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Krone v. State, Dept. of Health and Social Services

Supreme Court of Alaska

December 31, 2009

Dorothy KRONE, Silas Stevens, and Billie Wallace on behalf of themselves and all those similarly situated, Appellants,
v.
STATE of Alaska, DEPARTMENT OF HEALTH AND SOCIAL SERVICES, Joel Gilbertson, in his official capacity as Commissioner of the Department, Division of Senior Services, and Rod Moline, in his official capacity as Acting Director of the Division, Appellees.

Page 251

James J. Davis, Jr. and Goriune Dudukgian, Northern Justice Project, and Kara A. Nyquist, Alaska ProBono Program, Anchorage, for Appellants.

David T. Jones, Assistant Attorney General, Anchorage, and Talis J. Colberg, Attorney General, Juneau, for Appellees.

Before : FABE, Chief Justice, MATTHEWS, EASTAUGH, CARPENETI, and WINFREE, Justices.

OPINION

WINFREE, Justice.

I. INTRODUCTION

Class representatives prevailed in a class action suit concerning state constitutional rights. The pro bono fee agreement between the class representatives and their attorneys provided that the attorneys would be entitled to receive any attorney's fees awarded to the class representatives at the conclusion of the case. The superior court determined that the class representatives were public interest litigants and awarded them attorney's fees by: (1) determining appropriate hourly rates for their pro bono attorneys; (2) multiplying those rates by an appropriate number of attorney hours actually and reasonably expended in connection with the litigation; and (3) then doubling that amount based on a number of considerations, but primarily to encourage pro bono service in similar cases.

We then decided State v. Native Village of Nunapitchuk, [1] upholding the validity of an amendment to AS 09.60.010 intended to abrogate attorney's fees awards under our public interest litigation decisions. Based on its reading of Nunapitchuk and the statutory amendments, the superior court reconsidered and reduced the attorney's fees award to eliminate the final doubling factor. The class representatives appeal.

We affirm the superior court's reliance on AS 09.60.010(c)(1), which provides that in a civil action concerning state constitutional rights the court shall generally award a prevailing claimant full reasonable fees. But because it appears the superior court felt constrained in its approach to determining full reasonable fees, we vacate the attorney's fees award and remand for renewed consideration of an award of full reasonable attorney's fees to the class representatives.

II. FACTS AND PROCEEDINGS

Alaska's Medicaid Home and Community-Based Services Waiver Program (Program) provides long-term health care services to individuals in their homes or communities as an alternative to nursing home placement. In 2004 the Department of Health and Social Services (DHSS) changed the way it determined eligibility for the Program; shortly thereafter, it began terminating newly ineligible participants from the Program. In August 2005 the Northern Justice Project (NJP), representing putative class representatives pro bono, brought suit against DHSS on behalf of disabled, low-income individuals recently terminated from the Program. The class representatives alleged that DHSS had violated the Program recipients' state and federal constitutional due process rights by terminating them from the Program for medical ineligibility without first finding that their medical conditions had materially improved. The class representatives did not seek damages, but asked that former benefit recipients be reinstated to the Program and that no additional benefit recipients be terminated from the Program unless their medical conditions had materially improved.

Superior Court Judge William F. Morse certified the class in January 2006. The next month DHSS stipulated to an injunction prohibiting termination of benefits until it proved, at a " full and fair hearing," that a recipient's medical condition had materially improved since being admitted to the Program. DHSS subsequently restored Program benefits it had already terminated and began developing regulations defining material improvement of medical conditions. In December 2006 the superior court entered final judgment in favor of the class.

Page 252

In February 2007 the class representatives moved for an award of enhanced attorney's fees in the amount of $120,000, approximately three times what NJP asserted would be actual reasonable fees. The class representatives argued this was appropriate because: (1) the class was a prevailing public interest litigant; (2) NJP stood to receive no compensation beyond court-awarded fees; and (3) the case was " of a type that would make it difficult to attract capable counsel without the potential for enhanced fees."

In support of the fee motion NJP submitted affidavits from two Anchorage attorneys. One attorney stated that in the prevailing Anchorage legal market, reasonable hourly billing rates for the two NJP attorneys would be in the range of $185 to $210 and $235 to $285, respectively. The other attorney placed reasonable hourly billing rates for the two NJP attorneys at " not less than" $200 and $275, respectively. NJP submitted affidavits showing just over 150 hours of billable attorney time in the case and calculated a reasonable fee of $15,780 for one attorney based on an hourly rate of $200 and $21,642.50 for the other based on an hourly rate of $275, for a total of $37,422.50.

In March 2007 the superior court awarded attorney's fees of $67,740, double the amount it concluded would be actual reasonable fees (based on the hourly rates suggested by NJP and the hours the court deemed compensable). The court noted several factors, but stated that " [t]he most compelling justification for an enhancement is the testimony concerning the paucity of attorneys both capable of taking on a case of this type [and] willing to do so on a pro bono basis." DHSS moved for reconsideration, which the superior court granted. Before the superior court ruled on reconsideration, we issued our decision in State v. Native Village of Nunapitchuk upholding an amendment to AS 09.60.010 intended to modify " a policy-based nontextual exception" to Alaska Civil Rule 82 that created special treatment of attorney's fees awards in public interest litigation.[2] The superior court then invited the parties to " revise their filings on the motion for attorney's fees in light of [ Nunapitchuk ]."

In June 2007 the superior court amended its earlier award, reasoning that its justification for the fee enhancement had been based on the line of cases the amended statute had overturned. The court reduced the award of attorney's fees to $36,570, based on the same hourly rates but with more hours of effort, relying on a new provision of the amended statute, AS 09.60.010(c)(1). [3]

The class representatives appeal, requesting that we reverse the superior court's final fee award and ...


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