Attorney fees awarded in TheraMatrix lawsuit against Blues

There’s been another development in Pontiac-based TheraMatrix winning a $4.5 million lawsuit against Blue Cross Blue Shield of Michigan for breach of contract and tortious interference with economic and business relationships (“Their (Blue) Cross to bear,” Aug. 23, 2010).

Oakland County Circuit Court Judge Edward Avadenka awarded case evaluation sanctions, including attorney fees, against Blue Cross on Nov. 15.

But the way he came up the $625-per-hour rate is interesting.

According to Sara K. MacWilliams and Rodger D. Young, counsel for TheraMatrix:

[Avadenka] explained that the case was “most contentious” and that trial “was like a fencing match — thrust and parry by both sides, endlessly,” and therefore, substantial attorney hours were properly included in the fee award.

But, they continued:

Judge Avadenka’s opinion is of special note, because it examined what the proper source of evidence is to determine attorney fees in a Southeastern Michigan commercial litigation. Courts determining fee awards sometimes rely on the 2007 State Bar Survey of attorney rates.

However, as Michigan Lawyers Weekly recently reported, the survey is actually poor evidence of fees, both because it is now outdated, and because the survey has a very low response rate. Judge Avadenka recognized this, writing that the 2007 State Bar Survey is not “indicative of the true hourly rate in Southeastern Michigan for the attorneys who actually tried this case. There are over 35,000 attorneys in the State of Michigan, and the 2007 State Bar Survey reflects a questionnaire return rate of only 20-30 percent.”

Judge Avadenka, through his research, determined a more reasonable alternative, writing, “A truer representation of a reasonably hourly rate for the attorneys involved in the instant case is set forth in the National Law Survey (2008), which lists various rates by firm.”

Judge Avadenka also relied on “the Michigan Benchmark” as another source of evidence for determining fee awards. Using this evidence, Judge Avadenka set a reasonable billing rate of plaintiff’s lead counsel, Rodger Young, at $625 per hour during the applicable period, and adjusted at least one attorney’s billing rate up.

Judge Avadenka’s Nov. 15, 2010, Order and Opinion, which carefully sets forth the Smith v. Khouri guidelines for setting attorney fee awards, may prove to offer useful guidance for attorneys involved in fee award disputes, including fees owed under MCR 2.403.

As we wrote last week, a USA Today story that also appears in the Detroit Free Press (both papers are owned by Gannett) also covered the TheraMatrix case. The Freep also published a story that talks about a recently filed U.S. Justice Department lawsuit against the Blues.

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BCBSM motion denied in $4.5 million breach-of-contract suit

In our Aug. 16, 2010, edition, we reported about a $4.5 million verdict rendered against Blue Cross Blue Shield of Michigan in a breach-of-contract and tortious interference lawsuit (“Their (Blue) Cross to bear”).

That stemmed from Pontiac-based TheraMatrix Services, Inc. contending BCBSM breached its agreement with the physical-therapy business over a program at Ford Motor Co. that would have saved the auto company millions of dollars in health care costs, and also interfered with TheraMatrix’s business relationship with Chrysler Motor Co. over a similar program.

Now, in a recent development, Oakland County Circuit Court Judge Edward Avadenka on Oct. 5 rejected BCBSM’s motion for judgment notwithstanding the verdict or a new trial.

BCBSM counsel Laurine S. Parmely said in August that “we don’t see this as more than a simple, contractual business dispute between two parties.”

But Rodger D. Young, counsel for TheraMatrix, indicated the possibility of filing another suit to seek damages for money lost during TheraMatrix’s 18-month hiatus from Blue Cross’ provider network – when Blue Cross terminated TheraMatrix as a participating provider for its health plans in Michigan.

As well, he added, there could be counts of anti-trust and anti-competitiveness asserted against Blue Cross, as officials from the Michigan Attorney General’s Office and the U.S. Department of Justice monitored the July 2010 trial.

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