U.S. appeals court tosses $185 million Quinn Emanuel fee award in Obamacare case

The United States Court of Appeals for the Federal Circuit is seen in Washington, D.C.
The United States Court of Appeals for the Federal Circuit is seen in Washington, D.C., U.S., August 30, 2020. REUTERS/Andrew Kelly
  • Federal Circuit panel faults judge's analysis
  • UnitedHealthcare, others objected to 'astronomical' award

Jan 31 - A U.S. appeals court on Tuesday vacated what it called an "extraordinarily high" legal-fee award of $185 million for law firm Quinn Emanuel Urquhart & Sullivan, ordering a fresh review that could reduce compensation for plaintiffs' attorneys who secured a $3.7 billion settlement with the U.S. government.

The three-judge panel of the U.S. Court of Appeals for the Federal Circuit said a lower court judge "did not adequately justify" $185 million in fees. The panel said the analysis of the fee award was "inconsistent" with the terms of notices sent to class members in the case.

The unanimous ruling was a blow for 900-lawyer Quinn Emanuel, which had defended the award as fair compensation for its work litigating a key provision of the federal Affordable Care Act.

The firm represented a class of health insurers that sued over sums they said they were owed under Obamacare's "risk corridor" program, which was designed to encourage insurers' participation in the health exchanges at the center of the new law.

UnitedHealthcare Inc and a group of other class members challenged the attorneys' fee award as "untenable" and "astronomical" and urged the appeals court to strike it down.

They argued that a fee award of about $8 million, or no greater than $20 million, was appropriate in the case.

Derek Shaffer of Quinn Emanuel, who defended the fee in arguments before the Federal Circuit, did not immediately respond on Tuesday to a message seeking comment.

Quinn Emanuel said in a statement that the firm was "reviewing all options for next steps" in response to the decision.

A lawyer for UnitedHealthcare did not immediately respond to a similar message, and neither did a representative from UnitedHealthcare.

The Federal Circuit panel said Federal Claims Court Judge Kathryn Davis, who issued the fee award, should have performed a particular analysis of the law firm's hours and rates in assessing its fee request.

"The law required a lodestar cross-check, contrary to the Claims Court's conclusion," wrote Circuit Judge Richard Taranto, joined by Chief Circuit Judge Kimberly Moore and Circuit Judge Raymond Chen.

"Quinn Emanuel's numbers for hours and rates, even if accepted, would produce a lodestar of approximately $10 million, and Quinn Emanuel's $185 million proposal is huge compared to that figure, whereas the objectors' dollar proposal of $8.828 million is pretty close to it," Taranto wrote.

The case is Health Republic Insurance Co v. United States, U.S. Court of Appeals for the Federal Circuit, No. 22-1018.

For plaintiffs: Derek Shaffer of Quinn Emanuel

For objecting class members: Moe Keshavarzi of Sheppard, Mullin, Richter & Hampton

Read more:

U.S. appeals court questions $185 mln award to law firm Quinn Emanuel

Quinn Emanuel defends its $185 mln fee in Obamacare litigation

Health insurers balk at Quinn Emanuel's 'astronomical' $185 million fee award

(NOTE: This report was updated with comment from Quinn Emanuel.)

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