NEW ORLEANS (Legal Newsline) —In a ruling that could affect lawyers nationwide, a federal appeals court recently denied an appeal involving block-billing, a common billing practice in many law firms that includes lumping together many small tasks into a single block.
As a result, the court awarded only $739,000 of a requested $3.5 million in attorneys fees, leaving a whistleblower left to cover the remaining balance.
Amy Cook-Reska, a coding specialist, filed a qui tam action against Community Health Systems (CHS) in Tennessee under the False Claims Act. A qui tam lawsuit is an action on behalf of the government, brought about by a whistleblower.
Cook-Reska worked with the U.S. Department of Justice (DOJ) in a nationwide investigation concerning claims in Community’s emergency department.
In 2014, Community entered into a settlement with the U.S., dividing the claims into ER and non-ER claims. The ER claims were resolved in the Middle District of Tennessee, as that court had jurisdiction over that part of the case. A Texas federal court handled the non-ER claims.
Cook-Reska was awarded $2.1 million by the U.S. as a whistleblower. She also petitioned the court for $3.5 million in attorneys’ fees for both lawsuits, the ER and non-ER claims.
“The rights to attorneys’ fees were very different,” Norman G. Tabler, Jr., an attorney in Indianapolis who specializes in the legal health care field, explained to Legal Newsline.
In March 2011, the court had reminded Cook-Reska and her attorneys that there were two separate claims.
Cook-Reska joined other informants, or relators, in the ER claim. The court concluded that Cook-Reska should not receive attorneys’ fees for that case, because she was not the first relator to file.
However, in the non-ER case, the court reasoned that she should be awarded the fees for her lawyers. The court awarded her $730,000, a drastic reduction from what she originally sought.
Cook-Reska appealed to the U.S. Court of Appeals for the Fifth Circuit, which rejected the appeal late last month. In the opinion, the court cited its disdain of block-billing.
According to Tabler, block-billing is easier for attorneys when accounting for their time, but the practice is falling out of favor. Many clients are insisting on more specific time management. Now, the courts have weighed in on the practice.
The Fifth Circuit concluded that the lower court hadn’t abused its discretion in lowering the attorneys’ fees.
“One thing that should be made clear -- it’s the defendant who benefits from the court’s ruling," Tabler said. "The defendant in the case is required to pay for the attorneys’ fees.”
The penalties for false claims are “brutal,” in Tabler’s opinion. First, the organization that is found guilty of filing false claims must pay three times the damages. There is also a fine of up to $11,000 per claim. The company must also cover attorneys’ fees for the whistleblower, who brought the case to court.
“This is why it is so hotly contested," he said.
Even though his fellow lawyers paid the price, Tabler can't find fault with the ruling.
“I think I agree with the ruling," he said. "The lawyers were on notice that there were two sets of cases.”