The opinion of the court was delivered by: McCLURE, District Judge.
Relators filed a second complaint, docketed to No.
4:CV-96-1303, on July 12, 1996, alleging that defendant failed to
comply with instructions of the Health Care Financing
Administration (HCFA) of the Department of Health and Human
Services concerning the processing of laboratory claims submitted
for treatment of patients with End Stage Renal Disease (ESRD).
In accordance with the False Claims Act, relators filed the
complaints under seal and served them on the government, along
with "voluntary disclosure statements." The government conducted
an investigation which also involved allegations by two other
relators who filed complaints against defendant, as well as a
problem disclosed to the government by defendant itself.
In the end, the government negotiated, and relators accepted, a
global settlement of the claims with defendant for
$38,500,000.00. Of that amount, $14,000,000.00 was attributed to
relators' claims, and they were awarded 18% of the recovery, or
$2,252,000.00. Relators then paid a contingency fee to their
counsel of 40% of the recovery, or $1,008,000.00. It was only
after the settlement was accepted by relators that the government
formally intervened and moved for dismissal. The dismissal was
with prejudice, with the reservation of relators' right to
petition for a statutory award of attorney's fees.
On September 25, 1998, relators petitioned the court for the
award of attorney's fees. Since defendant opposed the award, an
evidentiary hearing was conducted on April 26-28, 1999, and May
11-12, 1999. The request is now ripe for disposition.
The relevant statute provides that a relator in a successful
qui tam action "shall also 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). That relators are entitled to reasonable
fees and costs is not in dispute. Rather, it is whether the fees
claimed by relators are reasonable which is disputed by
The parties agree that the proper manner for determining the
amount of the fees is the "lodestar method," which is the general
method for determining reasonable attorney's fees in cases
involving fee-shifting statutes. See, e.g., Marinelli v. City of
Erie, 25 F. Supp.2d 674, 680-681 (W.D.Pa. 1998) (using lodestar
method under Americans with Disabilities Act, which incorporates
attorney's fees provision of Title VII); Boykin v. Bloomsburg
Univ. of Pennsylvania, 905 F. Supp. 1335, 1348 (M.D.Pa. 1995)
(Muir, J.; Conclusion of Law No. 8; fee award against attorney
who unreasonably and vexatiously multiplies proceedings under
28 U.S.C. § 1927), aff'd, 91 F.3d 122 (3d Cir. 1996) (table),
cert. denied sub nom. Mirin v. Eyerly, 519 U.S. 1078, 117 S.Ct.
739, 136 L.Ed.2d 678 (1997).
Hours may be excluded if they are not reasonably expended,
meaning that they are excessive, redundant, or otherwise
unnecessary, that they relate to distinct claims on which the
applicant did not succeed, or that the hours are inadequately
documented. Id. (citing Hensley at 433, 440, 103 S.Ct. 1933;
Institutionalized Juveniles v. Secretary of Public Welfare,
758 F.2d 897, 919 (3d Cir. 1985)). An hourly rate is reasonable if it
is consistent with the prevailing market rates in the relevant
community. Id. (citing Blum v. Stenson, 465 U.S. 886, 895,
104 S.Ct. 1541, 79 L.Ed.2d 891 (1984)). This requires an
assessment of the experience and skill of the applicant's
attorneys and a comparison of their rates to the rates prevailing
in the community in which the attorneys practice for similar
services provided by attorneys of similar skill, experience, and
reputation. Id. (citing Blum at 895 n. 11, 104 S.Ct. 1541;
Student Public Interest Research Group v. AT & T Bell
Laboratories, 842 F.2d 1436, 1447 (3d Cir. 1988)).
Once the court determines the reasonable number of hours
expended and the reasonable hourly rate, it multiplies the two to
obtain the lodestar, which is presumed to be the reasonable fee.
Id. (citing Blum at 897, 104 S.Ct. 1541). The court then has
the discretion to make certain adjustments to the lodestar, the
necessity of which must be proven by the party seeking the
adjustment. Id. (citing Cunningham v. City of McKeesport,
753 F.2d 262, 268 (3d Cir. 1985), vacated on other grounds,
478 U.S. 1015, 106 S.Ct. 3324, 92 L.Ed.2d 731, reinstated,
807 F.2d 49 (3d Cir. 1986), cert. denied, 481 U.S. 1049, 107 S.Ct. 2179,
95 L.Ed.2d 836 (1987)).
The lodestar may be adjusted downward if the lodestar is not
reasonable in light of the results obtained, thereby accounting
for time spent litigating unsuccessful or partially unsuccessful
claims that are related to the successful claims. Id. (citing
Hensley at 434-437, 103 S.Ct. 1933). While there are instances
in which an upward adjustment may be appropriate, id. at
1183-1184, such are not applicable in this case and are not
claimed by relators.
Under federal law regarding fee shifting statutes, time
expended by attorneys seeking an award of fees (sometimes called
"fees on fees") justifiably may be included in the application
and the award. Polselli v. Nationwide Mutual Fire Insurance
Co., 126 F.3d 524, 537 (3d Cir. 1997) (citing Prandini v.
National Tea Co., 585 F.2d 47, 53 (3d Cir. 1978); Public
Interest Research Group of New Jersey v. Windall, 51 F.3d 1179,
1190 (3d Cir. 1995)).
Based on the applicable standard, a number of the arguments
raised by defendant may be rejected summarily.
First, relators met their initial burden of proof by
introducing the legal bills and the testimony of counsel that the
hours expended were reasonable. Defendant's argument that
relators must produce evidence regarding why each hour billed was
reasonable simply contradicts the law of the Third Circuit on the
Related arguments are asserted by defendant with respect to
certain categories of hours spent by counsel which purportedly
are unnecessary. For instance, defendant contends that counsel's
hours should have been reduced because the government was
conducting a vigorous investigation. Such an assertion is
insufficient: defendant must point to specific hours which need
not have been expended because the government investigators had
performed the task already or would be performing the task.
Defendant also contested the time spent drafting the complaints
and disclosure statements prepared by relators pursuant to §
3730(b)(2). No evidence was provided by defendant as to the
amount of time the drafting should have taken, although relators
responded to the general "too much" objection by providing
testimony of a qui tam practitioner that the hours billed were
reasonable. Given the complicated nature of the actions and the
heightened pleading requirement for complaints alleging fraud, as
well as the necessity of preparing the requisite disclosure
statements, we cannot say that the hours billed were
unreasonable. The same problem exists with respect to defendant's
objections to internal consultation within the law firm
representing relators, and the amount of time spent on the
telephone by counsel consulting among themselves, with government
counsel, and with relators individually.
Defendant seeks a 25% reduction in the travel time billed by
relators' counsel. Relators have withdrawn claimed fees
representing duplicate billings when multiple attorneys attended
meetings, which would include the travel time. This withdrawal is
sufficient to cover the claimed excess.
Defendant also makes a general argument of duplicate effort. To
the extent this refers to such things as meetings attended by
both counsel and local counsel, we see no reason to exclude these
hours from the lodestar: the complicated nature of the case makes
employment of multiple attorneys proper for such a task. For the
sake of comparison, we would not find multiple criminal defense
attorneys in a complicated prosecution, such as a capital or RICO
case, to be unreasonable. We disagree with defendant's general
proposition that it is inherently unreasonable to have more than
one attorney involved in such matters as meetings and telephone
conferences, and see no basis for excluding hours from the
lodestar calculation based on "duplication of effort."
Defendant contends that it was unnecessary to consult a
litigation expert within the firm employed by relators. Since
there was a good chance that the government would choose not to
intervene, particularly with respect to the force code complaint,
it was reasonable for counsel to prepare for the eventuality that
relators would have to pursue the action themselves.
We also disagree with defendant's argument that any hours
represented in block billing which cannot be supported in detail
should be excluded. Block billing is a common practice which
itself saves time in that the attorney summarizes activities
rather than detailing every task. While a substantial number of
vague entries may be a reason to exclude hours from the lodestar
calculation, that a block may have an entry such as "review file"
is not a reason to exclude the entire entry. We believe the more
appropriate approach would be to look at the entire block,
comparing the listed activities and the time spent, and
determining whether the hours reasonably correlate to all of the
Defendant points to the large number of hours spent on
researching various aspects of the False Claims Act by relators'
counsel. Again, a general "too much" argument is insufficient, as
it is necessary to point to the specific area researched and to
provide reasons why the research or the amount of time on the
research is unreasonable.
In this instance, relators claimed that the damages were much
greater than the government at first thought likely. While
relators' view eventually seemed inflated, the fact is that the
government's recovery was considerably greater than its initial
estimate. It clearly was reasonable, then, for relators' counsel
to attempt to convince the government to change its view.
Moreover, the government increased the percentage of the proceeds
awarded to relators as part of the overall settlement of the
case, not in collateral litigation. We see no basis for reducing
the number of hours for purposes of determining the lodestar
based on the nature of this work by relators' counsel.
For their part, relators initially claimed that they were
entitled to an award of attorney's fees in an amount equal to the
contingency fee paid to their counsel. This contention was based
on a statement in the legislative history of § 3730 to the effect
that most qui tam cases would involve counsel with contingency
agreements with the relators. Relators seem to have abandoned
this position, and we agree with defendant that it may be
rejected out of hand. As noted, the Third Circuit employs the
lodestar method in statutory fee-shifting cases. Moreover, a
single statement in a legislative history is not a part of the
statute, and can hardly be said to override the plain language of
We turn to the relevant facts as established at the evidentiary
hearing. In so doing, we address only those facts relevant for
purposes of the thirteen areas listed by defendant as being the
subjects of challenge, Defendant's Exhibit 4 (Biesecker Report)
at 3-4, and which the court is able to extract from defendant's
proposed findings of fact and conclusions of law. Most of the
latter have been addressed above as being easily rejected.
Remaining are arguments concerning hours spent on drafting of
False Claims Act memoranda for the government, researching the
right to attorney's fees under the False Claims Act, and
reviewing documents provided by defendant to the government.
1. These actions, along with two related qui tam actions
brought by relators Lynn M. Bultena and Susan L. Howell, were
resolved in a global settlement agreement between defendant, the
government, and all of the relators, said agreement being dated
August 12, 1998.
2. Under the terms of the agreement, defendant paid the
government $38,500,000.00, in contrast to an initial government
estimate for recovery of $7,000,000.00.
3. That total was allocated by the government as follows: $16
million to Bultena's complaint; $3.2 million to Howell's
complaint; $13 million to the Hicks' ESRD claims and $1 million
to their Force Code qui tam action; $4.8 million to an
overpayment issue disclosed by defendant (not a subject of any
qui tam action); and $500,000.00 for the government's civil
4. The government in turn paid each of the four relators 18% of
their portion of the settlement, as follows: Bultena,
$2,880,000.00; relators, $2,252,000.00; and Howell, $576,000.00.
5. Relators never agreed to the government's unilateral
allocation of $13,000,000.00 to their ESRD claim and
$1,000,000.00 to their force code claim, although they did agree
to the $14,000,000.00 total.
7. The legal bills introduced by relators relating to the
underlying qui tam litigation reflect a total of $717,115.25
(reflecting 3,427.45 hours at the rates actually charged
according to the bills) in incurred legal ...