Offer on the table in old hospital lawsuit

Offer on the table in old hospital lawsuit

Dispute over attorney fees threatens to upend settle-ment agreement

news@theeveningtimes.com

Attorneys in a class action lawsuit against the directors of the former Crittenden Regional Hospital have reached a proposed settlement, but are now squabbling over attorney fees.

According to documents filed on November 4 in the United States District Court for the Eastern District of Arkansas, Yolanda Goodman, who represents a class of litigants who sued the hospital over unpaid medical bills incurred after the hospital stopped paying employee health care premiums, has reached a settlement for $1.15 million from Cigna Health and Life Insurance Company.

Under the terms of the proposed deal, the plaintiffs would receive $400,000 from the settlement with $600,000 going toward legal fees. Attorneys will also continue to defend Class members against collection of $5.1 million in unpaid medical bills, most of which they contend are not entitled to be collected.

Although attorneys for the plaintiffs are calling the proposed settlement with Cigna “fair, reasonable, and adequate,” they remain at odds over the amount that should be paid in legal fees. Attorney Denny Sumpter of Rogers, Coe & Sumpter of West Memphis, who originally filed the Class Action, is arguing that attorneys fees should be capped at one-third of the settlement or about $380,000.

However, the other attorneys in the case, Ballin, Ballin & Fishman, and Burns Watson of Memphis, contend that they did the majority of the work and argue that $865,000 of the settlement should go toward legal fees.

“It has put the … Plaintiff, in the peculiar position of having to argue directly against attorneys who are appointed by the Court to work in the best in interest of the class,” Sumpter wrote. “Yet these attorneys seem to only be focused on how much they are going to get paid, the Class be damned.”

Crittenden Regional Hospital declared bankruptcy in August 2014.

Goodfellow, who had $9,500 in unpaid medical bills, brought the lawsuit in 2014 against CRH on behalf of 500 potential employees and family members who were part of the hospital’s health care plan.

The class action lawsuit alleged that CRH officials — with the knowledge and assent of the board of directors — failed to fund its employee health care plan, but continued to deduct premiums from employees creating the impression that claims were being paid and that employees had health care coverage.

CRH was deducting about $100,000 a month from employees and collected $4 million in premi-

ums from 2011 until it closed.

The lawsuit alleged that hospital officials decided they could save money by not making the necessary payments to the plan and instead diverted money from those premiums in order to prop up the hospital’s

deteriorating finances.

At the same time, the board renewed an insurance policy to protect them personally

from any future liability just days before the

hospital went bankrupt.

Sumpter originally filed the lawsuit on behalf of his mother, who worked for the hospital for 36 years. His family noticed that bills were going unpaid after his father underwent quadruple bypass surgery leaving them with upwards of $100,000 in bills.

Sumpter signed up the bulk of the Class and the case was later joined with clients represented by Ballin, Ballin & Fishman, which has extensive experience in class action lawsuits.

But according to Sumpter’s filing, his client believes the bulk of the settlement should go to Class members and not to attorneys.

“Though there were bumps along the way, the Class attorneys worked through the issues necessary to prosecute this case on behalf of Plaintiff and the Class,” Sumpter wrote.

“Now, the attorneys appointed to this matter once again find themselves divided, particularly on the amount to be paid from the settlement proceeds for attorney’s fees and expenses.”

Attorneys from Ballin, Ballin and Fischman claim they have born all of the expenses in the case and have put in over $1.7 million

in fees.

According to Sumpter, the other attorneys threatened they would “make this ugly” and even “find another class representative” and walked out of the settlement talks.

The attorneys at Ballin, Ballin & Fischman, claim Sumpter is the one attempting to collect more money for his work than he is entitled to.

Attorney Tim Edwards wrote in his status report to the Court that Ballin, Ballin & Fischman and Watson Burns did “if not 100 percent, virtually 100 percent” of the work in the case including reviewing all documents and files in discovery, taking and defending depositions, preparing all motions, researching relevant legal issues, and negotiating the final settlement.

“The undersigned attorneys are unaware of Mr.

Sumpter actually taking any steps or actions that advanced the case on behalf of Class Members but have, nevertheless, agreed to allow him to share in any fees awarded by the Court,” Edwards wrote.

In fact, Edwards claims that Sumpter filed a complaint in the wrong court under the wrong law, and named his mother as the class representative, which is prohibited under Class Action law, and that the case would have been dismissed.

They also claim that Sumpter took actions that duplicated the efforts of the other attorneys, performed little, if any, substantive work on the case, and with the exception of a single deposition notice which never occurred, “filed nothing in this Court (nor authored any document filed in this Court) until his Status Report.”

Edwards further claims that Sumpter has refused to provide his billing records “claiming he did not know how to format time and expense records” and “when he became unable to secure a firm commitment on “his share” of any fees awarded, he now claims dissatisfaction with the settlement terms.”

“The reason for that is self evident: Mr. Sumpter has devoted little or no time to the effort achieving the settlement,” Edwards wrote.

Under the current proposed settlement — which Sumpter is objecting to — Cigna would pay $1.15 million to the Class. Of that, $150,000 comes off the top for reimbursement of litigation expenses incurred by Ballin, Ballin & Fishman and not Sumpter.

Of the remaining $1 million, one half — $500,000 — would be set aside to cover medical bills for the Class as well as to reimburse any out-of-pocket expenses.

Anything remaining over $400,000 of that $500,000 would be added to the pool for attorney fees.

“Consequently, there is potentially the sum of $600,000 to cover attorney’s fees in this case which is less than half of the time and effort spent by the undersigned attorneys,” Edwards wrote.

Of the $500,000 for attorney’s fees, 40 percent would be awarded to Ballin, Ballin & Fishman, 40 percent to Watson Burns, and 20 percent to Rogers, Coe & Sumpter.

“Mr. Sumpter, for reasons known only to him seeks to further reduce the amount of attorney’s fees earned by others,” Edwards wrote.

Sumpter said he is asking the court to accept the settlement, and if necessary, step in to determine how much the lawyers should collect.

“Plaintiff believes this settlement, given the circumstances is fair and reasonable, and can be adequate if funds are correctly administered, and an appropriate amount remains for the Class,” Sumpter wrote.

The settlement agreement is due this week and will be followed by responses from the attorneys.

Ultimately, it will be up to a judge to determine the amounts paid to the Class and attorneys.

By Mark Randall