.30, for a total of $626.30. Mr. Liebling also reasonably and appropriately incurred taxable court reporter fees of $345.56 for a copy of Mr. Smith’s deposition.

The evidence was unrebutted that GCIC’s expert witness, Donald A. Smith, Jr., Esq., contracted with Arthur Liebling, Esq. for his expert services at the rate of $450.00 per hour, that Mr. Liebling paid Mr. Smith an initial retainer of $2,500.00, and that Mr. Smith billed a total of $15,627.00 up to the fee hearing. Mr. Smith expended an additional four hours attending the morning session of the hearing during which Mr. Auslander, Messers. Liebling, and Mr. Smith himself testified, for a total of $17,427.00. Based on the uncontraverted evidence, the Court finds that Mr. Smith’s fees are reasonable and taxable against Ocean Harbor in these proceedings.

Liebling & Liebling is entitled to interest on the total trial level award at the statutory rate of 4.75% per annum from the filing of the final judgment in GCIC’s favor on October 13, 2011 through the entry of the instant order and final judgment. The Appellate Division’s opinion affirmed judgment against Ocean Harbor on its core defense of benefits exhausted and remanded solely for entry of individual rulings on each of its other defenses. Before this Court could do so, Ocean Harbor filed a confession of judgment. Since nothing remained for the Court to do but comply with the Appellate Division’s mandate, interest runs from the date of the original final judgment. See Gorman v. Largo Hosp. Owners, Ltd., 435 So.2d 872, 873-74 (Fla. 2d DCA 1983) (where the “only action necessary in the trial court is compliance with the mandate of the appellate court, interest on the judgment as modified runs from the date of the original judgment”).

Liebling & Liebling is entitled to interest on the total appellate level award at the statutory rate of 4.75% per annum from the filing of the Appellate Division’s order granting attorney’s fees on March 22, 2013 through the entry of the instant order and final judgment.

Final Judgment

Based upon the foregoing, it is

ORDERED AND ADJUDGED as follows:

Lawrence H. Liebling of Liebling & Liebling, shall recover against Ocean Harbor taxable costs of $626.30 and reasonable attorney’s fees of $70,420.00 (100.6 hours x.$350.00 per hour x 2 multiplier), for a total award of $71,046.30, pursuant to §§ 627.428, 627.736(8) and 57.041, Fla. Stat. (2010).

Prejudgment interest of $5,821.39.00 is hereby awarded on the total trial level award of $49,925.00 ($350.00 per hour x 70.5 hours x 2 multiplier + costs of $575.00) at the statutory rate of 4.75% per annum from the filing of the summary final judgment in GCIC’s favor on October 13, 2011 through the entry of the instant order and final judgment.

Prejudgment interest of $1,017.00 is hereby awarded on the total appellate award of $21,121.30 ($350.00 per hour x 30.1 hours x 2 multiplier + costs of $51.30) at the statutory rate of 4.75% per annum from the filing of the Appellate Division order granting attorney’s fees on March 22, 2013 through the entry of the instant order and final judgment.

Lawrence H. Liebling of Liebling & Liebling shall recover taxable costs of $345.56 against Ocean Harbor for the court reporter’s charge for a copy of Mr. Smith’s deposition.

Arthur Liebling of Liebling & Liebling shall recover taxable expert’s fees of $17,427.00 against Ocean Harbor for the expert witness services of Donald A. Smith, Jr., Esq.

Combining the awards in paragraphs “2” through “5” above, Liebling & Liebling shall recover the grand total of $95,657.25 against Ocean Harbor Casualty Insurance Company, which shall bear interest at the statutory rate of 4.75% per annum from the date of entry of this judgment until paid in full, FOR WHICH SUMS LET EXECUTION ISSUE.

__________________

¹Hereafter, references to “Mr. Liebling” are to Lawrence H. Liebling, unless otherwise noted.