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United States ex rel. Fox Rx, Inc. v. Omnicare, Inc.

United States District Court, S.D. New York

April 15, 2015

UNITED STATES OF AMERICA, et al., ex rel. Fox Rx, Inc., Plaintiffs,
v.
OMNICARE, INC., NEIGHBORCARE, INC., PHARMERICA CORP., and MANAGED HEALTH CARE ASSOC., INC., Defendants.

Michael I. Leonard, LEONARD LAW OFFICES, Chicago, IL, Paul A. Traina, ENGSTROM, LIPSCOMB & LACK, PC, Los Angeles, CA, Dennis J. Doody, Tarrytown, NY, For relator Fox Rx, Inc.

Daniel S. Ruzumna. Adam Blumenkrantz, PATTERSON BELKNAP WEBB & TYLER LLP, New York, NY, For defendant Managed Health Care Associates Long Term Care Network Inc.

OPINION & ORDER

DENISE COTE, District Judge.

Fox Rx, Inc. ("Fox"), a serial qui tam relator and former Medicare Part D plan sponsor, has brought at least a half-dozen actions under the False Claims Act, 31 U.S.C. § 3729 et seq. ("FCA"), around the country against entities with which it once worked. This is one such action, which was dismissed on August 12, 2014. See United States ex rel. Fox Rx, Inc. v. Omnicare, Inc., 38 F.Supp. 3d 398 (S.D.N.Y. Aug. 12, 2014). On August 24, 2014, defendant MHA Long Term Care Network ("MHA") filed a motion for attorneys' fees and costs since January 10, 2014, pursuant to 31 U.S.C. § 3730(d)(4). On December 1, that motion was granted for "an amount to be determined following the submission of supporting documentation by MHA LTC." United States, ex rel. Fox Rx, Inc. v. Omnicare, Inc., No. 12cv275 (DLC), 2014 WL 6750277, at *4-5 (S.D.N.Y. Dec. 1, 2014) ("Fees Opinion"). The parties having made submissions regarding the amount of fees to be awarded, MHA is hereby awarded fees in the amount of $168, 967.61.

BACKGROUND

Familiarity with the facts of this case is presumed. A detailed factual background is provided in the Fees Opinion, 2014 WL 6750277, at *1-4. For present purposes, it is enough to state that Fox levied a number of claims against Omnicare under the FCA that were objectively frivolous, based variously on a studied misunderstanding of MHA's business, an obvious misreading of a relevant agreement, and factual assertions with no reasonable basis. Fees Opinion, 2014 WL 6750277, at *4. The Court granted MHA's motion for attorneys' fees under an FCA provision permitting such awards if the "claim of the person bringing the action was clearly frivolous, clearly vexatious, or brought primarily for purposes of harassment." 31 U.S.C. § 3730(d)(4); see Mikes v. Straus, 274 F.3d 687, 705 (2d Cir. 2001) (court may award fees pursuant to § 3730 "upon a finding that the... claims were objectively frivolous, irrespective of plaintiff's subjective intent").

MHA's request for fees and costs totals $168, 967.61. This amount encompasses:

(1) 239.4 hours of attorney time, billed by a partner and two associates at the rates of $836/hour, $631.75/hour, and $541.50/hour, respectively, totaling $167, 962.48; and
(2) $1, 005.13 in costs, encompassing legal research, conference call services, and other miscellaneous expenses.[1]

The work described above was performed between January 13, 2014 and October 23, 2014.

DISCUSSION

The starting point in determining an attorneys' fees award is calculating the "lodestar" number, which is the number of hours reasonably expended on the litigation multiplied by a reasonable hourly rate. Stanczyk v. City of New York, 752 F.3d 273, 284 (2d Cir. 2014) (citation omitted). In determining what constitutes a reasonable hourly rate, courts look first to the rates commonly charged by attorneys for similar work in the district in which the court sits. See, e.g., Simmons v. New York City Transit Auth., 575 F.3d 170, 174 (2d Cir. 2009). The calculation of attorneys' fees rests in the sound discretion of the district court. McDaniel v. Cnty. of Schenectady, 595 F.3d 411, 416 (2d Cir. 2010).

"[T]he fee applicant bears the burden of establishing entitlement to an award and documenting the appropriate hours expended and hourly rates." Hensley v. Eckerhart, 461 U.S. 424, 437 (1983). To aid in calculating the lodestar, the fee applicant must provide contemporaneous time records, affidavits, and other materials to support its application for the amount of reasonable hours expended. McDonald ex rel Prendergast v. Pension Plan of the NYSA-ILA Pension Trust Fund, 450 F.3d 91, 96 (2d Cir. 2006). "Where the documentation of hours is inadequate, the district court may reduce the award accordingly." Hensley, 461 U.S. at 433. Fee requests should also be reduced to exclude hours that are not "reasonably expended, " such as those that are excessive or redundant. Id. at 434 (citation omitted).

Fox's objections to the amount of costs and attorneys' fees MHA may be summarized as follows: (1) the hourly rates MHA proposes are excessive; (2) the number of hours MHA proposes is "unreasonable" and its documentation insufficiently detailed; ...


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