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Block billing costs attorneys dearly

Block Billing Practices

All attorneys know that tracking and billing time to their clients is an important and inevitable part of working in a law firm.  Most attorneys bill their time in six, ten, or fifteen minute increments, depending on firm policy and/or client directives.  If an attorney fails to bill his or her time to a client, then the firm cannot invoice, and, as a result, the firm does not get paid.  Accordingly, timekeeping, and even more importantly, incremented timekeeping as opposed to block billing, is a function vital to the success of a law firm.

What is Block Billing?

Block billing occurs where an attorney lumps multiple tasks under one billing entry.  Or in other words, the attorney, instead of separating out each task and the time it took to complete the task, the attorney will list multiple activities under a single time entry.  The practice of block billing is potentially problematic from a client’s perspective because it allows an attorney to conceal the actual time it took to complete an individual task and prevents a determination of whether individual tasks were performed in a reasonable time.  Some clients may feel that block billing is a great way for an attorney to pad his or her bills, and some courts may be beginning to feel that way too.

Fifth Circuit Takes Issue With Block Billing

A recent Fifth Circuit Court of Appeals decision reflects that courts can be equally as sensitive and hostile towards block billing practices.  In U.S. ex. rel. Cook-Reska v. Community Health Systems, the Fifth Circuit upheld an award of $739,000 in attorneys’ fees in response to a petition for attorneys’ fees that started at nearly $3.5 million.

Amy Cook-Reska, a coding specialist at Community Health Systems (“CHS”) hospital, filed a qui tam lawsuit alleging violations of the False Claims Act (“FC A”) as it related to Community’s billing practices.  The government subsequently invited Cook-Reska and her attorneys to communicate with other relators (whistleblowers) and to participate in a nationwide investigation of CHS’s billing practices.  The relators agreed to cooperate in the investigation and share any proceeds from their collective claims.

The government, the relators, and CHS entered into a global settlement in August 2014.  The settlement divided the claims into two categories: 1) ED Claims; and 2) non-ED claims.  The government awarded Cook-Reska, based on both the ED and non-ED claims, approximately $2.14 million plus interest for her efforts as a relator.

Relator Petitions Court for $3.46 Million, Court Orders Relator to Amend Motion for Attorneys’ Fees to Non-ED Claims Only

Cook-Reska then petitioned the district court and received approximately $3.46 million in attorneys’ fees and costs for the ED and non-ED claims.  CHS responded by moving to have her ED claims severed and transferred to the Middle District of Tennessee, where the other relators were already litigating with CHS to determine which relator was the first to file the ED claims and thus entitled to attorneys’ fees.  The court district granted the motion, ordering Cook-Reska to amend her motion for attorneys’ fees and costs, limiting the motion only to the non-ED claims.

Cook-Reska filed an amended petition for attorneys’ fees, requesting approximately $2.03 million in attorneys’ fees, which she said reflected and $800 hourly rate for her attorneys and $250 for her investigator. However, even though the district court asked Cook-Reska to limit her claims to the non-ED claims, Cook-Reska’s attorneys submitted their block billing time entries that attributed 1024 hours to non-ED claims, 2144 hours to both non-ED and ED claims, and 3540.5 hours to ED claims.  Cook-Reska’s attorneys claimed the time entries labeled “both” should be recoverable “because the work thereunder would have been required to pursue the non-ED claims alone.”  The district court disagreed, awarding Cook-Reska her attorneys’ fees only as it related to the non-ED claims and the “both” claims, but reduced the “both” claims to the time spent before the claims were transferred to Tennessee.  Additionally, the district court reduced the attorneys’ hourly rate from $800 to $550 and the investigator’s rate from $250 to $125.

Fifth Circuit Affirms Limited Attorneys’ Fees Award

On appeal, the Fifth Circuit affirmed the district court’s limited award.  There, the Fifth Circuit noted that “[a]n FCA relator who brings successful claims may recover … reasonable attorneys’ fees[.]”  A relator has the burden “to provide the district court with sufficient evidence to discern the claims for which such fees are recoverable and to determine the number of hours spent,” the Fifth Circuit said.

Cook-Reska initially challenged the motion to transfer her ED claims to Tennessee, which the Fifth Circuit rejected, noting that the attorneys’ own time entries recognized that the ED claims and non-ED claims did not involve a “common core of facts.”  Turning to Cook-Reska’s second argument – that the district court erred in determining that she had not met her burden regarding her attorneys’ time records – the Fifth Circuit concluded that the block billing submitted by her attorneys:

[F]ailed to [properly] distinguish between the time they spent on the ED Claims and Non-ED Claims.  At the very least, it was not an abuse of discretion to conclude that the block-billed time entries were insufficient to allow the court to allocate time between the ED and Non-ED Claims.

Block Billing Cost Attorneys $1.3 Million

Accordingly, the Fifth Circuit affirmed the lower court’s award, which cost the lawyers approximately $1.3 million in attorneys’ fees off of the amount their amended petition requested.

Fifth Circuit’s Holding Advises of the Dangers of Block Billing

The attorneys’ block billing practices at issue underscore the importance of discussing with a client how they would like to see your time billed, whether in single-task increments or in block billing.  Additionally, in light of the court’s findings in Cook-Reska it may be advisable to bill all time in per task increments, even if that means entering multiple time entries per day for the same client.  This way, not only will your client be able to discern how much time was spent on a single task and whether such time spent was reasonable, but courts will be able to clearly determine how much time was expended on certain claims for which it can order attorneys’ fees to be paid.

* Photo Cred.: lasthonestlawyer.com

Copyright 2016

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