Legal Fee Tracker: Lawyers eye $700 million payout in latest Blue Cross settlement
Plus: An unusual insurance policy in Quinn Emanuel's $185 million ObamaCare fee fight
By David Thomas and Mike Scarcella
Oct 17 (Reuters) -Plaintiffs' lawyers behind a new $2.8 billion class action antitrust settlement with Blue Cross Blue Shield are planning to request up to $700 million in legal fees for their work, adding to hundreds of millions of dollars in fees already awarded in the sprawling case.
The settlement with hospitals and other health care providers, which requires court approval, would create a system-wide platform facilitating member benefits and mandate other reforms that the attorneys said would lead to more transparency, efficiency and accountability. It would also provide more contracting opportunities with Blue Cross.
The providers' lawyers, led by Joe Whatley and Edith Kallas of Whatley Kallas, told U.S. District Judge R. David Proctor in their settlement papers on Monday that they would ask for as much as a quarter of the $2.8 billion in fees.
It would be second nine-figure attorney fee award in the antitrust litigation against BCBS, a 12-year-old legal saga that reached the U.S. Supreme Court earlier this year.
BCBS struck a $2.7 billion settlement with commercial and individual subscriber plaintiffs in 2020. That led to a fee award of $667 million for subscribers' counsel led by Boies Schiller Flexner and Hausfeld.
Whatley and Kallas said that in the providers' settlement, they've been focused on winning preliminary approval for the deal before they formally seek legal fees.
"When we do turn to the issue of attorneys' fees, the value of the settlement will drive the issue, but you will see that provider plaintiffs' counsel have spent approximately $100 million in expenses and devoted an unprecedented number of hours over more than 12 years to achieve the outstanding result for the class," Whatley and Kallas said in an email.
A BCBS spokesperson declined to comment on the legal fees in the case. The insurer has denied wrongdoing.
Whatley Kallas is one of at least 30 law firms representing providers in the case. Those that responded to Reuters declined to comment on how the fee award would be divided.
The plaintiffs first sued in 2012, claiming Blue Cross and its affiliates divided the country into exclusive areas where they did not compete with each other. The lawsuit said the alleged conspiracy increased the cost of insurance and drove down reimbursements.
A member of the subscriber class objected to the fee award, arguing it was too high. The U.S. Supreme Court upheld both the fee award and the overall subscriber settlement in June.
As for the latest settlement, Whatley and Kallas said in an email that there was "no basis for a legitimate objection" to the deal.
INSURANCE COMPLICATES QUINN EMANUEL FEE FIGHT
In other legal fee news, a U.S. federal claims court judge last week awarded Quinn Emanuel Urquhart & Sullivan $92.4 million for its work on a multibillion-dollar federal healthcare insurance case. The judge halved the $185 million fee that the court previously awarded, after an appeals panel ruled last year that it was excessive.
The award stemmed from a $3.7 billion judgment Quinn Emanuel secured in 2020 for a class of insurers that said the Obama administration breached its obligations under an Obamacare provision aimed at encouraging medical coverage to uninsured Americans.
The ensuing fee dispute contains a wrinkle: Quinn Emanuel in 2021 took out an insurance policy on the original $185 million award and later distributed the bounty to the firm’s partners.
“The size of the case and the award are very unusual to say the least. And getting insurance on the award is highly unusual,” said Professor Tom Baker, an insurance expert who teaches at University of Pennsylvania’s law school. Baker said he would expect Quinn Emanuel to appeal the reduced award.
Redacted copies of the policy documents were disclosed in the case. The primary policy said insurers’ maximum liability was $25 million, but additional excess policies appear to cover the firm for many times that amount.
The documents show Quinn Emanuel was obligated to pursue its interest in the $185 million fee award “vigorously, in good faith and with the same zeal as if no insurance were in place.”
Quinn Emanuel did not immediately respond to requests for comment, and neither did the main challengers to the fee award, UnitedHealthcare and Kaiser.
UnitedHealth and Kaiser argued last year that Quinn Emanuel's insurance policies pushed the firm to litigate to preserve the entire $185 million award. They said the policies improperly asserted outside influence on the fee dispute.
“The class’s right to prompt repayment should not depend on the conduct of a stranger to this litigation,” the insurers told the court.
The policy documents show that Quinn can argue that continuing to pursue the maximum amount of $185 million would be “fruitless.”
That doesn't mean the fight is over, said insurance expert Marc Mayerson.
He said there appeared to be a risk of “multiple simultaneous suits and arbitrations” based on the insurance carriers’ individual contracts with the firm.
(Legal Fee Tracker is a weekly feature exploring attorney compensation awards and disputes in class actions, bankruptcies and other matters. Please send tips or suggestions to D.Thomas@thomsonreuters.com.)
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Reporting by David Thomas
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