United States v. Habana Hosp. Pharm.

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UNITED STATES OF AMERICA, STATE OF FLORIDA, and ex rel. BEATRIZ MORALES, Plaintiffs, v. HABANA HOSPITAL PHARMACY, INC., a Florida corporation, et al., Defendants.

No. 17-cv-80871-MARRA/MATTHEWMAN

United States District Court, S.D. Florida

August 7, 2023

MAGISTRATE JUDGE'S REPORT AND RECOMMENDATION ON RELATOR'S MOTION FOR ATTORNEYS' FEES [DE 61]

WILLIAM MATTHEWMAN UNITED STATES MAGISTRATE JUDGE

THIS CAUSE is before the Court upon Relator Beatriz Morales' (“Relator”) Motion for an Award of Attorneys' Fees, Expenses, and Costs Against Defendants (“Fees Motion”) [DE 61]. The Honorable Kenneth A Marra, United States District Judge, referred the Fees Motion to the undersigned United States Magistrate Judge. See DE 62. Defendant Habana Hospital Pharmacy, Inc. (“Defendant Habana” or “Habana”) has filed a Response [DE 67], and Relator has filed a Reply [DE 70]. Moreover, the Court held a hearing on the Fees Motion via Zoom video teleconference (VTC), on February 1, 2023. See DE 82.^[1] Thus, the matter is now ripe for review. For the reasons that follow, the undersigned Magistrate Judge RECOMMENDS that the District Judge GRANT IN PART AND DENY IN PART Relator's Fees Motion [DE 61].

I. BACKGROUND

A. Complaint and Settlement Agreement

This is a case brought under the False Claims Act. [DE 1]. Pursuant to the False Claims Act, on April 14, 2022, “the United States notified the Court of its election to partially intervene in th[e] action for the purposes of settlement.” [DE 56 at 1] (citing DE 50). Accordingly, on June 28, 2022, a settlement agreement was fully executed. See DE 56. That settlement agreement was entered into by: (1) the United States; (2) Habana; (3) APB&J Holdings Corporation d/b/a Medicine Shoppe #0089; (4) Tropic Pharmacy Holdings, Inc.; (5) Longevity Drugs, LLC; (6) Forest Hill Pharmacy, LLC;^[2] and (7) Relator. [DE 56-1 at 1]. And importantly, while Relator “claim[ed] entitlement under 31 U.S.C. § 3730(d) to a share of the proceeds of th[e] Settlement Agreement and to . . . reasonable expenses, attorneys' fees and costs,” the Settling Defendants “specifically reserve[d] all defenses and rights to challenge any claim for the award of attorney's fees, expenses or costs to Relator, including any subsequent motion or litigation for a statutory award pursuant to 31 U.S.C. § 3730(d) or any law or provision.” [DE 56-1 at 3]. Moreover, nothing in the settlement agreement “prohibit[ed] Relator from moving for a statutory fee award or prevent[ed] the Settling Defendants from contesting such an award, either in part or in full.” Id.

With the parties' settlement agreement in mind, on July 28, 2022, the Court entered a Final Order of Dismissal [DE 58]. Thereafter, on September 12, 2022, Relator filed the Motion for an Award of Attorneys' Fees, Expenses, and Costs Against Defendants [DE 61] at issue. According to Relator, “[b]ecause the United States . . . intervened and settled this matter, Relator is entitled to an award of reasonable attorneys' fees, costs, and expenses under the False Claims Act.” [DE 61 at 2]. None of the Defendants filed a timely response to the Fees Motion. At that point, the matter was then referred to the undersigned United States Magistrate Judge by the Honorable Kenneth A. Marra, United States District Judge, on September 29, 2022, for a report and recommendation. [DE 62].

B. Motion for Extension of Time, Motion to Compel, and Request for Hearing

1. Motion for Extension of Time

Subsequently, on October 10, 2022, Andrew Levi, Esq. appeared on behalf of Defendant Habana. [DE 63]. The next day, Mr. Levi filed a Motion for Extension of Time to Respond to Plaintiffs' Motion for an Award of Attorneys' Fees, Expenses, and Costs [DE 64]. In Habana's motion, Mr. Levi acknowledged that Habana's response was overdue. Nonetheless, he noted that he had only recently been retained by Habana and requested additional time to prepare a response to the Fees Motion. Relator opposed Defendant Habana's request, arguing that Habana failed to timely respond, and that Habana should not be allowed to do so belatedly. [DE 65].

The Court granted Defendant Habana's motion for extension of time, noting that it preferred to resolve matters on the merits. [DE 66]. Thus, the Court set a briefing schedule on Relator's Fees Motion. Habana filed its response in opposition on October 25, 2022 [DE 67], and Relator filed her reply on November 15, 2022 [DE 70].

2. Motion to Compel Discovery

Thereafter, on November 23, 2022, Defendant Habana filed a Motion to Compel Discovery Responses from Relator (“Motion to Compel”) [DE 71]. Specifically, within the Motion to Compel, Defendant Habana took issue with the “many time entries for Ms. Khawam that appear to have been recreated by duplicating, en masse, the time entries of other attorneys.” Id. In this regard, Habana noted Ms. Khawam's (Relator's co-counsel's) Declaration that the billing entries attached to the Fees Motion “do not reflect any time after July 19, 2018, or any of [Ms. Khawam's] time entries” due to “a computer error that resulted in lost data,” all while Relator simultaneously “included hundreds of entries after July 19, 2018 and myriad entries for Ms. Khawam” within the billing entries attached to the Fees Motion. [DE 71 at 2].

The Court held a hearing on the Motion to Compel on December 19, 2022. [DE 76]. Ultimately, at that hearing, Ms. Khawam did not fully or adequately explain why her Declaration was at odds with the billing entries (specifically, how she could claim that time entries were destroyed after July 19, 2018 in her Declaration but then bill for time entries after July 19, 2018 within the same filing). In any event, following the hearing, on December 22, 2022, the Court issued an Order Granting in Part and Denying in Part Defendant Habana's Motion to Compel [DE 77].

Specifically, the Court denied Habana's Motion to Compel to the extent Habana requested documents beyond what was contemplated by Local Rule 7.3. [DE 77 at 5]. However, the Court granted Habana's motion “to the extent Relator's Motion or Reply d[id] not already provide: (1) the identity, experience, and qualifications for each timekeeper for whom fees are sought; (2) the number of hours reasonably expended by each such timekeeper; (3) a description of the tasks done during those hours; and (4) the hourly rate(s) claimed by each timekeeper.” Id.

Further, as part of the Court's December 22, 2022 Order, the Court also stated that it “does intend to find that Habana is jointly and severally liable for any award of attorneys' fees and costs.” Id. at 6. In doing so, the Court noted the “discretion courts are vested in determining how to divide liability,” stating that “joint and several liability would be appropriate under the facts of this case.” Id. (citing United States v. Sleep Med. Ctr., No. 12-cv-1080-J-39PDB, 2016 WL 11567785, at *20 (M.D. Fla. Aug. 23, 2016), report and recommendation adopted sub nom. United States ex rel. Nichols v. Sleep Med. Ctr., No. 12-cv-1080-J-39PDB, 2016 WL 11567770 (M.D. Fla. Dec. 6, 2016)). Additionally, based on the Court's stated intent to find joint and several liability, the Court directed the parties to file a “Joint Notice advising whether they have agreed on an amount of attorneys' fees” on or before January 6, 2023. Id. at 6.

3. Request for Hearing

The parties filed the requisite Joint Notice, stating that an agreement had not been reached. [DE 79]. Defendant Habana also filed a “Request for Hearing on Relator's Motion for Attorney's Fees, Costs, and Expenses.” [DE 80]. In Defendant Habana's Request for Hearing [DE 80], Habana noted that Relator “ha[d] since modified her fee request, reducing counsel's hourly rate and eliminating some, but not all, of the duplicative and unrecoverable entries.” [DE 80 at 1]. However, Habana contended that “Relator's modified billing records continue to raise questions . . . regarding the accuracy and adequacy of the documents submitted in support of the motion and [that] her fee request still seeks an excessive fee award for the many reasons set out in Habana's response.” Id.

Defendant Habana therefore requested a hearing to “facilitate a discussion of the deficiencies in Relator's motion, including the accuracy and credibility of the billing records submitted in support, the inclusion of numerous duplicative time entries and the excessive number of hours for which recovery is sought.” Id. at 2. The Court granted Habana's Request for Hearing, leading up to the February 1, 2023 hearing.

4. February 1, 2023 Hearing

At the February 1, 2023 hearing, Ms. Khawam explained the discrepancy in her Declaration as an exercise in changing software programs and being unable to “pull out the information herself.” She stated that the billing entries on behalf of the Whistleblower Law Firm were done properly and contemporaneously, and that in an effort to resolve this matter in good faith, she had taken a major “haircut” in this case and reduced her fees significantly. She also stated that all billing entries concerned work specifically done on this case. With respect to Mr. Wolfson (Relator's co-counsel), he stated: (1) that he had been brought in later; (2) that he did some of his own work drafting documents and would forward research; (3) that he had frequent meetings with the Relator by telephone; and (4) that he would frequently go to Ms. Khawam's office.

Turning to Habana, Mr. Levi argued that Mr. Wolfson should bill at a rate similar to that of Ms. Khawam's reduced rate. He further stated that the factors courts address when considering joint and several liability weighed in favor of not holding Habana jointly and severally liable.

5. Significant Discrepancy between Fees Motion and Reply

Notably (and as...