11 Fla. L. Weekly Supp. 596b
Attorney’s fees — Insurance — Personal injury protection — Contingency risk multiplier — Abuse of discretion to award contingency risk multiplier where trial court was presented with no evidence on whether market required multiplier to obtain competent counsel — Even if market evidence had been presented, trial court abused its discretion in finding that provider’s likelihood of success at outset of case was less than even where issues to be resolved were fairly simple, insurer was merely defending against deficiencies in complaints filed by provider, insurer paid claims in full once it was provided with copies of bills at issue, and insurer indicated to provider that discovery did not have to be answered once bill of particulars was submitted
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Appellant, vs. LERNER CHIROPRACTIC, P.A., as assignee of MIGUEL FLORES, Appellee. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Appellant, vs. LERNER CHIROPRACTIC, P.A., as assignee of DIEGO FLORES, Appellee. Circuit Court, 9th Judicial Circuit (Appellate) in and for Orange County. Case No. CVA1 01-51. March 26, 2004. Appeal from the County Court for Orange County, Jeffery Arnold, Judge. Counsel: Karen M. Walker, Orlando, for Appellant. Christopher W. Conomos, Lake Mary, and Brian A. Coury, for Appellee.
(Before CONRAD, COHEN, and MILLER, JJ.)
FINAL ORDER AND OPINION REVERSING TRIAL COURT
(PER CURIAM.)Appellant, State Farm Mutual Automobile Insurance Company (State Farm), appeals two orders from the county court awarding attorney’s fees and costs to Appellee, Lerner Chiropractic, P.A. (Lerner), as assignee of Miguel and Diego Flores. The cases were consolidated for purposes of appeal. This Court has jurisdiction to consider this matter pursuant to Florida Rule of Appellate Procedure 9.030(c). Upon consideration of the record, briefs, and court file, this Court dispenses with oral argument pursuant to Florida Rule of Appellate Procedure 9.320, and reverses the order of the trial court with respect to the application of a contingency risk multiplier.
FACTS
On April 20, 2000, Lerner filed two lawsuits against State Farm for unpaid medical bills for services rendered to Miguel and Diego Flores, both of whom were insured by State Farm. Lerner alleged that State Farm was responsible for the payment of these bills in accordance with personal injury protection (PIP) insurance policies State Farm had issued. However, the complaints did not specify the bills at issue and did not attach copies of the claim forms that served the basis for the complaints. State Farm moved to dismiss the complaints, alleging that it had no outstanding bills in its possession. In response, Lerner filed a bill of particulars, attaching copies of the claim forms at issue. The motion to dismiss was thereafter rendered moot.
On July 19, 2000, State Farm remitted payment for the outstanding bills to settle the claims. On September 1, 2000, Lerner served a Motion for Entitlement of Attorneys Fees and Costs with Interest. Based on its mistaken belief that the settlement would not constitute a confession of judgment and would not automatically entitled Lerner to an award of attorney’s fees, State Farm filed a motion to void the settlement agreement, which the trial court denied on May 3, 2001. Thereafter, on May 4, 2001, the trial court heard argument and testimony on Lerner’s motion for fees and costs. Following the hearing, the court entered an order in the Miguel Flores case, awarding fees and costs to Lerner, and, in doing so, applied a contingency risk multiplier of 2.5 to the award of attorney’s fees. After a hearing on both parties’ motions for clarification, the court entered an amended order in the Miguel Flores case and a similar order in the Diego Flores case. This consolidated appeal follows.STANDARD OF REVIEW
The standard of review for an appeal of an order granting a contingency risk multiplier is abuse of discretion. See DiStefano Construction, Inc. v. Fidelity and Deposit Co. of Maryland, 597 So. 2d 248, 250 (Fla. 1992); Thomas v. Perkins, 723 So. 2d 293, 295 (Fla. 3d DCA 1998).
ANALYSIS
State Farm’s only allegation on appeal is that the trial court abused its discretion in applying a contingency risk multiplier of 2.5 to the award of attorney’s fees in this lawsuit for the payment of overdue medical bills. Florida law on the issue of contingency risk multipliers is primarily governed by two decisions of the Florida Supreme Court, Florida Patient’s Compensation Fund v. Rowe, 472 So. 2d 1145 (Fla. 1985), and Standard Guaranty Insurance Company v. Quanstrom, 555 So. 2d 828 (Fla. 1990).
In Rowe, the Florida Supreme Court identified eight factors to be considered in determining attorney’s fees and whether a contingency risk multiplier should be applicable in a given case. These factors include:
(1) the time and labor required, the novelty of the question involved, and the skill required to perform the legal service properly;
(2) the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer;
(3) the fee customarily charged in the locality for similar legal services;
(4) the amount involved and the results obtained;
(5) the time limitations imposed by the client or by the circumstances;
(6) the nature and length of the professional relationship with the client;
(7) the experience, reputation, and ability of the lawyer or lawyers performing the services; and
(8) whether the fee is fixed or contingent.
Rowe, 472 So. 2d at 1150. The supreme court observed:
The contingency risk factor is significant in personal injury cases. Plaintiffs benefit from the contingent fee system because it provides them with increased access to the court system and the services of attorneys. Because the attorney working under a contingent fee contract receives no compensation when his client does not prevail, he must charge a client more than the attorney who is guaranteed remuneration for his services. When the prevailing party’s counsel is employed on a contingent fee basis, the trial court must consider a contingency risk factor when awarding a statutorily-directed reasonable attorney fee. . . .
Based on our review of the decisions of other jurisdictions and commentaries on the subject, we conclude that in contingent fee cases, the lodestar figure calculated by the court is entitled to enhancement by an appropriate contingency risk multiplier in the range from 1.5 to 3. When the trial court determines that success was more likely than not at the outset, the multiplier should be 1.5; when the likelihood of success was approximately even at the outset, the multiplier should be 2; and, when success was unlikely at the time the case was initiated, the multiplier should be in the range of 2.5 and 3.
Id. at 1151.
In Quanstrom, the supreme court reaffirmed the principles set forth in Rowe and clarified what factors should be considered in determining whether a multiplier is appropriate. These factors include:
(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 or her client.
Quanstrom, 555 So. 2d at 834. The court noted that “[e]vidence of these factors must be presented to justify the utilization of a multiplier.” Id. The supreme court also modified the multiplier range as follows:
(1) if the trial court determines that success was more likely than not at the outset, it may apply a multiplier of 1 to 1.5;
(2) if the trial court determines that the likelihood of success was approximately even at the outset, the trial judge may apply a multiplier of 1.5 to 2.0; and
(3) if the trial court determines that success was unlikely at the outset of the case, it may apply a multiplier of 2.0 to 2.5.
Id.
In the instant case, State Farm argues (1) that there was insufficient record evidence before the trial court to support the application of a contingency risk multiplier under the criteria announced in Rowe and Quanstrom, and (2) that, at the onset of litigation, there were no factors which could have been considered by the trial judge that would suggest that success for Lerner would be anything but imminent. Therefore, State Farm asserts that the trial court abused its discretion in applying the contingency risk multiplier and finding that Lerner’s chances of success at the outset of this case were less than even.
As support for its argument, State Farm asserts that there was no evidence presented to the trial court that Lerner’s counsel could not have been retained but for a multiplier, relying on Strahan v. Gauldin, 756 So. 2d 158 (Fla. 5th DCA 2000), abrogated on other grounds, Allstate Insurance Company v. Sarkis, 809 So. 2d 6 (Fla. 5th DCA 2001). In Strahan, the Fifth District Court of Appeal reversed a trial court’s decision to apply a 2.5 multiplier, where there was no evidence that the plaintiff’s attorney could not have been retained but for the multiplier. The Fifth DCA explained:
The multiplier provides an incentive to a lawyer to represent a client in a case in which few lawyers would venture. The potential use of a multiplier in calculating a fee aids an injured person having a tenuous case to secure competent counsel and improves access to our system of justice. The United States Supreme Court has cautioned, however, that the use of a multiplier can also have the negative social cost of encouraging claimants with nonmeritorious claims. City of Burlington v. Dague, 503 U.S. 557, 563 (1992). We conclude that the multiplier was improperly applied in this case where there was an absence of any evidence indicating that a premium was necessary to obtain competent counsel.
Strahan, 756 So. 2d at 162.
State Farm further contends that Lerner was more likely than not to succeed on its claim, considering that the only real issue in this case was whether or not the medical bills had been received. Prior to Lerner’s filing of the bill of particulars, State Farm had merely taken the position that the bills in question had never been received, not that the services rendered were unnecessary. Once Lerner filed the bill of particulars, identifying the specific bills at issue, State Farm was obligated to, and did, pay the bills. Thus, State Farm argues that the trial court erred in finding Lerner’s likelihood of success to be less than even.
In defending the award in this case, Lerner argues that the record before the trial court was sufficient to justify a 2.5 multiplier. Lerner’s expert, Jeffrey Byrd testified regarding the risks of taking an assignment of benefits case and the fee arrangement between Lerner and counsel. He also noted that Lerner’s counsel had given State Farm the opportunity to resolve the case “early on” and that State Farm had aggressively defended the manner in an obstinate and recalcitrant manner. These circumstances, Lerner argues, combined to provide a foundation for the trial court’s conclusion that a 2.5 multiplier was warranted.
After reviewing the lengthy record in this consolidated appeal, we conclude that the trial court abused its discretion in applying a 2.5 contingency risk multiplier to the award of attorney’s fees. As State Farm indicates, the trial court was presented with no evidence regarding whether the market required a contingency fee multiplier to obtain competent counsel, a primary factor to be taken into consideration according to Quanstrom. Indeed, the only evidence presented on this issue came from State Farm’s expert, who testified that the multiplier was not needed to get attorneys to handle these types of cases. Thus, the trial court abused its discretion in applying a contingency risk multiplier in this case. See Strahan v. Gauldin, 756 So. 2d 158 (Fla. 5th DCA 2000), abrogated on other grounds, Allstate Insurance Company v. Sarkis, 809 So. 2d 6 (Fla. 5th DCA 2001).
Even had there been record evidence that competent counsel could not have been obtained but for the multiplier, we also conclude that the court abused its discretion in awarding a multiplier of 2.5 and finding that Lerner’s likelihood of success at the outset of this case was less than even.
The issues to be resolved in the case were fairly simple, and once State Farm was provided with copies of the bills at issue, it was obligated to, and did, pay the claims in full. Lerner’s own expert even testified that cases of this type are generally 50/50 propositions. While Lerner has characterized State Farm’s actions as obstinate and recalcitrant, we find that not to be the case. The record clearly establishes that State Farm was merely defending against deficiencies in the complaints filed by Lerner, i.e., the failure to attach copies of the bills to be paid. Lerner also makes much of the fact that State Farm issued discovery in this case. However, this was done on the same day that Lerner submitted its bill of particulars, and State Farm related to Lerner’s counsel that, in light of that submission, such discovery did not have to be answered.
Considering the record as a whole, there simply exists no competent, substantial evidence to support a finding that Lerner’s likelihood of success at the outset of this case was less than even. Rather, it appears that this was merely a “run of the mill PIP benefits case, where the services of an attorney were necessary to ‘coax’ the insurer into paying.” United States Security Insurance Company v. Lapour, 617 So. 2d 347, 348 (Fla. 3d DCA 1993).
Accordingly, it is hereby ORDERED AND ADJUDGED:
1. The trial court’s award of a 2.5 contingency risk multiplier for attorney’s fees in this case is hereby REVERSED.
2. This cause is REMANDED to the trial court, with directions to award Appellee, Lerner Chiropractic, P.A., $6,142.50 as a reasonable attorney fee for case number SCO-00-3252 and $2,092.50 as a reasonable attorney fee for case number SCO-00-3253.
3. The trial court is further directed to order that the above-stated award shall bear interest at a rate of 11% per annum from October 26, 2000 until paid in full.
4. Since State Farm is the prevailing party on appeal, Lerner’s Motion for Appellate Attorney’s Fees is hereby DENIED. (CONRAD, COHEN, and MILLER, JJ., concur.)
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