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United States ex rel. Trakhter v. Provider Services, Inc.

United States District Court, S.D. Ohio, Western Division

June 10, 2019

UNITED STATES OF AMERICA, ex. rel. TRAKHTER, Plaintiff-Relator,
v.
PROVIDER SERVICES, INC., et al., Defendants.

          ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFF-RELATOR'S AMENDED MOTION FOR ATTORNEYS' FEES, COSTS, AND EXPENSES UNDER 31 U.S.C. § 3730(D) (DOC. 44)

          TIMOTHY S. BLACK UNITED STATES DISTRICT JUDGE.

         This civil action is before the Court on Plaintiff-Relator Vladimir Trakhter's (“Trakhter”) Amended Motion for Attorneys' Fees, Costs, and Expenses under 31 U.S.C. § 3730(d) (Doc. 44), as well as the parties' responsive memoranda (Docs. 45, 49, 55).

         I. BACKGROUND

         Trakhter commenced this civil action pursuant to the qui tam provisions of the False Claims Act, 31 U.S.C. § 3730(b). Trakhter's Complaint alleged that Defendants Provider Services, Inc. and Olympia Therapy, Inc. (collectively, “Defendants”) knowingly submitted or caused the submission of false claims for medically unnecessary therapy services provided to Medicare Part A patients at skilled nursing facilities. (Doc. 2). The United States subsequently elected to intervene. (Doc. 35).

         In July 2017, the United States, Trakhter, and Defendants (as well as plaintiff-relators and defendants in No. 1:12-CV-935) reached a $19.5 million global settlement to resolve the False Claims Act claims brought by Trakhter (as well as plaintiff-relators in No. 1:12-CV-935[1]). (Doc. 45-1). Of that amount, $15, 527, 844.00 was attributable to Trakhter's claims. (Id. at 5). As a part of the global settlement, the United States agreed to award $2, 872, 651.14 to Trakhter. (Id. at 6).

         Two law firms represented Trakhter in the aforementioned proceedings: Hochman Plunkett Co., LPA (“HP”), an Ohio firm; and Korein Tillery, LLC (“KT”), a Missouri firm (collectively, “Trakhter's Counsel”).[2] In pursuit of Trakhter's claims: HP worked 1, 045.17 hours, and incurred $541, 078.50 in attorneys' fees and $4, 488.90 in costs/expenses, (Doc. 54-1 at 12, 43); and KT worked 2, 016.34 hours, and incurred $853, 942.85 in attorneys' fees and $20, 891.60 in costs/expenses, (Doc. 54-2 at 6, 130).

         Specifically, Trakhter's Counsel generated the following hours, rates, and totals:

Employee

Title

JD

Hours

Rate

Total

James Hochman

Partner

1966

389.80

$675

$263, 115.00

Brett Bissonette

Associate CPA Statistician

2010

542.35

$450

$244, 057.50

Natalie Tackett

Associate

1988

113.02

$300

$33, 906.00

Total

1, 045.17

$541, 078.50

         KT's Proposed Hours, Rates, and Totals

Employee

Title

JD

Hours

Rate

Total

Steve Tillery

Partner

1976

53.91

$860

$46, 362.60

Doug Sprong

Partner

1989

18.01

$675

$12, 156.75

John Hoffman

Partner

1990

491.63

$650

$319, 559.50

Aidan McNamara

Associate

2002

337.17

$400

$134, 868.00

Michael Forrest

Associate

2007

63.10

$400

$25, 240.00

Chris Combs

Associate

2012

187.52

$300

$56, 256.00

Michelle Stallings

Associate

2005

804.50

$300

$241, 350.00

Cozetta Gagg

Associate

2000

60.50

$300

$18, 180.00

Total

2, 016.34

$853, 942.85

         (Doc. 54-1 at 12; Doc. 54-2 at 6).[3]

         On September 7, 2017, Trakhter filed this motion. (Doc. 44). In it, Trakhter asks the Court to award his counsel $1, 395, 021.35[4] in attorneys' fees, $25, 380.50 in costs/expenses, and a 50% fee enhancement. (See Doc. 45 at 20 (reducing the attorneys' fees, costs/expenses, and fee enhancements to sum totals)). Trakhter also asks the Court to award his counsel the fees incurred in bringing this motion: $101, 485.25 in attorneys' fees and $15, 000.00 in additional costs/expenses. (Doc. 55 at 20).

         II. STANDARD OF REVIEW

         Under the False Claims Act, a successful qui tam plaintiff “shall . . . receive an amount for reasonable expenses which the court finds to have been necessarily incurred, plus reasonable attorneys' fees and costs. All such expenses, fees, and costs shall be awarded against the defendant.” 31 U.S.C. § 3730(d)(1); Gonter v. Hunt Valve Co., 510 F.3d 610, 614 (6th Cir. 2007) (“The False Claims Act, 31 U.S.C. § 3730(d), provides for fee-shifting and includes both attorneys' fees and expenses as part of the award to a successful qui tam plaintiff.”).

         “The starting point for the Court's determination of a reasonable fee award is the fee applicant's ‘lodestar' amount.” U.S. ex rel. MacKay v. Touchstone Research Labs., Ltd., No. 1:04-CV-327, 2009 WL 3150385, at *3 (S.D. Ohio Sept. 30, 2009). The “lodestar” amount is calculated by multiplying the number of hours reasonably expended on the litigation by a reasonable hourly rate. Id. Where the fee applicant has established that the number of hours and the rate claimed are reasonable, the “lodestar” amount is presumed to be the reasonable fee to which counsel is entitled. Imwalle v. Reliance Med. Prods., Inc., 515 F.3d 531, 552 (6th Cir. 2008).

         A “district court's award or denial of attorney[s'] fees is reviewed for abuse of discretion.” Cramblit v. Fikse, 33 F.3d 633, 634 (6th Cir. 1994); see also Somberg on behalf of Somberg v. Utica Cmty. Sch., 908 F.3d 162, 182 (6th Cir. 2018) (“When a district court provides ‘a clear and concise explanation of its reasons for the [attorneys' fees] award,' we afford the district court's calculation of the lodestar value and any justifiable departure substantial deference.”) (quoting Gonter, 510 F.3d at 616).

         III. ANALYSIS

         Defendants argue that the rates proposed by Trakhter's Counsel are unreasonable; that the records kept by Trakhter's Counsel are inadequate; and that a fee enhancement is not available under the facts of this case. (See Doc. 49). The Court considers each argument in turn, before setting out its final calculations.

         A. Reasonableness of Rates

         Defendants argue that the rates proposed by Trakhter's Counsel are unreasonable. (Doc. 49 at 6). The Court agrees.

         A court has the “broad discretion to determine what constitutes a reasonable hourly rate.” Wayne v. Vill. of Sebring, 36 F.3d 517, 533 (6th Cir. 1994). A reasonable hourly rate is one that attracts competent counsel but avoids producing a windfall. Dowling v. Litton Loan Servicing LP, 320 Fed.Appx. 442, 446 (6th Cir. 2009) (citing Geier v. Sundquist, 372 F.3d 784, 791 (6th Cir. 2004)). In determining what constitutes a reasonable hourly rate, a “useful guideline is the prevailing market rate in the relevant community.” Gilden v. Platinum Holdings Grp., LLC, No. 1:18-CV-343, 2019 WL 590745, at *3 (S.D. Ohio Feb. 13, 2019) (quoting Dowling, 320 Fed.Appx. at 447).

         In this case, Trakhter's Counsel charged rates higher than the those prevailing in the relevant community. Thus, adjustment is proper.

         1. The Relevant Community

         First, the relevant community, by which to determine the prevailing rates, is the Ohio complex litigation community.

         As a general rule, the “relevant community” is the jurisdiction where the case was tried. See Louisville Black Police Officers Org. v. City of Louisville, 700 F.2d 268, 278 (6th Cir. 1983). Courts depart from this general rule where a “good-faith effort” fails to identify local counsel, competent to handle the proceedings. Sigley v. Kuhn, Nos. 98-3977, 99-3531, 2000 WL 145187, at *7 (6th Cir. Jan. 31, 2000). This exception is called the out-of-town specialist rule. Hadix v. Johnson, 65 F.3d 532, 535 (6th Cir. 1995) (analyzing the propriety of awarding out-of-town counsel out-of-town rates, under the out-of-town specialist rule).

         The out-of-town specialist rule applies where a plaintiff shows that it was “necessary” to retain out-of-town counsel. Hadix, 65 F.3d at 535. The out-of-town specialist rule does not apply where competent local counsel is readily available. Am. Broad. Companies, Inc. v. Brunner, No. 1:04-CV-750, 2008 WL 11450441, at *11 (S.D. Ohio Sept. 30, 2008); see, e.g., The Ne. Ohio Coal. for the Homeless v. Husted, 831 F.3d 686, 716-19 (6th Cir. 2016) (refusing to award out-of-town counsel national rates, where its retention was not necessary). A court has the broad discretion to hold out-of-town counsel to local rates. Wayne, 36 F.3d at 533.

         Here, the relevant community is the Ohio complex litigation community-not the “national” complex litigation community (as Trakhter argues). (See Doc. 55 at 4-6). This is true despite the fact that Takhter retained an out-of-state firm (KT) to represent him. While KT is a highly accomplished firm, it is not an out-of-town specialist. Trakhter has not demonstrated that it was necessary for him to look beyond Ohio for competent qui tam representation.[5] (Doc. 49-1 at 25). Indeed, Trakhter only checked with one other Ohio firm before retaining KT. (Doc. 55-2 at ¶¶ 4-9). Under such circumstances, no good-faith effort failed to identify local counsel.

         2. The Prevailing Rates

         Second, the prevailing rates, in the relevant community, are up to $345/hour for senior associates, and up ...


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