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DAVID v. SULLIVAN

November 13, 1991

JOSEPH DAVID, AS ADMINISTRATOR OF THE ESTATE OF IRENE DAVID, AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, AND SALVATORE CIVILLO, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, PLAINTIFFS,
v.
LOUIS W. SULLIVAN, M.D., IN HIS CAPACITY AS SECRETARY OF HEALTH AND HUMAN SERVICES, AND GROUP HEALTH INCORPORATED, DEFENDANTS.



The opinion of the court was delivered by: Weinstein, District Judge:

  MEMORANDUM, FINAL ORDER AND JUDGMENT

After a full hearing of this matter by the court, the Magistrate Judge's recommendations and findings are adopted for the reasons stated in her Report which is attached to, and made a part of, this order.

Plaintiffs' counsel contend that the Magistrate Judge's award of fees is based on rates that are somewhat low by Manhattan standards. The fees awarded are adequate to encourage attorneys to take on the important task of policing government practices. Added to the monetary incentive is the supplemental psychic incentive of recognition for a job well done from the bar, bench, and public, and personal satisfaction for performing a valued public service. Able attorneys in metropolitan New York should be sufficiently beguiled by this package of benefits to continue to pursue public interest litigation of this kind.

This case is closed.

So ordered.

REPORT AND RECOMMENDATION

This action began over twelve years ago when plaintiffs — a class of Medicare beneficiaries who were enrolled in the supplementary medical insurance program established under Part B of the Social Security Act, 42 U.S.C. § 1395j et seq., but who had been denied reimbursement for certain medical costs — sued Group Health Incorporated (GHI), the carrier which administers the program in Queens, New York, and the Secretary of Health and Human Services (HHS), who is statutorily authorized to contract with private insurance carriers to administer the Part B claims process. Plaintiffs alleged, in substance, that the "review determination notices," through which GHI supposedly informed plaintiffs of the results of the carrier's internal review of its decision to deny benefits, were inadequate. Although Judge Weinstein resolved the primary issue in 1984, ruling that these notices did not meet due process standards and ordering that they be "changed to provide claimants with comprehensible explanations of the actual reason full reimbursement is denied," David v. Heckler, 591 F. Supp. 1033, 1035 (E.D.N.Y. 1984), there have been many subsequent proceedings in which details concerning this original order have been ironed out. In June 1990, plaintiffs moved, pursuant 28 U.S.C. § 2412, to recover the attorneys' fees and costs they incurred during these post-judgment proceedings. After rendering a decision as to certain aspects of this motion, Judge Weinstein referred this matter to me for a report and recommendation concerning all aspects of the fees request.

FACTS

The Procedural History

This class action, brought by plaintiffs' counsel on behalf of "hundreds of thousands of older people in Queens, New York, whose Medicare Part B claims [were] subjected to diminution," principally challenged the adequacy of notices and appeal procedures used by GHI, the insurance carrier who was authorized by HHS to administer the Part B claims process in this area. David v. Heckler, 591 F. Supp. at 1035. The dispute focused on the adequacy of GHI's "review determination notices" (also referred to as "review letters"), which are sent to beneficiaries who challenge GHI's refusal to reimburse them for certain medical costs in order to inform them of the results of GHI's internal review of its initial decision to deny benefits. This dispute was largely resolved following a 1984 bench trial before Judge Weinstein; in David v. Heckler, 591 F. Supp. 1033, the judge ruled that the review determination notices were "constitutionally inadequate" in that they were "incomprehensible to most of the people who receive them" and did "not contain enough information about why reimbursement was denied and how the reimbursable amount was calculated to enable an individual or his or her representative to effectively appeal the decision." Id. at 1042. The judge also found that this lack of information pervaded all aspects of the review process, including the hearing stage, thereby presenting a due process problem which mandated certain modifications in procedures. Id. at 1046-47.

To cure these deficiencies, Judge Weinstein ordered, inter alia, that defendants re-draft the review letters so as to 1) eliminate code words and confusing language and 2) insure that they were sufficiently clear and detailed so that beneficiaries could determine whether or not their reimbursement had been calculated correctly. The judge also directed defendants to furnish plaintiffs' counsel with information necessary to ensure that the Plan B program was being properly administered. In so doing, the court praised plaintiffs' counsel efforts, noting that plaintiffs might otherwise not be represented because 1) the relatively small claims made it uneconomical for them to obtain counsel, 2) no specialized bar, such as that which has developed to effectively protect the rights of Social Security recipients, was likely to develop to protect Medicare beneficiaries, and 3) it was difficult for the elderly to organize effective private organizations with the interest and resources necessary to provide a check on the system. Judge Weinstein stated:

  [O]ne organization has shown the interest and
  capacity necessary to investigate [Medicare
  violations] and obtain relief — Legal Services for
  the Elderly. In this case the organization provided
  highly skilled and aggressive representation for
  the class through Toby Golick, Esq. in conjunction
  with Julia Spring Esq. and Whitney North Seymour,
  Esq., acting pro bono in the highest traditions of
  the bar. Id. at 1048.

Following this decision, plaintiffs moved for an award of attorneys' fees. This motion was withdrawn in May, 1985, however, after the parties reached an agreement on this issue. Their agreement was embodied in a stipulation, entered as an order by Judge Weinstein on May 17, 1985, which provided that plaintiffs would accept $74,500 "in full settlement and discharge of their claim for attorneys' fees and expenses under the Equal Access to Justice Act, 28 U.S.C. § 2412." The motion at bar, therefore, does not seek to recover attorneys' fees or costs related to the trial or pre-trial proceedings, but only to recover expenses relating to post-judgment proceedings which took place in 1987 and thereafter.

Plaintiffs initiated these post-judgment proceedings on April 2, 1987, by moving that defendants be held in contempt for failure to comply with the Court's original July 11, 1984, ruling. Plaintiffs alleged, inter alia, that GHI had failed to simplify the review determination notices, but that HHS's annual reviews had nonetheless found the carrier in perfect compliance with the 1984 order. While Judge Weinstein denied this motion, he directed defendants to produce the review determination letters and other data analyzed during the government's Fiscal Year (FY) 1985 and 1986 reviews.

Although the government subsequently provided plaintiffs' counsel with copies of "scoring sheets" and summaries prepared by the reviewers who evaluated GHI's performance, it could not produce the specific letters analyzed during the FY 1985 review because these were not adequately identified in the reviewer's records. Plaintiffs' counsel thereupon requested that the government repeat its FY 1985 and 1986 reviews using a new random sampling of letters, and that plaintiffs' representatives be permitted to witness the review of these letters. The government denied this request.

On July 21, 1987, plaintiffs filed a second post-judgment motion, seeking to compel production of the letters analyzed during the FY 1985 and 1986 reviews. At the September 23, 1987 oral argument on this motion, Judge Weinstein ruled that no purpose would be served in repeating prior reviews, but ordered defendants to supply plaintiffs, inter alia, with copies of the 60 randomly-selected review determination notices which were reviewed as part of the FY 1987 audit.

On March 18, 1988, based on an extensive review of the letters produced by defendants, plaintiffs renewed their original motion to hold defendants in contempt, asserting that the notices produced were lacking in substantive content and thus failed to comply with the court's original ruling. At the June 27, 1988 oral argument on this motion, Judge Weinstein declined to entertain the contempt question and essentially converted the motion into a request for modification of the original decree. He then ordered defendants, inter alia, to make several alterations on the notices being used and directed the parties to develop a proposal for a system that would provide the beneficiaries with sufficient information to challenge agency determinations.

Over the next few months, plaintiffs' counsel invested substantial effort in developing a proposal for amending the Medicare Part B reimbursement review determination procedure. During this time, the parties appeared before Judge Weinstein in several proceedings pertaining to this proposal, including a September 1988 hearing at which plaintiffs adduced testimony concerning the operation and costs of the proposed system.

These efforts culminated in an Interim Order, signed by Judge Weinstein on December 21, 1988. This order denied plaintiffs' civil contempt motion, with leave to renew, but noted that "[t]he apparent failure of the defendants' actions to rectify prior defects in notice and to fully comply with directions of this Court in the Judgment previously entered necessitate[d] a more precise order to ensure adequate compliance. . . ." The court then directed GHI to implement, for a six-month ...


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