On March 20, 2015, the Eastern District of California ruled in United States ex rel. Doe v. Biotronik, Inc., that defendant Biotronik Inc.’s attorneys did not have to turn over their billing records to the relator and his counsel, who sought those records claiming they were relevant to prove the reasonableness of their own fees. No. 2:09-cv-3617-KJM-EFB, 2015 WL 1291371 (E.D. Cal. Mar. 20, 2015). The False Claims Act (FCA) entitles successful relators to “receive an amount for reasonable expenses . . . plus reasonable attorneys’ fees and costs.” 31 U.S.C. § 3730(d).
The complaint in Biotronik alleged violations of the FCA based on kickbacks and off-label uses and billing. The United States intervened and effected a settlement. The parties agreed that the relator was entitled to fees and costs — at issue was whether discovery of defense attorneys’ fees and billing records was relevant to determining the reasonableness of relator’s attorneys’ fees.
The Ninth Circuit uses the lodestar method in analyzing attorneys’ fees, and has held that comparing the hours of the prevailing and losing parties is “a useful guide.” Democratic Party of Washington State v. Reed, 388 F.3d 1281, 1287 (9th Cir. 2004). The Biotronik court explained that the standard for reasonable attorneys’ fees is based on “how many hours were reasonably expended on the litigation, and then multiply those hours by the prevailing local rate for an attorney of the skill required to perform the litigation.”
The court ruled that while Biotronik’s attorneys had to provide their hourly rates, as those were “part of the universe of data from which one would determine the range for rates charged in this district by experienced and qualified attorneys to litigate cases of this nature,” they did not have to share their billing records for the litigation. This was because Biotronik did not contest the reasonableness of the number of hours the relator’s lawyers spent on any particular task. Instead, Biotronik claimed that the relator was unable to collect fees for (1) any time that was vaguely described or block-billed; and (2) any time spent on issues on which the relator did not prevail (as defined by reference to the settlement agreement). The court found that, absent an argument that the time the relator’s counsel spent was unreasonable, “comparing the amount of time [defense counsel] spent on this case or on any particular tasks has no bearing on the pending fee petitions.”
This case is notable against a landscape where legal fees incurred by FCA defendants are increasingly under scrutiny. FCA defendants face fee-related litigation, or face media demands in states with open records laws that enable journalists to obtain defense counsel billing data. While Biotronik has no impact on the latter category, it underscores the fact that, depending on the position of a challenge to a relator’s fees, billing records reflecting attorneys’ fees incurred by FCA defendants may be deemed irrelevant.