In connection with the certification of claims against the Federal Government under the Affordable Care Act, the Opt-In Notices sent to potential class members with court approval represented that Class Counsel would seek attorney’s fees to come out of any recovery, that it would seek no more than 5% of any judgment or settlement obtained, and that the Claims Court would determine the exact amount based on, among other things, how many issuers participated, the amount at issue in the case, and a so-called “lodestar cross-check” (based on the hours actually worked). Ultimately, however, the Claims Court awarded 5% of each of the common funds recovered. The Claims Court stated that it need not perform a lodestar cross-check, but noted that even if it were, the apparent multiplier of 18-19 would not fall outside the realm of reasonableness.
Vacating the award, the Court of Appeal stated that: “It is a sufficient reason for us to so hold that in this case the court-approved notices sent to potential class members, for use by potential members in deciding to whether to opt into the classes, expressly guaranteed use of a lodestar cross-check by the Claims Court in determining an attorney’s fee award.”
The Court further noted that a number of courts have surveyed relevant fee awards and noted a norm of implicit multipliers in the range of 1 to 4. “A multiplier of 18 or 19 is far outside the evident relevant norm and so would require exceptional justification.”
Health Republic Ins. Co. v. United States, 58 F.4th 1365 (Fed. Cir. 2023).