United States District Court, N.D. Indiana, Hammond Division
THE UNITED STATES OF AMERICA, ex rel. BRADLEY STEPHENS, Plaintiffs,
DR. ARSHAD MALIK, AFZAL J. MALIK, and PRIME HEALTH CARE SERVICES, INC., Defendants.
OPINION AND ORDER
William C. Lee, Judge.
matter is before the Court on the Petition for Attorney Fees
and Expenses and memorandum in support filed by
Relator/Plaintiff Bradley Stephens (docket entries 107 and
108). Defendants Afzal Malik and Prime Health Care Services,
Inc., filed a response to the petition (DE 113) and Stephens
filed a reply (DE 114). Shortly after Stephens filed his
petition, Defendants moved to strike it as untimely.
Defendants' Motion to Strike (DE 109). The Court
(Magistrate Judge Paul R. Cherry) denied the motion (DE 112).
Stephens then filed a Supplemental Petition for an Award of
Attorney's Fees and Costs (DE 115) and a supplemental
supporting memorandum (DE 116). The Defendants did not file a
supplemental response and so this matter is ripe for
reasons discussed below, the Court GRANTS the Petition for
Attorney Fees and Expenses (DE 107), GRANTS the Supplemental
Petition for an Award of Attorney's Fees and Costs (DE
115), and awards the total sum $81, 790.50. The Clerk of the
Court is instructed to enter judgment in favor of
Relator/Plaintiff Bradley Stephens, and against Defendants
Afzal Malik and Prime Health Care Services, Inc., jointly and
severally,  in the amount of $81, 790.50, plus
interest, at the prevailing legal rate, from April 29, 2016,
until judgment is paid in full.
filed this qui tam action on August 1, 2012, under
the False Claims Act, 31 U.S.C. § 3729 et seq.
Complaint (DE 1), p. 1. Stephens alleged that Defendant
Arshad Malik, an Indiana physician, “violated the [FCA]
by referring Medicare patients to Defendant Prime Health Care
Services, Inc. (a company solely owned by his brother,
Defendant Afzal J. Malik) which, in turn, billed Medicare for
home health services in violation of the Stark Law, 42 U.S.C.
§ 1395nn(a)(1)-(2).” Petition for Attorney Fees,
p. 1. The United States filed a Notice of Election to
Intervene in Part and Decline in Part on March 24, 2014 (DE
17) and joined this action as a plaintiff. After nearly four
years of litigation, the parties filed a joint Notice of
Settlement on April 20, 2016 (DE 104). The court entered an
Agreed Order of Dismissal on April 29, 2016, dismissing this
case without prejudice and retaining jurisdiction (at the
request of all parties) for purposes of enforcing the
settlement agreement. Order of Dismissal (DE 15), p. 1. The
enforcement of the settlement, at least as to plaintiff's
counsel's fee award, is what brings this matter before
petition, Stephens states that because “settlement was
reached resolving all False Claims Act claims between the
Relator, the United States of America, and the Defendants[, ]
. . . the Relator is now a prevailing party and, as such, is
entitled to recover reasonable attorney fees and expenses
attributable to the False Claims Act claims” asserted
in this case. Petition for Attorney Fees, p. 1. Stephens claims
that “[w]hile an agreement was recently reached with
Defendant Dr. Arshad Malik, all attempts to do so with
Defendant Afzal J. Malik and Defendant Prime Health Care
Services, Inc., via their common counsel, have been
unsuccessful.” Id., pp. 1-2. Stephens requests
that “his counsel be paid attorney fees of $73, 078.50
($93, 078.50 minus the $20, 000.00 paid by Defendant Dr.
Arshad Malik) and expenses of $2, 497.00, plus interest from
the April 29, 2016[, ] settlement and dismissal of the
qui tam allegations in this case.”
Id., p. 2.
their response brief, Afzal Malik and Prime Health Care
challenge Stephens' fee petition first by renewing their
argument that it “is time barred and it does not comply
with trial rules and should be denied.” Defendants'
Response, p. 1. The Defendants don't expressly state that
they are asking this Court to reconsider the Order entered by
Magistrate Judge Cherry, in which he denied their motion to
strike (which was based on this same argument), but clearly
that's what they are requesting. The Court has considered
the Defendants' arguments presented in their brief but
declines the invitation to reconsider or reverse the
Court's July 5, 2016, Opinion and Order.
from their argument that his petition was untimely, the
Defendants concede that Stephens is entitled to recover fees
and costs. They do, however, raise challenges as to the
amount. This argument is twofold. First, the Defendants
contend that the “fee request should be decreased by
$5, 625.50 because the time requested to be reimbursed is
unreasonable and would compensate the relator for attorney
time not actually spent on this case.” Defendants'
Response, p. 2. Second, the Defendants argue that Stephens
“requests to be reimbursed at an attorney rate that is
not reasonable because it is not his attorney's actual
rate [and] a credit of $7, 937.50 should be given the
Defendants [sic].” Id., p. 3.
Original fee petition.
memorandum in support of his first petition for fees and
costs, Stephens notes that “courts typically calculate
attorney's fees in qui tam cases using the same
standard as applied in 42 U.S.C. § 1988 civil rights
actions and other matters involving federal statutes. This is
commonly referred to as the ‘lodestar
method.'” Plaintiff's Memorandum, p. 2
(citations omitted). Stephens contends that his request for
fees is based on a reasonable hourly rate and a reasonable
number of hours of work, thereby providing a
“reasonable lodestar” for Plaintiff's
request. Id., pp. 2-4. Stephens' counsel
submitted a declaration in support of the fee petition that
summarizes his qualifications and expertise in cases like
this, his work on this case, and his calculation of fees.
Declaration of Travis W. Cohron (DE 108-1). Mr. Cohron also
submitted a spreadsheet itemizing the fees and expenses
incurred in this case. Plaintiff's Exh. (DE 108-2).
Defendants' first argument for a decrease in the amount
requested by Stephens is based on its brow raising contention
that Stephens' fee petition contains “altered
entries” and they attach what they claim is “a
summary of those altered entries[.]” Defendants'
Response, p. 2 (citing Defendants' Exhibits 113-1 and
113-2). As the Defendants explain it, “[t]hrough
informal discovery, [Stephens] provided to these Defendants a
listing of time spent working on th[is] case[.] [Stephens]
now reports attorney time that has been increased from the
actual time recorded at the time the work was
completed[.]” Id. In other words, the
Defendants are claiming that Stephens' counsel is fudging
the numbers and consequently his fee award should be reduced
“by $4, 922.50” for “work performed before
2016 (3.5 years)[.]” Id. (The 3.5 years refers
to the period from the inception of this case through
December 2015.) As to fees incurred for the period from
January through May 2016, the Defendants state that since
Stephens “did not supplement [his] informal discovery
with entries for time after [December 2015] . . . defendants
cannot make a reasoned decision as to the reasonableness of
the attorney time requested to be reimbursed.”
Id., p. 3. Still, argue the Defendants, “[i]t
is reasonable to assume that [Stephens] has reviewed all of
his counsel's time entries and made adjustments. . . .
These Defendants believe that the court can reasonably make a
downward adjustment of 14% of the 3.5 Year Adjustment, or
$703.00.” Id. Thus, the Defendants seek a
reduction in the attorney fee in the amount of $5, 625.50
($4, 922.50 for pre-2016 fees and $703.00 for the period from
January through May of 2016).
maintains in his reply brief that the alleged “altered
entries” the Defendants refer to are nothing more than
a legitimate billing adjustment. Plaintiff's Reply, pp.
2-3. He claims the discrepancies in the two documents are the
result of his efforts to compromise his attorney's fees
to facilitate settlement, and that the exhibits submitted by
the Defendants reflect those efforts (that is, the hours
listed on the document that later became the Defendants'
exhibit were lower because they were reduced to facilitate a
settlement). Id. He also contends that the exhibits
submitted by the Defendants-the ones that evidence the
alleged “altered entries”-“should be
stricken or disregarded as they are the product of
confidential settlement communications, made pursuant to
[Federal Rule of Evidence] 408, not ‘informal
discovery.'” Id., p. 3. So, the Defendants
accuse Stephens and his counsel of altering time records in
order to recover an unfairly high fee award, and Stephens
retorts by accusing the Defendants of misrepresenting the
contents of a document they should not have disclosed in the
Stephens' argument that the Defendants' exhibits
should be stricken or disregarded, the Court is not inclined
to adopt either option. If in fact the Defendants received
Stephens' counsel's fee summary during settlement
negotiations then their use of the document now might very
well violate (at least the spirit of) Rule 408, as Stephens
argues. Rule 408 states in relevant part as follows:
Evidence of the following is not admissible-on behalf of any
party-either to prove or disprove the validity or amount of a
disputed claim or to impeach by a prior inconsistent
statement or a contradiction:
(1) furnishing, promising, or offering-or accepting,
promising to accept, or offering to accept-a valuable
consideration in compromising or attempting to compromise the
(2) conduct or a statement made during compromise
negotiations about the claim[.] . . .
the Rule 408 prohibition is not absolute. As one ...