Verdicts

Med-Mal Attorney's Fee Request Denial Was Proper

The U.S. District Court for the Eastern District of New York did not err in denying attorney fees to a lawyer who claimed fees in excess of the statutorily permitted amount, where the court's assessment of the reason for the overcharge was at least as plausible as the attorney's. Chen v. Chen Qualified Settlement Fund, — F.3d —-, 2009 WL 18726 (C.A.2 (N.Y.),2009).

In January 2003, Zuhua Chen, individually and as the guardian of her son David, who was born with debilitating birth defects, executed a medical malpractice retainer with attorney Steven Goldman. The attorney then filed a complaint against the defendant health care providers who delivered the child. In July 2004, Goldman and the defendants reached a settlement agreement for $2.4 million. Then Goldman filed a proposed Stipulation of Settlement and Infant's Compromise Order with the court, which proposed that the $2.4 million be distributed as follows: 1) $428,000 in fees and expenses to Goldman; 2) $250,000 to Chen for her loss of services claim; and 3) $1,722,000 to be paid to Chen as trustee for David in a Special Needs Trust.

In his accompanying affidavit, Goldman indicated that, pursuant to his retainer agreement, he was entitled to a fee of $408,000 and to expenses of $20,000. Although Goldman provided a general list of “services ' rendered on this matter,” including the “[o]btaining of all medical reports,” he did not provide any documentation detailing his request for fees. He also did not provide documentation of the child's current medical condition or of his projected future needs. In September 2004, the district court issued an order appointing Steven North as Special Master to “provide [the court] with his recommendation on the application to approve the infant's compromise in this case.” In the order, the court acknowledged its “fiduciary duty to protect the interest of the infant” and noted that “although so much is at stake for the infant, the information provided by plaintiff's counsel is totally unhelpful.” The Special Master, however, had no greater luck with Goldman, who continued to fail to provide the documentation he needed to make an evaluation. In the end, he gave up, telling the court that he was unable to make any conclusions concerning the fairness of the settlement and of the how the monies should be distributed. He did, however, note that Goldman's initial claim for fees was in excess of the statutorily permitted amount of $388,000, and that Goldman's explanation for the overcharge was unsatisfactory. After further unsatisfactory attempts to obtain detailed information from Goldman, the court, sua sponte, appointed its own medical expert to review the medical records, and also consulted with others. The District Court ultimately approved the settlement.

Goldman then sought his fee through the court. The court asked Goldman to explain why he had initially attempted to overcharge the Chens. He replied that there had been a typographical error, but the District Court did not believe this explanation. It denied his request for payment completely, except to allow him to claim costs, if he could provide adequate documentation to prove them. Stated the District Court: “Over the last 21 years I have overseen a fair number of infant's compromise cases, ranging from trip and fall cases to those involving serious brain damage with settlements reaching into the millions of dollars. The lawyers in those cases earned their fees by the settlements they achieved and by post-settlement work that Mr. Goldman failed to provide. I am not going to allow him to be compensated in the same way as attorneys who do their job. Moreover, assuming that my conclusion regarding the deliberate fabrication of Mr. Goldman's initial application for fees and disbursements is not sustained, the utter carelessness in the calculation nevertheless warrants additional sanction.” Goldman appealed.

The U.S. Court of Appeals for the Second Circuit noted that New York courts have consistently held that “an attorney who engages in misconduct by violating the Disciplinary Rules is not entitled to legal fees for any services rendered.” Shelton v. Shelton, 542 NYS2d 719 (N.Y.App. Div.2d Dep't 1989). New York's Disciplinary Rules also provide that “[a] lawyer shall not enter into an agreement for, charge or collect an illegal or excessive fee.” 22 N.Y. ADC 1200.11(a). “Accordingly,” stated the court, “if the district court's conclusion that Goldman purposely requested an excessive fee was not clearly erroneous, then the court did not abuse its discretion in denying Goldman's fee application in its entirety.” Here, Goldman's explanations for the initial overcharge were plausible, but so was the District Court's conclusion that Goldman's evasiveness indicated that he had been trying to get away with overcharging. The Second Circuit then looked to the U.S. Supreme Court's decision in Anderson v. City of Bessemer City, 470 U.S. 564, 573-74 (1985), in which it stated that when a “district court's account of the evidence is plausible in light of the record viewed in its entirety, the court of appeals may not reverse it even though convinced that had it been sitting as the trier of fact, it would have weighed the evidence differently. Where there are two permissible views of the evidence, the factfinder's choice between them cannot be clearly erroneous.” With this in mind, the appellate court affirmed the denial of attorney fees, stating: “It cannot be said that the district court abused its discretion by choosing one of two equally plausible views of the evidence in this case.”

National Practitioner Databank Report Proper Even When Doctor Quits

On Jan. 14, the U.S. Court of Appeals for the First Circuit issued an order upholding a federal requirement that hospitals report investigations of doctors to the U.S. Department of Health and Human Services (HHS) even if they resign or give up their clinical privileges while under investigation. Doe v. Leavitt, — F.3d —-, 2009 WL 81655 (C.A.1 (Me.), 1/14/09).

The case involved a doctor against whom a nurse made derogatory allegations. An ad hoc committee was appointed to investigate the matter. The committee reported to the hospital's executive committee that the nurse's allegations had some credibility. The executive committee thereafter proposed that the doctor be allowed to return to work so long as he agreed to certain contractual modifications, including provisions for regular proctoring and psychological evaluations. He did not agree to this, and voluntarily resigned his clinical privileges. Despite the resignation, the hospital reported the investigation to the National Practitioner Databank (NPDB). A month after he resigned, but following the hospitals report to the NPDB, the doctor requested administrative review of the hospital's filing. He contended that the hospital's investigation had ended when the ad hoc committee presented its report to the executive committee and, therefore, that he had not resigned while under an investigation. On May 25, 2007, the Secretary of HHS issued a written decision in which he ruled that the hospital appropriately had reported the doctor to the NPDB. The Secretary premised this ruling on a statement that “[a]n investigation is ' considered ongoing until the health care entity's decision making authority takes a final action or formally closes the investigation.” Because the executive committee had neither taken a final disciplinary action nor formally closed its inquiry when the doctor resigned, the secretary found that he was still “under an investigation” and that the hospital, therefore, had a duty to report the resignation under a provision of the Health Care Quality Improvement Act (HCQIA). 42 U.S.C. ' 11133(a)(1)(B)(i).

Following this, the physician brought an action under the Administrative Procedure Act (APA) against the Secretary of HHS, challenging his interpretation of the word “investigation” under HCQIA. The lower court agreed with the secretary's conclusion that a hospital's investigation is ongoing until the hospital closes it or takes final action. The doctor appealed.

In upholding the lower court's conclusion, Senior Circuit Judge Bruce M. Selya signaled agreement with the secretary of HHS's interpretation of the HCQIA that “Congress did not intend to construct an easily accessible escape hatch that would permit beleaguered physicians to elude the reach of the HCQIA's reporting requirement.”

Texas Says No Mandamus Review for Deficient
Med-Mal Expert Reports

The Texas Supreme Court has decided that appellate courts may not grant mandamus of trial court rulings that grant time extensions to medical malpractice plaintiffs to correct deficient expert reports. In re Watkins, — S.W.3d —-, 2009 WL 153251 (Tex., 1/23/09).

Plaintiff Gary Jones sued Dr. Mary Louise Watkins, alleging she injured his eye while she was treating a lesion on his face. Within 120 days of filing, he served what he purported to be an expert report. Dr. Watkins objected that the report was deficient. Indeed, the trial judge found that the report was merely an account of the treatment Jones had received and should receive in future. It failed to address the standard of care and the issues of breach and causation. Despite the doctor's objections, the trial court granted a 30-day extension. Jones filed a new report, which Dr. Watkins did not challenge. Instead, the defendant filed an interlocutory appeal and an original proceeding in the court of appeals asserting the trial court abused its discretion in granting an extension, and seeking an order of dismissal. The court of appeals dismissed the interlocutory appeal for want of jurisdiction and denied mandamus relief. Dr. Watkins appealed only the denial or mandamus relief, and asked the Texas Supreme Court to order dismissal of the case.

The state's legislature passed a sweeping tort reform bill a few years ago that, among other things, placed limitations on when an interlocutory appeal could be taken. The law allows for interlocutory appeal when no expert report is filed in a medical malpractice case. A right to appeal is not provided for when a deficient report is filed. Texas' Supreme Court thus concluded that if it granted mandamus review, it would be going against the will of the legislature's limits on review. “If no report was served, interlocutory appeal was available, so mandamus is unnecessary,” stated the court. “If the report was merely deficient, then an interlocutory appeal was prohibited, and granting mandamus to review it would subvert the Legislature's limit on such review.”

Med-Mal Attorney's Fee Request Denial Was Proper

The U.S. District Court for the Eastern District of New York did not err in denying attorney fees to a lawyer who claimed fees in excess of the statutorily permitted amount, where the court's assessment of the reason for the overcharge was at least as plausible as the attorney's. Chen v. Chen Qualified Settlement Fund, — F.3d —-, 2009 WL 18726 (C.A.2 (N.Y.),2009).

In January 2003, Zuhua Chen, individually and as the guardian of her son David, who was born with debilitating birth defects, executed a medical malpractice retainer with attorney Steven Goldman. The attorney then filed a complaint against the defendant health care providers who delivered the child. In July 2004, Goldman and the defendants reached a settlement agreement for $2.4 million. Then Goldman filed a proposed Stipulation of Settlement and Infant's Compromise Order with the court, which proposed that the $2.4 million be distributed as follows: 1) $428,000 in fees and expenses to Goldman; 2) $250,000 to Chen for her loss of services claim; and 3) $1,722,000 to be paid to Chen as trustee for David in a Special Needs Trust.

In his accompanying affidavit, Goldman indicated that, pursuant to his retainer agreement, he was entitled to a fee of $408,000 and to expenses of $20,000. Although Goldman provided a general list of “services ' rendered on this matter,” including the “[o]btaining of all medical reports,” he did not provide any documentation detailing his request for fees. He also did not provide documentation of the child's current medical condition or of his projected future needs. In September 2004, the district court issued an order appointing Steven North as Special Master to “provide [the court] with his recommendation on the application to approve the infant's compromise in this case.” In the order, the court acknowledged its “fiduciary duty to protect the interest of the infant” and noted that “although so much is at stake for the infant, the information provided by plaintiff's counsel is totally unhelpful.” The Special Master, however, had no greater luck with Goldman, who continued to fail to provide the documentation he needed to make an evaluation. In the end, he gave up, telling the court that he was unable to make any conclusions concerning the fairness of the settlement and of the how the monies should be distributed. He did, however, note that Goldman's initial claim for fees was in excess of the statutorily permitted amount of $388,000, and that Goldman's explanation for the overcharge was unsatisfactory. After further unsatisfactory attempts to obtain detailed information from Goldman, the court, sua sponte, appointed its own medical expert to review the medical records, and also consulted with others. The District Court ultimately approved the settlement.

Goldman then sought his fee through the court. The court asked Goldman to explain why he had initially attempted to overcharge the Chens. He replied that there had been a typographical error, but the District Court did not believe this explanation. It denied his request for payment completely, except to allow him to claim costs, if he could provide adequate documentation to prove them. Stated the District Court: “Over the last 21 years I have overseen a fair number of infant's compromise cases, ranging from trip and fall cases to those involving serious brain damage with settlements reaching into the millions of dollars. The lawyers in those cases earned their fees by the settlements they achieved and by post-settlement work that Mr. Goldman failed to provide. I am not going to allow him to be compensated in the same way as attorneys who do their job. Moreover, assuming that my conclusion regarding the deliberate fabrication of Mr. Goldman's initial application for fees and disbursements is not sustained, the utter carelessness in the calculation nevertheless warrants additional sanction.” Goldman appealed.

The U.S. Court of Appeals for the Second Circuit noted that New York courts have consistently held that “an attorney who engages in misconduct by violating the Disciplinary Rules is not entitled to legal fees for any services rendered.” Shelton v. Shelton , 542 NYS2d 719 (N.Y.App. Div.2d Dep't 1989). New York's Disciplinary Rules also provide that “[a] lawyer shall not enter into an agreement for, charge or collect an illegal or excessive fee.” 22 N.Y. ADC 1200.11(a). “Accordingly,” stated the court, “if the district court's conclusion that Goldman purposely requested an excessive fee was not clearly erroneous, then the court did not abuse its discretion in denying Goldman's fee application in its entirety.” Here, Goldman's explanations for the initial overcharge were plausible, but so was the District Court's conclusion that Goldman's evasiveness indicated that he had been trying to get away with overcharging. The Second Circuit then looked to the U.S. Supreme Court's decision in Anderson v. City of Bessemer City , 470 U.S. 564, 573-74 (1985), in which it stated that when a “district court's account of the evidence is plausible in light of the record viewed in its entirety, the court of appeals may not reverse it even though convinced that had it been sitting as the trier of fact, it would have weighed the evidence differently. Where there are two permissible views of the evidence, the factfinder's choice between them cannot be clearly erroneous.” With this in mind, the appellate court affirmed the denial of attorney fees, stating: “It cannot be said that the district court abused its discretion by choosing one of two equally plausible views of the evidence in this case.”

National Practitioner Databank Report Proper Even When Doctor Quits

On Jan. 14, the U.S. Court of Appeals for the First Circuit issued an order upholding a federal requirement that hospitals report investigations of doctors to the U.S. Department of Health and Human Services (HHS) even if they resign or give up their clinical privileges while under investigation. Doe v. Leavitt, — F.3d —-, 2009 WL 81655 (C.A.1 (Me.), 1/14/09).

The case involved a doctor against whom a nurse made derogatory allegations. An ad hoc committee was appointed to investigate the matter. The committee reported to the hospital's executive committee that the nurse's allegations had some credibility. The executive committee thereafter proposed that the doctor be allowed to return to work so long as he agreed to certain contractual modifications, including provisions for regular proctoring and psychological evaluations. He did not agree to this, and voluntarily resigned his clinical privileges. Despite the resignation, the hospital reported the investigation to the National Practitioner Databank (NPDB). A month after he resigned, but following the hospitals report to the NPDB, the doctor requested administrative review of the hospital's filing. He contended that the hospital's investigation had ended when the ad hoc committee presented its report to the executive committee and, therefore, that he had not resigned while under an investigation. On May 25, 2007, the Secretary of HHS issued a written decision in which he ruled that the hospital appropriately had reported the doctor to the NPDB. The Secretary premised this ruling on a statement that “[a]n investigation is ' considered ongoing until the health care entity's decision making authority takes a final action or formally closes the investigation.” Because the executive committee had neither taken a final disciplinary action nor formally closed its inquiry when the doctor resigned, the secretary found that he was still “under an investigation” and that the hospital, therefore, had a duty to report the resignation under a provision of the Health Care Quality Improvement Act (HCQIA). 42 U.S.C. ' 11133(a)(1)(B)(i).

Following this, the physician brought an action under the Administrative Procedure Act (APA) against the Secretary of HHS, challenging his interpretation of the word “investigation” under HCQIA. The lower court agreed with the secretary's conclusion that a hospital's investigation is ongoing until the hospital closes it or takes final action. The doctor appealed.

In upholding the lower court's conclusion, Senior Circuit Judge Bruce M. Selya signaled agreement with the secretary of HHS's interpretation of the HCQIA that “Congress did not intend to construct an easily accessible escape hatch that would permit beleaguered physicians to elude the reach of the HCQIA's reporting requirement.”

Texas Says No Mandamus Review for Deficient
Med-Mal Expert Reports

The Texas Supreme Court has decided that appellate courts may not grant mandamus of trial court rulings that grant time extensions to medical malpractice plaintiffs to correct deficient expert reports. In re Watkins, — S.W.3d —-, 2009 WL 153251 (Tex., 1/23/09).

Plaintiff Gary Jones sued Dr. Mary Louise Watkins, alleging she injured his eye while she was treating a lesion on his face. Within 120 days of filing, he served what he purported to be an expert report. Dr. Watkins objected that the report was deficient. Indeed, the trial judge found that the report was merely an account of the treatment Jones had received and should receive in future. It failed to address the standard of care and the issues of breach and causation. Despite the doctor's objections, the trial court granted a 30-day extension. Jones filed a new report, which Dr. Watkins did not challenge. Instead, the defendant filed an interlocutory appeal and an original proceeding in the court of appeals asserting the trial court abused its discretion in granting an extension, and seeking an order of dismissal. The court of appeals dismissed the interlocutory appeal for want of jurisdiction and denied mandamus relief. Dr. Watkins appealed only the denial or mandamus relief, and asked the Texas Supreme Court to order dismissal of the case.

The state's legislature passed a sweeping tort reform bill a few years ago that, among other things, placed limitations on when an interlocutory appeal could be taken. The law allows for interlocutory appeal when no expert report is filed in a medical malpractice case. A right to appeal is not provided for when a deficient report is filed. Texas' Supreme Court thus concluded that if it granted mandamus review, it would be going against the will of the legislature's limits on review. “If no report was served, interlocutory appeal was available, so mandamus is unnecessary,” stated the court. “If the report was merely deficient, then an interlocutory appeal was prohibited, and granting mandamus to review it would subvert the Legislature's limit on such review.”