Court reduces attorneys fees awarded to whistleblower

By Taryn Phaneuf | May 8, 2016

More than 18 months after a hospital operator agreed to pay $98 million to settle False Claim Act allegations with the federal government, an appeals court reduced the attorneys fees that should be awarded to one of the whistleblowers.

Community Health Systems, Inc. settled the suit in 2014. On April 29, the Fifth Circuit Court of Appeals awarded Amy Cook-Reska, one of the relators in the case, only a portion of the attorneys fees she requested. The court upheld the ruling of the U.S. District Court for the Southern District of Texas, concluding that Cook-Reska’s attorneys were only entitled to collect for the unique work they did on the case. The court also agreed that their rate was too high.

A case with more than one relator can be more complicated, but it can also be stronger, but it impacts awards for attorneys fees, Geary Reamey, a professor at St. Mary's University School of Law, told the SE Texas Record. 

“In this instance, there was some overlap in the work needed to investigate and litigate each group's claims. Therefore, if the groups worked cooperatively, they might be able to reduce litigation costs and present their individual claims more effectively,” he said. “On the other hand, as the Fifth Circuit explained in its CHS opinion, it becomes more difficult to assign the attorneys' fees and costs of investigation to some of the work done in the case.”

Cook-Reska worked as a coding specialist for CHS, providing billing services for Laredo Medical Center in Texas. She thought LMC was charging the government for medically unnecessary inpatient procedures and was allowing improper financial relationships between physicians, according to court documents. She asserted a relator claim against CHS under the False Claims Act in 2009. From then on, she started helping the government investigate the claims.

Two years later, the government told Cook-Reska that CHS faced FCA claims and investigations in three other federal courts, accusing CHS of fraud in its emergency department admissions. Cook-Reska and her attorneys agreed to participate in the nationwide investigation of CHS’s emergency department admissions.

Having more than one whistleblower in an FCA case isn’t uncommon, Reamey said.

“The FCA does not permit a person to pursue a claim that already has been made and is publicly known, but in some cases, like the CHS case, somewhat different allegations of wrongdoing may be made against a single entity contemporaneously but independently by more than one relator,” he said.

CHS settled the suit in 2014. The settlement divided the claims in two: those involving emergency department admissions brought by the national investigation and those involving the claims brought by Cook-Reska.

For her share, Cook-Reska was awarded more than $2.1 million. She filed for more than $2 million in attorneys fees. But the district court awarded just $730,000. The court concluded Cook-Reska shouldn’t recover fees for work attorneys did on emergency department claims because she wasn’t the first to file those allegations. The court awarded fees to cover non-emergency room work, as well as any work on the case that could not be separated into one of the categories.

The court also reduced the per-hour wage for Cook-Reska’s attorneys — from $800 to $550 — and investigators — from $250 to $125 — which it determined was a more reasonable rate after considering the rates of other attorneys and investigators in the Houston area.

Reamey said the case shows how the courts try to balance multiple factors to determine what’s “reasonable” for attorney fees. There’s not a formula for it.

“Courts face a difficult task,” he said. “Some claimants will hire specialists to represent them, and these experienced attorneys command a higher hourly fee than a less experienced lawyer might. Lawyers in some parts of the country typically bill at higher rates than in other places, often because their overhead costs are higher. More complex cases usually command higher fees, and more expensive investigation costs may need to be incurred because of the complexity.”

More News

The Record Network