Quinn, Emanuel, Urquhart & Sullivan’s “astronomical” bid for a $185 million fee in an Obamacare case should be slashed by 95%, according to a pair of insurers that the firm represented.
The fee dispute is one of the final stages in a pair of long-running class actions stemming from payments promised but never made to insurers under an Obamacare program. The U.S. Supreme Court ruled in April that the government owed insurers about $12 billion in subsidies designed to support insurance coverage for sick, uninsured people.
Quinn Emanuel last month requested a fee that worked out to 5% of the payments to a group of more than 280 health care plans, many of which went bust when Congress scrapped the subsidies.
The firm’s request translated to more than $18,000 an hour, which it argued was “large” but reasonable considering the strength of the result and the fact that insurers signed on to the class action agreeing to pay up to 5% of their award.
“This was an important case; we’re proud of our work,” Stephen Swedlow, Quinn Emanuel’s partner in charge of the case, said in a statement. “The Court will determine the reasonableness of the attorneys’ fees in the context of the fee petition.”
The duo of insurers said any fee approaching $20 million “would be patently unreasonable.”
‘Simply Too High’
Kaiser Foundation healthcare plans are set to receive more than $650 million as a result of the judgments in the case, court records show. UnitedHealthcare plans are owed more than $145 million. Quinn Emanuel’s fee would deduct from those numbers.
The insurers called Quinn Emanuel’s $18,000 per hour request “exorbitant” and “astronomical,” noting the firm failed to submit a log of its lawyers’ hours. They zeroed in on the fact that the class action cases that Quinn Emanuel handled were mostly on pause for three years while other so-called “risk corridor” cases wound their way to the Supreme Court. They also listed more than 15 other law firms that they said helped to advance the cases.
The $185 million fee request is “simply too high, not grounded in precedent, unsupported by adequate evidence, and contrary to the representations Quinn Emanuel made to class members to encourage them to join the class,” the insurers’ lawyer, Moe Keshavarzi of Sheppard, Mullin, Richter, & Hampton wrote.
If a judge sides with insurers who objected to the size of the fee, one winner would likely be the litigation finance industry. A number of insurers sold their claims in the case to investors who will receive portions of the payments set to be made. The lawyers’ fee comes out of the payments to insurers and investors.
The fee dispute also highlights the differing approaches judges take to determine lawyer fees in cases involving billion-dollar settlements.
Quinn Emanuel argued the court should not judge the value it brought to the case simply by the amount of hours its lawyers worked. The insurers, though, argue that method, known as the “lodestar cross-check,” was mentioned in the firm’s contract to sign up clients in the case.
“The Supreme Court correctly held that the government should stand by its word. The same premise applies to Quinn Emanuel,” Keshavarzi wrote. “Quinn Emanuel touted the 5% as a ceiling, which could be ‘substantially reduced’ depending on class participation, and that would be subject to a lodestar cross-check.”
The cases are Health Republic Insurance Co. v. United States, Fed. Cl., 16 00259, 8/20/20 and Common Ground Healthcare Cooperative v. United States, Fed. Cl., 17 00877, 8/20/20.