Keeping the Lodestar Local — Mississippi Court Refuses to Apply D.C. Rates for FCA Fee Award

In a reversal of the typical False Claims Act (FCA) fee scenario, a federal district court in Mississippi recently declined to apply Washington, D.C. rates in an award to prevailing defendants, instead using those for lawyers in that state.

In United States ex rel. Jehl v. GGNSC Southaven LLC, No. 3:19-CV-091-GHD-JMV, 2024 WL 1145962 (N.D. Miss. Mar. 14, 2024), after finding the relator’s case frivolous, the court awarded attorney’s fees to the defendants under 31 U.S.C. § 3730(d)(4). It appeared to have little difficulty in making the underlying determination — the relator had improperly accused the owners of a nursing home of defrauding Medicare and Medicaid to the tune of US$30 million, with treble damages, by operating without a valid license. In fact, the defendants had a proper multistate license, which relator would have discovered through a “simple online inquiry.” But, when it came to the fee award, the court struggled with the defendants’ bill of US$2 million from its Washington, D.C. law firm. It instead awarded just over US$1 million, about half the fees sought.

It reduced the tab two ways. First, applying the familiar “lodestar” analysis for fee awards, the court rejected the Washington, D.C. rates, notwithstanding the dearth of local law firms with specialized FCA experience in the Northern District of Mississippi. While the court rejected a “hyper-local” approach limiting the rates to lawyers in the district, it refused to go so far as the nation’s capital, instead considering the state as a whole. The court then applied rates previously determined in a qui tam lodestar analysis in the Southern District of Mississippi, which effectively cut the hourly rates charged by the defendants’ attorneys by about 65% to 72%, depending on the attorney.

Second, it applied the recalculated lodestar rates against the reasonableness of the hours billed. The court there found unreasonable hours that many defense counsel and their clients would consider otherwise — for example about 150 hours for a motion to dismiss and a reply brief, about 75 hours for preparing for the relator’s deposition, and about 90 hours for preparing for the relator’s experts. The court also criticized the invoices, finding them “too vague to permit meaningful review.” In the end, it reduced the hours by 20% across the board.

Given what’s good for the goose is good for the gander, the case, though disappointing for the particular defendants, will provide ample arguments for other defendants in negotiating or litigating relator fee awards. Our experience is that relator firms tend to argue that their rates and hours should be no less than what were charged by the defense’s “fancy D.C. law firm.” Considering only local rates and subjecting billing records to scrutiny for “vagueness” quite likely would reduce the tab for fees paid to a relator.

* Max Gould contributed to this blog. Max is a graduate of the New York University School of Law.

© Arnold & Porter Kaye Scholer LLP 2024 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.