Health Republic Insurance Company v. United States ( 2021 )

IN THE UNITED STATES COURT OF FEDERAL CLAIMS
___________________________________
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HEALTH REPUBLIC INSURANCE )
COMPANY, )
)
Plaintiff, )
)
v. ) No. 16-cv-259C
)
THE UNITED STATES, )
)
Defendant. )
___________________________________ )
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COMMON GROUND HEALTHCARE )
COOPERATIVE, )
)
Plaintiff, )
)
v. ) No. 17-cv-877C
)
THE UNITED STATES, )
) Filed: September 16, 2021
Defendant. )
___________________________________ )
OPINION AND ORDER
Before the Court are Class Counsel Quinn Emanuel Urquhart & Sullivan LLP’s Motions
for Approval of Attorney’s Fee Request and Class Representative Incentive Award related to their
representation of certain classes certified in the above-captioned cases. See Health Republic ECF
No. 84; Common Ground ECF No. 107. 1 Class Counsel seek approval of an attorney’s fee award
of five percent, approximately $185 million of the combined $3.7 billion judgment recovered on
the Non-Dispute Subclasses’ risk corridors claims. They also seek approval of $100,000 incentive
awards to both Health Republic Insurance Co. (“Health Republic”) and Common Ground
1 Because the briefing pertaining to the opposed fee request motions in both cases is
substantively the same, for ease of reference this opinion and order will cite only to the briefing in
Health Republic.
Healthcare Cooperative (“Common Ground”) (collectively, “named Plaintiffs”) as representatives
of their respective classes, to be paid from Class Counsel’s fee. The Court is tasked with
determining the reasonableness of these awards. For the reasons that follow, the Court approves
in part and denies in part Class Counsel’s requests.
I. BACKGROUND
On February 24, 2016, Class Counsel filed a complaint on behalf of Health Republic as the
first challenge to the Government’s failure to make risk corridors payments to Qualified Health
Plan (“QHP”) issuers pursuant to Section 1342 of the Patient Protection and Affordable Care Act,
Pub. L. No. 111-148 (2010), 124 Stat. 119, and the Health Care and Education Reconciliation Act
of 2010, Pub. L. No. 111-152 (2010), 124 Stat. 1029 (collectively, the “ACA”). See Pl.’s Class
Action Compl., Health Republic ECF No. 1. The risk corridors program was designed to mitigate
risk for QHP issuers participating in the new insurance market created by the ACA. It did so by
providing QHP issuers compensation from the Government for any “losses exceed[ing] a certain
defined amount due to high utilization and high medical costs,” while on the other hand requiring
QHP issuers to pay the Government “a percentage of any profits [QHP issuers] made over
similarly-defined amounts.” Id. ¶ 5. In the Complaint, Class Counsel argued on behalf of Health
Republic and a putative class of QHP issuers that Section 1342 was a money-mandating statutory
provision that required the Government to “pay any QHP certain amounts exceeding the target
costs they incurred in [benefit years] 2014 and 2015,” id. ¶ 60, notwithstanding Congress’s
decision not to appropriate sufficient funds to pay such amounts, id. ¶ 10. Health Republic was
the first lawsuit filed challenging the Government’s withholding of risk corridors payments and
the first of its kind to raise a money-mandating theory of recovery under the Tucker Act. Health
Republic ECF No. 84 at 9 (citing Decl. of Stephen A. Swedlow ¶ 8, ECF No. 84-1).
2
By August 2016, numerous other firms had brought similar suits in this court on behalf of
individual QHP issuers, each arguing, among other things, that Section 1342 mandated the
Government to make risk corridors payments. See, e.g., First Priority Life Ins. Co. v. United
States, No. 16-cv-587 (Fed. Cl.) (filed May 17, 2016); Moda Health Plan, Inc. v. United States,
No. 16-cv-649 (Fed. Cl.) (filed June 1, 2016); Blue Cross and Blue Shield of N.C. v. United States,
No. 16-cv-651 (Fed. Cl.) (filed June 2, 2016); Me. Cmty. Health Options v. United States, No. 16-
cv-967 (Fed. Cl.) (filed Aug. 9, 2016); see also Health Republic ECF No. 84-1 ¶ 11.
The Government moved to dismiss Health Republic’s Complaint, arguing that the Court
of Federal Claims lacked subject matter jurisdiction under the Tucker Act because Section 1342
did not constitute a money-mandating statute providing a substantive right to payment. See Def.’s
Mot. to Dismiss at 21–26, Health Republic ECF No. 8. The court rejected that argument and
denied the Motion to Dismiss as to the Section 1342 claim. See Health Republic Ins. Co. v. United
States, 129 Fed. Cl. 757 (2017).
At the same time the court was considering the Government’s Motion to Dismiss, Health
Republic was moving forward in the class certification phase. The Government did not oppose
certification; consequently, on January 3, 2017, the court certified the proposed class in Health
Republic and appointed Quinn Emanuel lead class counsel. Order at 1–2, Health Republic ECF
No. 30. On February 24, 2017, exactly one year after it initiated suit, the court granted Class
Counsel’s proposed class notice plan. See Order, Health Republic ECF No. 42. Consistent with
the opt-in nature of class actions in the Court of Federal Claims, Class Counsel’s notice explicitly
informed potential class members that they must affirmatively submit a Class Action Opt-In Notice
Form to join the class, otherwise they would receive no benefit from the lawsuit. Updated
Proposed Class Notice at 2, 5, Health Republic ECF No. 41-1. The notice advised potential class
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members that, if successful, Class Counsel would seek permission to be compensated for their
representation, which would be deducted from the amount of any recovery by the class. Id. at 7.
It did not identify a particular amount or percentage of any proposed fee award. See id.; see also
Health Republic ECF No. 84-1 ¶ 13.
According to Class Counsel, it later became known that potential class members were
under the erroneous assumption that Class Counsel would be seeking a fee percentage in the
ballpark of 30 percent of any judgment. Mot. to Suppl. Class Notice at 1, Health Republic ECF
No. 50; Health Republic ECF No. 84-1 ¶ 13. To assuage those concerns, and with the court’s
approval, Class Counsel distributed a supplement to the class notice representing to potential class
members that they would seek a fee of no more than five percent of the class’s recovery. Proposed
Suppl. Class Notice at 6, Health Republic ECF No. 50-1; Order, Health Republic ECF No. 51;
Health Republic ECF No. 84-1 ¶ 15. The supplemental notice advised that the maximum award
may be substantially reduced depending on the level of class participation and, in any event, would
“be determined by the Court subject to, among other things, the amount at issue in the case and . .
. a ‘lodestar cross-check[.]’” Health Republic ECF No. 50-1 at 6. In sum, 153 QHP issuers opted
into the Health Republic class. Health Republic ECF No. 84-1 ¶ 17.
In March 2017, Health Republic moved for summary judgment. See Pl.’s Mot. for Summ.
J., Health Republic ECF No. 47. On June 27, 2017, before the court decided that Motion, Class
Counsel filed a separate class action complaint in Common Ground for benefit year 2016. See
Pl.’s Class Action Compl., Common Ground ECF No. 1. As in Health Republic, the court certified
the proposed risk corridors class in Common Ground and appointed Quinn Emanuel as class
counsel. Order at 2, 3, Common Ground ECF No. 17. It likewise approved Class Counsel’s
proposed class notice plan. Order, Common Ground ECF No. 25. The Common Ground class
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notice also advised potential class members that they must affirmatively opt into the class to benefit
from the lawsuit and that, if successful, Class Counsel would seek approval of at most a five
percent attorney’s fee award to be deducted from any class recovery. Am. Proposed Class Notice
at 1, 4–5, 6, Common Ground ECF No. 24-1. The notice similarly stated that Class Counsel’s fee
request might be reduced depending on class participation and that the fee ultimately would be
determined by the court subject to a lodestar cross-check. Id. at 6. In response, 130 QHP issuers
opted into the Common Ground class. Health Republic ECF No. 84-1 ¶ 17.
Meanwhile, other risk corridors cases moved through the litigation process, with Moda
Health being the first to reach and be granted summary judgment. See Moda Health Plan, Inc. v.
United States, 130 Fed. Cl. 436 (2017). The favorable decision in Moda was in part a credit to
Class Counsel’s work in Health Republic, as it relied extensively on the court’s decision denying
the Government’s request to dismiss Health Republic’s Section 1342 claim. See generally id.(citing with approval Health Republic Ins. Co., 129 Fed. Cl. at 770–72). The Government appealed
the decision in Moda Health, and pending resolution of that and other related appeals, the court
stayed further proceedings in the instant cases. Order, Health Republic ECF No. 62; Order,
Common Ground ECF No. 9. The stays lasted approximately three years.
With Health Republic and Common Ground stayed, Class Counsel turned to filing amicus
briefs on behalf of Health Republic, Common Ground, and additional parties in the United States
Court of Appeals for the Federal Circuit. Health Republic ECF No. 84 at 12–13 (citing Health
Republic ECF No. 84-1 ¶ 22). The Federal Circuit subsequently ruled in favor of the Government
in each risk corridors appeal. See Me. Cmty. Health Options v. United States, 729 F. App’x 939
(Fed. Cir. 2018); Moda Health Plan, Inc. v. United States, 892 F.3d 1311 (Fed. Cir. 2018); Land
of Lincoln Mut. Health Ins. Co. v. United States, 892 F.3d 1184 (Fed. Cir. 2018). A divided Federal
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Circuit later denied the motion for rehearing en banc in Moda Health, with Judge Wallach and
Judge Newman dissenting. Moda Health Plan, Inc. v. United States, 908 F.3d 738 (Fed. Cir.
2018). In his dissent, Judge Wallach cited several times Class Counsel’s amicus submissions on
behalf of Professor Kate Bundorf and other healthcare economists, as well as Health Republic and
Common Ground. See id. at 747–48 (Wallach, J., dissenting).
In the subsequent Supreme Court proceedings, Class Counsel continued to work to assist
the QHP issuers in the risk corridors appeals for the obvious reason that success on virtually
identical claims (even in separate suits) would benefit the classes here. They again submitted
amicus briefs (albeit on behalf of a group of healthcare economists, not Health Republic or
Common Ground) at both the writ of certiorari and merits stages. See Health Republic ECF No.
84-1 ¶ 22; Opp’n and Obj. to Mot. for Approval of Atty’s Fee Req. at 12–13, Health Republic ECF
No. 89. Class Counsel also “provided comments, strategic suggestions, and assistance with
argument to the firms and attorneys handling the Supreme Court arguments.” Health Republic
ECF No. 84 at 13 (citing Health Republic ECF No. 84-1 ¶ 22). In an 8-1 decision, the Supreme
Court held that Section 1342 was a money-mandating statute that obligated the Government to
make risk corridors payments to QHP issuers, and such obligation was not impliedly repealed by
subsequent appropriation riders. See Me. Cmty. Health Options v. United States, 140 S. Ct. 1308,
1323, 1327 (2020). The decision essentially vindicated the argument Class Counsel incepted in
Health Republic. See Health Republic ECF No. 1 ¶¶ 60–63; see also Health Republic, 129 Fed.
Cl. at 770. As a result of the Supreme Court’s decision, the industry-wide recovery for QHP
issuers amounts to roughly $12 billion. Health Republic ECF No. 84 at 7. The class members
represented by Class Counsel here received a large chunk of that amount: $1.9 billion in Health
Republic and $1.8 billion in Common Ground. See Rule 54(b) J. at 1, Health Republic ECF No.
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83; see Order at 1, Common Ground ECF No. 111. This represents a 100 percent recovery of the
classes’ unpaid risk corridors payments. Health Republic ECF No. 84-1 ¶ 19.
Seeking compensation, Class Counsel filed their Motion for Approval of Attorney’s Fee
Request and Class Representative Incentive Award on July 30, 2020. Consistent with the ceiling
set in the class notices, Class Counsel seek five percent of the common fund, or approximately
$185 million of the combined $3.7 billion awarded in the instant cases. Health Republic ECF No.
84 at 7–8. They argue that such percentage is reasonable primarily based on the seven-factor test
explicated in Moore v. United States, 63 Fed. Cl. 781, 787 (2005), and utilized by several judges
of the Court of Federal Claims applying the percentage-of-the-fund fee methodology. Health
Republic ECF No. 84 at 15 (citing Kane Cty. Utah v. United States, 145 Fed. Cl. 15, 18 (2019),
Lambert v. United States, 124 Fed. Cl. 675, 683 (2015), Quimby v. United States, 107 Fed. Cl.
126, 133 (2012)). Class Counsel argue that each of the Moore factors supports the conclusion that
they are entitled to the full five percent fee award requested. Id. Additionally, Class Counsel ask
that the Court award, from their fees, $100,000 incentive awards to each of the named Plaintiffs in
these cases. Id. at 38–39.
Thirty-four class members lodged a consolidated objection to Class Counsel’s request.
Although Objectors state that Class Counsel “should be compensated handsomely” for their work
on the two class actions, they have a dramatically different understanding of what that means.
Health Republic ECF No. 89 at 8. Objectors argue that Class Counsel are entitled to approximately
$8.8 million, or about .22 percent of the common fund. Id. at 9; see Reply to Opp’n and Obj. to
Mot. for Approval of Atty’s Fee Req. at 19, Health Republic ECF No. 93. Contrary to the
percentage-of-the-fund approach advocated by Class Counsel, Objectors ask the Court to apply
either the lodestar method to determine Class Counsel’s fees or to use the lodestar as a cross-check
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against the requested fee percentage. Health Republic ECF No. 89 at 14. Under that methodology,
they ask the Court to reduce the number of hours used to calculate Class Counsel’s lodestar by 35
percent for failure to provide detailed billing records and to lower Class Counsel’s blended hourly
billable rate by 35–40 percent to align with the Laffey Matrix. Id. at 15–18. Additionally,
Objectors argue that a risk multiplier of no more than two—instead of the 18–19 multiplier
produced by Class Counsel’s requested fee—is appropriate. Id. at 20, 24. Objectors state no
objection to Class Counsel’s request for incentive awards.
II. DISCUSSION
A. The Court Will Apply the Percentage-of-the-Fund Method to Determine
Reasonable Attorney’s Fees in These Common Fund Cases.
Rule 23 of the Rules of the United States Court of Federal Claims (“RCFC”) permits this
Court to “award reasonable attorney’s fees and nontaxable costs that are authorized by law or by
the parties’ agreement” in a certified class action. RCFC 23(h); see Moore, 63 Fed. Cl. at 786
(attorney’s fee awards are “committed to the sound discretion of the court”). In common fund
cases, such as this, where “each member of a certified class has an undisputed and mathematically
ascertainable claim to part of a lump-sum judgment recovered on his behalf,” Boeing Co. v. Van
Gemert, 444 U.S. 472, 479 (1980), “a litigant or a lawyer . . . is entitled to reasonable attorney fees
from the fund as a whole,” Haggart v. Woodley, 809 F.3d 1336, 1352 (Fed. Cir. 2016) (internal
quotations and modifications omitted) (citing Boeing, 444 U.S. at 478). Awarding attorney’s fees
out of the common fund guarantees that each member of the class pays its fair share for class
counsel’s representation. See Boeing, 444 U.S. at 478 (common fund fee awards avoid unjustly
enriching parties substantially benefitting from, while only minorly contributing to, the suit); see
also Kane Cty., 145 Fed. Cl. at 18. Here, the common fund between the two cases is approximately
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$3.7 billion, from which five percent has been reserved pending resolution of Class Counsel’s fee
request. 2 See Order, Health Republic ECF No. 98; Order, Common Ground ECF No. 125.
Federal courts have taken differing approaches to determine the reasonableness of an
attorney’s fee request in common fund cases, and thus, one of the primary disputes between Class
Counsel and Objectors is the methodology this Court should apply. Class Counsel request that the
Court use the percentage-of-the-fund approach. Health Republic ECF No. 84 at 15. Under this
approach, several judges of the Court of Federal Claims have utilized the seven Moore factors as
guideposts for determining reasonableness. Id. (collecting cases). These factors consider:
(1) the quality of counsel; (2) the complexity and duration of the litigation; (3) the
risk of nonrecovery; (4) the fee that likely would have been negotiated between
private parties in similar cases; (5) any class members’ objections to the settlement
terms or fees requested by class counsel; (6) the percentage applied in other class
actions; and (7) the size of the award.
Moore, 63 Fed. Cl. at 787 (citing Manual for Complex Litigation § 14.121 (4th ed. 2004)
(“MCL”)). No single factor is necessarily dispositive; they can be weighed in the Court’s
discretion. See, e.g., Quimby, 107 Fed. Cl. at 134 (considering each factor and determining that
the fee likely to have been negotiated between the parties most justified the award).
Objectors, on the other hand, advocate for either the lodestar method or the lodestar as a
cross-check against any percentage award. Health Republic ECF No. 89 at 14. No matter how it
is used, the lodestar is calculated by multiplying the number of hours reasonably billed by class
counsel in undertaking the litigation by the appropriate billable rates for their services. See Geneva
Rock Prods., Inc. v. United States, 119 Fed. Cl. 581, 594–96 (2015). In a common fund case, the
court may then increase or decrease the amount of the lodestar by a so-called risk multiplier (a
2The parties do not dispute that a common fund exists in these cases or that the common
fund doctrine, as opposed to fee-shifting, applies.
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number symbolizing the amount of risk or difficulty involved with the case). Haggart, 809 F.3d
at 1355 n.19.
The Federal Circuit has not mandated the use of one approach over the other. Rather,
binding precedent holds that this Court has discretion to choose between the percentage-of-the-
fund or lodestar methods in a common fund case. 3 See id. at 1354–55. While the lodestar method
is the preferred means of calculating attorney’s fees in fee-shifting cases, it has fallen out of favor
in cases where fees are paid from a common fund. See Perdue v. Kenny A. ex rel. Winn, 559 U.S.
542, 551 (2010); see also In re Rite Aid Corp. Sec. Litig., 396 F.3d 294, 300 (3d Cir. 2005) (stating
that the percentage-of-the-fund is “favored in common fund cases because it allows courts to award
fees from the fund in a manner that rewards counsel for success and penalizes it for failure”);
Swedish Hosp. Corp. v. Shalala, 1 F.3d 1261, 1271 (D.C. Cir. 1993) (“[A] percentage-of-the-fund
method is the appropriate mechanism for determining the attorney fees award in common fund
cases.”); MCL § 14.121 (stating that “the vast majority of courts of appeals now permit or direct
district courts to use the percentage-fee method in common-fund cases” (internal notations
omitted)). The reason for this is clear: “the lodestar method was designed to govern imposition of
fees on the losing party,” not the distribution of fees from victorious plaintiffs to their attorney.
Gisbrecht v. Barnhart, 535 U.S. 789, 806 (2002) (determining the lodestar method to be
inappropriate for judging reasonableness of contingency fee arrangement between attorney and
claimant in social security case subject to statutory maximum fee percentage).
3 Consistent with that discretion, other judges of the Court of Federal Claims have chosen
to use the lodestar as a cross-check for the percentage-of-the-fund method, see, e.g., Kane Cty.,
145 Fed. Cl. at 19; Geneva Rock Prods., 119 Fed. Cl. at 594–95, while others have declined, see,
e.g., Lambert, 124 Fed. Cl. at 683 n.10; Quimby, 107 Fed. Cl. at 133–34.
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But this is not the only reason why the lodestar method has been identified as a poor fit for
common fund cases. More consequential criticisms emphasize that it “is difficult to apply, time-
consuming to administer, inconsistent in result, and capable of manipulation,” and it creates
incentives for inefficiency. MCL § 14.121; see Ramah Navajo Chapter v. Jewell, 167 F. Supp. 3d
1217, 1242 (D.N.M. 2016) (The lodestar, “even when used as a cross check . . . has the effect of
rewarding attorneys for the same undesirable activities that the percentage method was designed
to discourage, namely ‘incentiviz[ing] [class counsel] to multiply filings and drag along
proceedings to increase their lodestar.’” (citation omitted)); Jones v. Dominion Res. Servs., 601 F.
Supp. 2d 756, 766 (S.D. W.Va. 2009) (The lodestar cross-check tends to “re-introduce[] the
problems of the lodestar method.” (internal quote omitted)).
Considering the circumstances of these cases, the Court believes the percentage-of-the-
fund is the appropriate method for calculating Class Counsel’s fee award. The lodestar method’s
primary emphasis on billable hours worked, with potential upward adjustment for the risks
assumed by counsel, fails to appreciate certain factors important to analyzing the reasonableness
of Class Counsel’s fee request—for example, the class members’ affirmative choice to join these
suits (knowing the potential of a five percent fee) rather than to pursue individual claims subject
to a higher market rate for attorney’s fees and the tremendous 100 percent recovery they obtained.
See In re Synthroid Mktg. Litig., 325 F.3d 974, 975 (7th Cir. 2003) (attorney’s fees should reflect
the “market rate for legal services . . . rather than the compensation a judge thinks appropriate as
a matter of first principles”). Thus, a nuanced, factor-based analysis will more appropriately gauge
the reasonableness of Class Counsel’s requested fee than Objectors’ suggested use of the lodestar
(either directly or as a cross-check), which relies on arbitrary premises and results in a grossly
disproportionate fee award to Class Counsel in comparison to the complete recovery obtained by
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the classes. See Will v. Gen. Dynamics Corp. No. 06-698-GPM, 2010 WL 4818174, at *3 (S.D.
Ill. Nov. 22, 2010) (“The use of a lodestar cross-check in a common fund case is unnecessary,
arbitrary, and potentially counterproductive.” (citations omitted)).
Objectors rely on In re Volkswagen “Clean Diesel” Marketing Sales Practices & Products
Litigation, MDL No. 2672 CRB (JSC), 2017 WL 1352859 (N.D. Cal. Apr. 12, 2017) (“Clean
Diesel”), to support application of the lodestar method. Health Republic ECF No. 89 at 26. The
comparison is unconvincing despite the .25 percent attorney’s fee awarded in that case. First, in
Clean Diesel, Volkswagen—the defendant—agreed to pay attorney’s fees as part of a class
settlement; the class members received their recovery without making any payment for class
counsel’s representation. Clean Diesel, 2017 WL 1352859, at *1. The court declined to address
whether the common fund doctrine applied and, if so, which approach for calculating attorney’s
fees was appropriate. Id. at *2. It instead chose to apply the lodestar method because of its
applicability in both common fund and fee-shifting cases. Id. As a result, Clean Diesel is not
especially instructive.
Second, the facts of Clean Diesel differ substantially from those in the cases at bar. The
Clean Diesel court cited three reasons for using the lodestar method to calculate fees in the “unique
circumstances” of that case: (1) “much of the groundwork” for the class settlement was laid in
negotiations preceding a separate class settlement (for which counsel had received compensation);
(2) the separate settlement incentivized Volkswagen to quickly reach settlement in Clean Diesel;
and (3) the high amount of the settlement at issue resulted primarily from the nature and value of
the assets at issue. Id. The court held that the percentage method would overcompensate class
counsel where counsel “did not expend significant additional time” reaching the settlement in
Clean Diesel or “undertake significant additional risk.” Id. As discussed further below, the same
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cannot be said for Class Counsel’s prosecution of the instant cases. 4 Additionally, these cases do
not involve circumstances where a reduction in fees is necessary to protect class members from a
suboptimal settlement or the pecuniary self-interest of class counsel. See In re Subway Footlong
Sandwich Mktg. & Sales Pracs. Litig., 869 F.3d 551, 556 (7th Cir. 2017) (“A class settlement that
results in fees for class counsel but yields no meaningful relief for the class ‘is no better than a
racket.’” (citation omitted)); see also Reynolds v. Beneficial Nat. Bank, 288 F.3d 277, 279 (7th Cir.
2002).
Accordingly, the Court will use the percentage-of-the-fund method to evaluate the
reasonableness of Class Counsel’s requested fee using the multi-factor analysis applied in Moore.
B. Class Counsel’s Requested Attorney’s Fee Is Reasonable.
An analysis of the relevant factors persuades the Court that a five percent fee is reasonable.
1. The Quality of Counsel
The quality of Class Counsel is essentially undisputed here, and the Court finds nothing in
this category that justifies a reduction in the requested fee. Both Quinn Emanuel and the members
of Class Counsel’s team have a history of providing quality results for their clients, including in
large class actions. See Health Republic ECF No. 84 at 16–18; Health Republic ECF No. 84-1 at
¶¶ 2–7. Despite the at times hyperbolic nature of their Motions, the facts show that Class Counsel
demonstrated a degree of foresight in bringing these suits and focusing their attention on the
The other cases relied on by Objectors also demonstrate the fact-specific nature of a
4
court’s decision to use either the percentage-of-the-fund or lodestar method in common fund cases.
Health Republic ECF No. 89 at 25–26 (citing In re Wash. Pub. Power Supply Sys. Sec. Litig., 19
F.3d 1291 (9th Cir. 1994), and Alexander v. FedEx Ground Package Sys., Inc., No. 05-cv-00038,
2016 WL 3351017 (N.D. Cal. June 15, 2016)). What is reasonable in one case, however, does not
constrain the exercise of the Court’s discretion in these cases. Wash. Pub. Power, 19 F.3d at 1296(courts “should be guided by the fundamental principle that fee awards out of common funds be
reasonable under the circumstances” (emphasis in original) (internal quotation marks omitted)).
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Section 1342 claim several months before other parties began filing individual complaints based
in part on the same legal theory. See Health Republic ECF No. 84 at 18–19. Even though
Objectors call into question the novelty of the argument, they do not contest that Class Counsel
pioneered the Section 1342 lawsuit by a matter of months or that the same argument they first
pressed eventually persuaded the Supreme Court to rule in favor of QHP issuers. See Health
Republic ECF No. 89 at 10 (referencing comments made by America’s Health Insurance Plans in
2014 arguing that the Government was statutorily required to make risk corridors payments). That
the favorable Supreme Court decision came down in separate, parallel cases handled by other
counsel does not undermine the quality of Class Counsel’s representation or the value added by
class counsel to the broader risk corridors litigation. See id. at 12–13. Indeed, one reason other
related cases beat Class Counsel to the high court was because Class Counsel, unlike in some of
those cases, successfully defeated dismissal at the pleading stage. See Health Republic ECF No.
84 at 19. At the end of the day, what is more important is that Class Counsel’s legal theory resulted
in a huge award to the classes here. In re Synthroid, 325 F.3d at 979–80 (excellent outcome for
class weighed against reducing fees); see Health Republic ECF No. 84-1 ¶ 24. As such, this factor
weighs in favor of Class Counsel.
2. The Complexity and Duration of the Litigation
Courts have recognized that “[m]ost class actions are inherently complex.” In re Austrian
& German Bank Holocaust Litig., 80 F. Supp. 2d 164, 174 (S.D.N.Y. 2000) (citing In re NASDAQ
Market-Makers Antitrust Litig., 187 F.R.D. 465, 477 (S.D.N.Y. 1998)). The instant cases are no
exception. First, the legal question presented in these cases was not straightforward. As Class
Counsel note, when they brought the Health Republic case in February 2016, there was little in the
way of relevant binding precedent, both in terms of cases addressing money-mandating statutes
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and in those interpreting Section 1342. See Health Republic ECF No. 84 at 21 (“‘[r]arely has the
[Supreme] Court determined whether a statute can fairly be interpreted as mandating compensation
by the Federal Government” (internal quotation marks omitted) (quoting Me. Cmty. Health
Options, 140 S. Ct. at 1329)). The number of diverging opinions in the Court of Federal Claims,
the Federal Circuit, and Supreme Court suggest that while these cases “turned on purely legal
issues,” as Objectors emphasize (Health Republic ECF No. 89 at 9), the question of whether
Section 1342 mandated risk corridors payments to QHP issuers was nonetheless complex enough
to split multiple courts as to its proper resolution.
Additionally, although these cases did not involve contested class certification, discovery,
or trial, Class Counsel engaged in litigation in either a direct or supporting role at every level
before the class members in these cases were awarded judgment in their favor, including motion
practice at the pleading and merits stages in Health Republic as well as participation in related
appeals in both the Federal Circuit and Supreme Court. See In re Black Farmers Discrimination
Litig., 953 F. Supp. 2d 82, 94 (D.D.C. 2013) (rejecting “[a]n exclusive focus on the lack of
discovery, merits briefing, and trial” in determining class counsel’s fee award). These efforts
spanned the course of over four years.
Objectors focus on the fact that Health Republic and Common Ground were stayed at a
relatively early stage of the litigation pending the appeals in other risk corridors cases, and they
diminish the overall influence Class Counsel had on the success of their claims, which they claim
were secured in separate matters before the Supreme Court. See Health Republic ECF No. 89 at
9, 12–13, 26. In a different scenario, these arguments would likely gain traction. But not here.
Objectors do not dispute that Class Counsel was first to file the Section 1342 claim in Health
Republic months before other cases followed suit with, in part, identical claims. Nor do they
15
dispute that Health Republic failed to win the race to the Supreme Court only because Class
Counsel succeeded in surviving dismissal, while other risk corridors cases did not or simply moved
to judgment faster as individual (not class) claims. While it is not possible for this Court to divine
to what extent Class Counsel’s amicus arguments swayed the Maine Community majority,
Objectors also do not dispute that Class Counsel pressed the classes’ interests—albeit in a
supporting role—during the course of the stays. Nor can they deny that Class Counsel’s arguments
had some objective impact in other trial court and intermediate appellate proceedings. See Moda
Health Plan, 130 Fed. Cl. at 450–51; Moda Health Plan, 908 F.3d at 747–48 (Wallach, J.,
dissenting). Simply put, these are not cases in which Class Counsel merely rode the coattails of
other innovative litigators.
Second, Class Counsel have been tasked with organizing and managing two large classes
(153 members in Health Republic and 130 members in Common Ground, Health Republic ECF
No. 84-1 ¶ 17). The logistics of administering such large class participation—for example, flying
to meet with QHP issuers, fielding and resolving questions of class members and other issuers,
assisting class members who faced insolvency—magnifies the complexity of these cases. See
Health Republic ECF No. 84 at 22–23; Health Republic ECF No. 84-1 ¶¶ 18, 20–21; In re Black
Farmers Discrimination Litig., 953 F. Supp. 2d at 94 (acknowledging the “unenviable logistical
challenges that confronted class counsel” in large class action). All told, Class Counsel brought
together and have represented QHP issuers representing approximately one-third of the overall
value of risk corridors claims. Health Republic ECF No. 84-1 ¶ 17. Thus, the second Moore factor
also supports a finding of reasonableness.
16
3. The Risk of Nonrecovery
Victory was never a certainty in these and the other risk corridors cases. Success was
dependent on a showing that Section 1342 created one of those “rare money-mandating
obligation[s]” requiring the Government to make risk corridors payments to QHP issuers. Me.
Cmty., 140 S. Ct. at 1331. The Government vigorously opposed the claim, successfully securing
dismissal of the same Section 1342 claim in other risk corridors lawsuits before multiple judges of
the Court of Federal Claims. See, e.g., Me. Cmty. Health Options v. United States, 133 Fed. Cl. 1(2017); Blue Cross and Blue Shield of N.C. v. United States, 131 Fed. Cl. 457 (2017); Land of
Lincoln Mut. Health Ins. Co. v. United States, 129 Fed. Cl. 81 (2016). Losses in the Federal
Circuit, and that Court’s later rejection of rehearing en banc, only compounded the risk of non-
recovery. It would take a favorable decision by the Supreme Court to change the course.
As Objectors argue, the existence of multiple similar suits likely served to spread the risk,
and the stays in Health Republic and Common Ground reduced the number of hours Class Counsel
invested into risk corridors litigation at the trial court level. See Health Republic ECF No. 89 at
26, 29. But those factors do not significantly diminish the overall risk that the classes’ Section
1342 claim would not succeed. See Raulerson v. United States, 108 Fed. Cl. 675, 678 (2013)
(noting that “all litigation carries risk”). If anything, the consistent losses other firms faced in
litigating the same claim increased the riskiness of any additional time Class Counsel spent on
Health Republic and Common Ground. All totaled, Class Counsel accumulated 10,000 billable
hours and assumed all litigation costs for which they may not have received any compensation at
all had the outcome gone the other way. Health Republic ECF No. 84-1 ¶ 23. This factor,
therefore, supports their fee request.
17
4. The Fee That Likely Would Have Been Negotiated Between Private Parties in
Similar Cases
That Class Counsel are seeking a fee of only five percent weighs heavily in favor of
reasonableness when compared to other fee awards in typical common fund cases. It is not atypical
to find attorneys “regularly contract[ing] for contingent fees between 30% and 40% in non-class,
commercial litigation.” In re Ins. Brokerage Antitrust Litig., 282 F.R.D. 92, 123 (D.N.J. 2012);
Decl. of Brian T. Fitzpatrick ¶ 23, ECF No. 84-2 (“[T]he most common percentages awarded by
federal courts nationwide using the percentage method were 25%, 20% and 33%, with a mean
award of 25.4% and a median award of 25%.”). Fee awards in that range and higher have been
awarded in class actions filed in the Court of Federal Claims. See Raulerson, 108 Fed. Cl. at 680
(approving a 33 percent fee on a $22 million settlement); Quimby, 107 Fed. Cl. at 134 (approving
a 40 percent fee on a $74 million settlement).
More importantly, Class Counsel’s five percent fee is also well below the market rate for
attorney’s fees in the risk corridors litigation. The 25 percent attorney’s fee arrangement that
Health Republic and Common Ground agreed to with Class Counsel before the certification of
their respective classes reinforces this point, as do the higher rates sought by other firms
representing QHP issuers. See Health Republic ECF No. 84-1 ¶ 8; id. ¶ 14 (averring that other
firms’ fee percentages were “in multiples” of Class Counsel’s five percent fee); Suppl. Decl. of
Stephen A. Swedlow ¶ 10, Health Republic ECF No. 93-2 (describing fees of 15 percent or more
sought by other firms representing individual clients). Thus, by opting into the classes, Objectors
received a substantial percentage reduction in the cost of pursuing their claims. The number of
QHP issuers opting into the class after receiving notice of Class Counsel’s maximum five percent
fee suggests that many of the class members recognized the potential savings and considered the
18
requested fee to be at least a better deal than could be had by bringing their own individual lawsuits.
See Health Republic ECF No. 84-1 ¶¶ 15–16; Quimby, 107 Fed. Cl. at 134.
The decision in Quimby affirms this analysis. There, using the same seven-factor test, the
Quimby court approved a fee of 30 percent of a $74 million common fund largely because the fee
award was in line with what would have been negotiated in similar cases. Quimby, 107 Fed. Cl.
at 134. Although the size of the award gave the court some pause due to the unique circumstances
in that case, it ultimately reasoned that “[a] contingent fee that is reached by the free consent of
private parties should be respected as fair as between them.” Id. In its discussion, the court
emphasized the fact that the class members assented to the 30 percent fee arrangement by opting
into the class after receiving notice that counsel would seek that fee. Id. “[B]y opting into the
class, each member effectively accepted the offer of representation for a thirty percent contingency
fee, and presumably concluded that a better deal could not be reached with their own counsel.”
Id.; cf. Restatement (Third) of the Law Governing Lawyers § 34 cmt. C. (Am. Law Inst. 2007)
(“Fees agreed to by clients sophisticated in entering into such arrangements (such as a fee contract
made by inside legal counsel in behalf of a corporation) should almost invariably be found
reasonable.”).
Similar reasons militate for the approval of Class Counsel’s full fee request. First,
Objectors, like the class members in Quimby, acted affirmatively to join the classes in these cases.
See Haggart v. United States, 89 Fed. Cl. 523, 530 (2009) (“[F]or an opt-in class action [under
RCFC 23], each participating member of the class must act affirmatively to participate . . .”). They
did so after being fully advised by the class notices that Class Counsel would seek no more than
five percent of any recovery. See, e.g., Health Republic ECF No. 50-1 at 6; Health Republic ECF
No. 84-1 ¶ 15. And they did so notwithstanding that there was a market for private counsel
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representing individual QHP issuers with risk corridors claims. Notably, the class members in
these cases consist of sophisticated entities with access to in-house legal counsel. See Health
Republic ECF No. 84-1 ¶ 21; Health Republic ECF No. 93 at 26. As issuers of insurance plans,
the class members are no strangers to the task of determining what costs are acceptable to bear
relative to the risks involved in a particular venture. Objectors’ affirmative choice to join these
cases and pay, at most, the five percent fee identified in the class notices points strongly in favor
of approving Class Counsel’s fee. 5
Two representations in Class Counsel’s class notice need addressing, however. The notice
stated that “the fee may be substantially less than 5% depending upon the level of class
participation” and asserted that the fees would be subject to a lodestar cross-check. See, e.g.,
Health Republic ECF No. 50-1 at 6 (emphasis added). Objectors point out that Class Counsel
concede they achieved substantial class participation, which Objectors argue justifies reducing the
percentages. Health Republic ECF No. 89 at 29 (quoting Health Republic ECF No. 84-1 ¶ 17).
As the language of the notices makes clear, however, a reduction was not guaranteed. Nor would
Class Counsel have authority to make such a guarantee because the ultimate decision to reduce a
requested fee percentage, if at all, rests within the Court’s discretion—whether based on class
participation or through use of the lodestar cross-check. 6
5 Objectors emphasize the lack of a formal written agreement to a five percent fee, but that
fact is not determinative. Given the circumstances discussed above, and consistent with Quimby,
“by opting into the class, each member effectively accepted the offer of representation” for, at
most, a five percent contingency fee. Quimby, 107 Fed. Cl. at 134.
6 As additional context, Class Counsel state that at the time of the notice’s issuance, they
were involved in settlement negotiations with the Government for the entire risk corridors liability,
not just the parties represented in Health Republic. Had a settlement been reached, it would have
resulted in $10 billion in settlement proceeds at a time when Class Counsel had spent $2 million
litigating Health Republic. Health Republic ECF No. 93-2 ¶ 3; see ECF No. 84-1 ¶ 10.
Consequently, Class Counsel issued the supplemental notice in anticipation of an early settlement
20
In sum, especially where the other factors favor Class Counsel’s five percent fee, there is
little reason for the Court to step in to protect the interests of sophisticated entities who made a
considered decision to join these cases and, as a result, will enjoy—even at the max rate of five
percent—considerably lower costs than if they pursued their claims individually.
5. The Percentage Applied in Other Class Actions
A five percent fee is low compared to those awarded in numerous other class actions.
Health Republic ECF No. 84 at 31–32 (collecting cases); see Health Republic ECF No. 84-2 ¶¶
23, 26; see also Decl. of Charles Silver ¶¶ 49, 75–77, Health Republic ECF No. 84-3. Other judges
of the Court of Federal Claims have previously acknowledged that “an award equal to one third of
the common fund is commensurate with attorney fees awarded in other class action common fund
cases.” Kane Cty., 145 Fed. Cl. at 19; see Raulerson, 108 Fed. Cl. at 680; Moore, 63 Fed. Cl. at
787. And multiple circuit courts have adopted benchmarks of between 20 and 30 percent for
calculating percentage awards. See Moore, 63 Fed. Cl. at 787 (collecting cases and concluding
that one-third of the common fund is a typical recovery).
Even in megafund cases such as this, where courts often decrease the percentage awarded
as the size of class recovery increases, a five percent fee is well within the reasonable range of fees
sought and, in fact, is on the low end of what is traditionally awarded. See In re Payment Card
Interchange Fee and Merch. Disc. Antitrust Litig., 991 F. Supp. 2d 437, 445 (E.D.N.Y. 2014) (10
percent fee was justified for awards between $1–2 billion, and eight percent fee was justified for
awards between $2–4 billion); Health Republic ECF No. 84-2 ¶ 26 (table of billion-dollar class
and a reduction in their fee award due to the quick resolution of the entire risk corridors claims.
Health Republic ECF No. 93-2 ¶ 3. Although a reduction may very well have been appropriate
under those circumstances, the early settlement never materialized.
21
action awards and accompanying fee percentages); Health Republic ECF No. 84-3 at 182–83 (table
of cases involving megafund percentage awards).
Accordingly, this factor weighs in Class Counsel’s favor.
6. The Size of the Award
Where a successful lawsuit results in a multi-billion-dollar award, even a minute fee
percentage can result in a sizeable award to counsel, the case at hand being such an example. In a
vacuum, Class Counsel’s proposed fee results in a seemingly massive award of approximately
$185 million. But comparing that amount to the almost $3.7 billion awarded to the class members
demonstrates the reasonableness of the request and weighs heavily in the Court’s analysis. See
Raulerson, 108 Fed. Cl. at 680 (comparing the size of the fee in relation to the size of the award).
Not surprisingly, the bulk of Objectors’ arguments relate to this factor. Instead of the five
percent Class Counsel seek, Objectors argue that an award of $8.8 million would be generous and
any amount above $20 million would be “patently unreasonable.” Health Republic ECF No. 89
at 28. As Class Counsel point out, the $8.8 million figure represents .22 percent of the common
fund. Health Republic ECF No. 93 at 19.
Before addressing some of Objectors’ arguments for reducing Class Counsel’s fee,
identifying exactly what Objectors are requesting is useful. With a little basic math it becomes
evident that Objectors are seeking to pay an infinitesimal portion of their recovery to Class Counsel
in attorney’s fees. Take Rocky Mountain Health Maintenance Organization, Inc., for example,
who seeks to pay fees of approximately $109,000 from its combined $49.5 million dollar
judgment. See Health Republic ECF No. 83-1 at 6; Common Ground ECF No. 111-1 at 6. Or take
Kaiser Foundation Health Plan Inc. of Colorado, who having received $141 million, now seeks to
pay approximately $310,000 to Class Counsel. See Health Republic ECF No. 83-1 at 5; Common
22
Ground ECF No. 111-1 at 5. Notably, Objectors do not draw attention to the fact that their
requested reductions would result in a .22 percent attorney’s fee in exchange for the 100 percent
recovery they obtained.
As explained above, the Court has determined that the percentage-of-the-fund is the proper
approach to evaluate the reasonableness of Class Counsel’s fee request. Accordingly, most of
Objectors’ specific arguments are irrelevant. The Court will nevertheless pause to address a few
reasons why a reduction of fees is not justified.
a) Detailed Billing Records
First, Objectors contend that Class Counsel’s fee request should be reduced because they
provided only a declaration with a one-paragraph summation of their lodestar rather than
submitting detailed billing records. Health Republic ECF No. 89 at 15. Extrapolating from
decisions in several fee-shifting cases, Objectors assert that a 35 percent reduction in Class
Counsel’s lodestar is therefore warranted. Id. at 17–18 (citing Am. Rena Int’l Corp. v. Sis-Joyce
Int’l Co., LTD., No. CV 12-6972 FMO (JEMx), 2015 WL 12732433 (C.D. Cal. Dec. 14, 2015)).
The Court finds the amount of Objectors’ proposed reduction to be largely arbitrary and agrees
with Class Counsel that detailed billing records are not required where the percentage-of-the-fund,
or even the lodestar cross-check, is employed. See In re Rite Aid Corp. Sec. Litig., 396 F.3d at 306(“The lodestar cross-check calculation need entail neither mathematical precision nor bean-
counting.”); In re Puerto Rican Cabotage Antitrust Litig., 815 F. Supp. 2d 448, 465 n.18 (D.P.R.
2011) (using “the Court’s common sense, experience, and familiarity with this case” to find that
expending over 30,000 billable hours was reasonable without reviewing detailed billing records).
To the extent Objectors rely on fee-shifting cases (where the lodestar method is required)
to argue for the necessity of detailed billing records, their argument is unavailing. See Health
23
Republic ECF No. 89 at 16 (collecting cases). Unlike in fee-shifting cases where the court must
determine the additional amount a losing defendant must pay to compensate the plaintiff’s
attorneys, in common fund cases there is “no direct or immediate danger of unduly burdening the
defendant,” making rigorous scrutiny of billing records unnecessary. 7 See Applegate v. United
States, 52 Fed. Cl. 751, 761 (2002) (quoting Skelton v. Gen. Motors Corp., 860 F.2d 250, 254 (7th
Cir. 1988), cert. denied, 493 U.S. 810 (1989)). Instead, even if the Court were applying the
lodestar method as a cross-check, it could simply determine the reasonableness of the fee based on
its familiarity with the case. Goldberger v. Integrated Res., 209 F.3d 43, 50 (2d Cir. 2000); In re
Puerto Rican Cabotage Antitrust Litig., 815 F. Supp. 2d at 465 n.18.
b) The Lodestar Multiplier
Objectors argue that the fee sought by Class Counsel is unreasonable because it represents
a multiple of 18–19 times their $10 million lodestar, and thus should be reduced after a cross-
check of the percentage. Health Republic ECF No. 89 at 20, 24; see Health Republic ECF No. 84-
1 ¶ 23. Objectors argue that a multiplier of two is commensurate with the work performed by
Class Counsel. Health Republic ECF No. 89 at 24–25. Choosing a multiplier between the parties’
opposing data points seems a relatively arbitrary exercise, at least compared to the multi-factor
analysis performed above. Although Class Counsel concede that their requested fee results in an
uncommonly high payout, they point to several cases where courts have approved similar or larger
multipliers. See Stop & Shop Supermarket Co. v. SmithKline Beecham Corp., No. Civ. A. 03-
4578, 2005 WL 1213926, at *18 (E.D. Pa. May 19, 2005) (multiplier of 15.6); In re Merry-Go-
7 For the same reasons, the Court is not bound to use the Laffey Matrix here, as it was
created to assist in analyzing awards under a fee-shifting statute. Adolph Coors Co. v. Truck Ins.
Exch., 383 F. Supp. 2d 93, 98 (D.D.C. 2005) (“[T]he Laffey Matrix, published by the United States
Attorney’s Office, is a concession by that office of what it will deem reasonable when a fee-shifting
statute applies and its opponent prevails and seeks attorneys’ fees.”).
24
Round Enters., Inc., 244 B.R. 327, 335, 345 (D. Md. 2000) (multiplier of 19.6); Am.’s Mining
Corp. v. Theriault, 51 A.3d 1213, 1252 (Del. 2012) (multiplier of 66, though no cross-check was
conducted). Therefore, even if the Court applied the lodestar cross-check, a multiplier of 18–19
would, at least, not be outside the realm of reasonableness.
7. Objections to the Fee Request
Of the hundreds of class members in Health Republic and Common Ground, the Court
received one substantive objection on behalf of 34 entities belonging primarily to two
organizations: UnitedHealthcare (23 of the 34 entities) and Kaiser Foundation Health Plan (four
of the 34 entities). See Health Republic ECF No. 89 at 8, 30; Health Republic ECF No. 93-2 ¶ 2.
In total, nine individual organizations object to Class Counsel’s request for a five percent fee. See
Health Republic ECF No. 89 at 30. Although larger than those involved in other percentage-of-
the-fund cases in this court, the number of objections is relatively low when viewed in the context
of the classes here. See, e.g., Lambert, 124 Fed. Cl. at 683–84; Quimby, 107 Fed. Cl. 126 at 134.
According to Class Counsel, putting Objectors aside, 90 percent of the organizations whose entities
opted into these suits, representing approximately $2.1 billion in damages, do not object to the fee.
Health Republic ECF No. 93 at 7 n.1. Consequently, the final factor likewise supports the
determination that Class Counsel’s fee request is reasonable.
B. The Requested Incentive Awards Are Denied.
Lastly, Class Counsel ask that the Court approve two awards of $100,000 each to the named
Plaintiffs, Health Republic and Common Ground. Health Republic ECF No. 84 at 38–39.
Although not frequently addressed in the Federal Circuit, other courts have generally recognized
that whether to approve an incentive award in a class action is a matter of the court’s discretion.
See Rodriguez v. West Publ’g Corp., 563 F.3d 948, 958–59 (9th Cir. 2009); Dial Corp. v. News
25
Corp., 317 F.R.D. 426, 439 (S.D.N.Y. 2016); Radosti v. Envision EMI, LLC, 717 F. Supp. 2d 37,
52–53 (D.D.C. 2010).
As Class Counsel note, other courts have with some frequency found it appropriate to
approve incentive awards to named plaintiffs in class actions as a reward for the benefits they
conferred to the class and the burdens they bore as class representatives. 8 See Health Republic
ECF No. 84 at 39 (citing In re Vitamin C Antitrust Litig., No. 06-MD-1738 BMC JO, 2012 WL
5289514, at *11 (E.D.N.Y. Oct. 23, 2012)). But the circumstances in which those courts have
granted incentive awards differ substantially from the circumstances at hand. Unlike the cases
Class Counsel cite, where requests for incentive awards were granted as part of a court’s broader
approval of a class settlement and (importantly) were paid from the settlement fund, Class Counsel
are requesting the awards to Health Republic and Common Ground be paid directly from their fee.
Approval of incentive awards in the latter scenario is much rarer. See 5 Newberg on Class Actions
§ 17:5 (5th ed.) (“In some rare cases, courts have alluded to the idea that incentive awards may be
[] paid by class counsel out of their fees and expenses.” (collecting cases)).
This Court has concerns about the propriety of approving incentive awards paid from Class
Counsel’s fee. The Model Rules of Professional Conduct prohibit the sharing of attorney’s fees
with nonlawyers. See MODEL RULES OF PRO. CONDUCT R. 5.4(a) (AM. BAR ASS’N 2021). Similar
rules exist in jurisdictions that likely govern Class Counsel’s representation in the instant cases.
See, e.g., D.C. RULES OF PRO. CONDUCT R. 5.4(a) (2021); ILL. SUP. CT. R. 5.4(a) (2021); CAL.
RULES OF PRO. CONDUCT R. 1-320(a) (2018). Other courts have reached different conclusions on
8 On the other hand, incentive awards appear to be an infrequent issue in this court. Class
Counsel have cited to only one case where a judge of the Court of Federal Claims approved an
incentive award. Health Republic ECF No. 84 at 38 (citing Russell v. United States, 132 Fed. Cl.
361, 365 (2017) (approving incentive awards as part of class settlement)).
26
whether professional rules of conduct bar such awards. Compare In re Anthem, Inc. Data Breach
Litig., 2018 WL 3960068, at *32 (N.D. Cal. Aug. 17, 2018) (declining to award incentive awards
from attorney’s fee, which “may run afoul of ethical rules,” and instead directing payment of
awards from the class settlement fund), with In re Presidential Life Sec., 857 F. Supp. 331, 337
(S.D.N.Y 1994) (awarding incentive awards from attorney’s fees and declining to enforce rule
against fee-sharing where concerns of corruption were not at play). Regardless, this Court declines
to exercise its discretion in a manner that would potentially sanction the violation of ethical rules,
especially where the relevant rules do not recognize an exception for an attorney to share court-
awarded fees with its client in the case for which the fees were awarded. See In re UnumProvident
Corp. Derivative Litig., No. 1:02-CV-386, 2010 WL 289179, at *8 (E.D. Tenn. Jan. 20, 2010)
(noting lack of ethical concern with incentive award paid from attorney’s fees given exception
provided in applicable ethics rules but noting the “problematic nature” of such arrangement).
Because the judgments have already been disbursed from the common fund to the Non-Dispute
Subclasses (less five percent for potential attorney’s fees), there is no alternate source of funds
available from which the Court could consider making the incentive awards.
Consequently, Class Counsel’s request for incentive awards to Health Republic and
Common Ground is denied.
III. CONCLUSION
For these reasons, the Court finds Class Counsel’s request for a five percent attorney’s fee
to be reasonable. Accordingly, Plaintiff’s Motions (Health Republic ECF No. 84; Common
Ground ECF No. 107) are GRANTED as to the fee request. Having determined pursuant to RCFC
54(b) that there is no just reason for delay, the Court directs the Clerk to enter judgment in Health
Republic in the amount of $95,183,102.35 to be paid to Class Counsel from the Non-Dispute
27
Subclass fund. The Clerk is likewise directed to enter judgment in Common Ground in the amount
of $89,665,569.32 to be paid from the Non-Dispute Subclass fund. Class Counsel’s request to pay
$100,000 incentive awards from their fees to Health Republic and Common Ground, respectively,
is DENIED.
SO ORDERED.
Dated: September 16, 2021 /s/ Kathryn C. Davis
KATHRYN C. DAVIS
Judge
28