Fee Award Arose Out Of A $3.7 Billion Common-Fund Recovery In A Patient Protection And Affordable Care Act And Health Care And Education Reconciliation Act (ACA) Class Action.
With some strong language indicating that lower federal courts must acts as fiduciaries when it comes to scrutinizing fee applications in common-fund class action situations, the Federal Circuit in Health Republic Ins. Co. v. Kaiser Foundation Health Plan, Inc., et al., No. 2022-1018 (Fed. Cir. Jan. 31, 2023) (precedential), reversed a Claims Court’s attorney’s fees award of $180 million to class counsel in an ACA case where a $3.7 billion common-fund recovery was obtained for two classes.
The fee award was for almost 10,000 hours of work on the two cases at a blended hourly rate of about $1,033 for partners and associates, plus 400 hours of work by support staff at an average $325 hourly rate. The $180 million award by the Claims Court was based on 5% under a percentage of recovery methodology, with no lodestar “cross check” (although the award was actually the product of class counsel’s lodestar work augmented by a 18-19 positive multiplier).
The Federal Circuit found that the class opt-in notices expressly indicated a lodestar cross-check would be used, and it was not such that the “deal” for opting into the class action required reversal so this cross-check methodology could be used. Beyond that, the federal appeals court expressed skepticism that a 18-19 multiplier was justified given the ranges in many decisions was more in the 1 to 4 positive range.
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