Hameroff v. Pmatf, 1D04-1120.

• Citation: 911 So.2d 827
• Decision Date: 06 October 2005
• Docket Number: No. 1D04-1120.,1D04-1120.
• Parties: Nathan M. HAMEROFF, M.D., Appellant, v. PUBLIC MEDICAL ASSISTANCE TRUST FUND, et al., Appellees.
• Court: United States State Supreme Court of Florida

911 So.2d 827

Nathan M. HAMEROFF, M.D., Appellant, v. PUBLIC MEDICAL ASSISTANCE TRUST FUND, et al., Appellees.

No. 1D04-1120.

District Court of Appeal of Florida, First District.

August 31, 2005.

Rehearing Denied October 6, 2005.

Michael J. Keane, Esq. and Brandon S. Vesely, Esq. of Keane, Reese, Vesely & Gerdes, P.A., St. Petersburg, for Appellant.

Mercer K. Clarke, Esq. of Clarke, Silverglate, Campbell, Williams & Montgomery, Miami, for Appellee, Quest Diagnostics.

Robert R. Hearn, Esq. of Zuckerman, Spaeder, LLP, Tampa, for Appellee, LabCorp.

Mark A. Hendricks, Esq. of Panza, Maurer & Maynard, P.A., Ft. Lauderdale, for Appellee, HealthSouth.

Chris Bentley, Esq. of Rose, Sundstrom & Bentley, LLP, Tallahassee, for Appellee, Tallahassee Orthopedic.

LEWIS, J.

Appellant, Nathan M. Hameroff, M.D., seeks review of the trial court's Amended Order Awarding Attorneys' Fees and Costs, arguing that the trial court abused its discretion in unilaterally modifying the terms of the class action settlement. We agree and, therefore, reverse the order on appeal and remand.

In 1995, certain health care entities filed a proposed class action suit, seeking to declare Florida's Public Medical Assistance Trust Fund ("PMATF") assessment unconstitutional. Pursuant to the PMATF, hospitals and other health care entities were assessed 1.5 percent of their annual net operating revenues in order to provide a method for funding the provision of health care services to indigent persons. The plaintiffs sought a refund of all improperly paid assessments and reasonable attorneys' fees. The trial court granted the plaintiffs' motion for class certification, we affirmed, and the supreme court approved our decision. See Pub. Med. Assistance Trust Fund v. Hameroff, 689 So.2d 358 (Fla. 1st DCA 1997), approved, 736 So.2d 1150 (Fla.1999).

In 1996, the plaintiffs moved to stay the enforcement of the PMATF assessments and to abate the accrual of penalties during the pendency of the litigation. The trial court granted the motion "for those Plaintiffs who pay current contested assessment amounts into a Court-supervised interest-bearing account. . . ."

Thereafter, the original action was consolidated with four other class actions challenging the constitutionality of the PMATF assessment. The approximate 1,000 class members were again informed that they could either pay their assessments directly to the Agency for Health Care Administration ("AHCA") or deposit their assessments into the escrow account and that payment to AHCA would eliminate their potential responsibility to pay additional interest in the event that the litigation was unsuccessful.

In 2001, the trial court concluded that the PMATF assessment was unconstitutional on due process grounds and permanently enjoined AHCA from imposing any further assessments upon the class members. While AHCA's appeal was pending, the trial court entered an Agreed Order of Conditional Stay, requiring that all PMATF assessments paid subsequent to the February 5, 2001, judgment be paid into the escrow account. We subsequently reversed the trial court's judgment, finding a rational basis for the assessment. See Agency for Health Care Admin. v. Hameroff, 816 So.2d 1145, 1150 (Fla. 1st DCA 2002), review denied, 835 So.2d 266 (Fla.2002), cert. dismissed, 539 U.S. 973, 124 S.Ct. 14, 156 L.Ed.2d 680 (2003).

Following a trial on the remaining issues, the trial court concluded that the PMATF assessment constituted an unconstitutional income tax. During the pendency of the appeal, the parties reached a settlement agreement in which they agreed that the class members who paid into the escrow account would receive refunds limited to their respective deposits, "less their pro rata share of attorney's fees and costs. . . ." Prior to the refund disbursement, $5,000,000 was to be paid from the escrow account to AHCA for support of the Medically Needy Program. The settlement notice explained that of the $150,000,000 collected as assessments, approximately $55,000,000 had been deposited into the escrow account.

On July 22, 2003, the trial court approved the settlement, finding that it represented a substantial refund benefit to the class members and recovered "for those who escrowed their payments an amount in excess of $55 million, part of which is to be used to pay their reasonable attorney's fees and costs; and also relieves all class members of any unpaid back assessments and of the obligation to pay any further assessments." Two days later, the trial court entered an order awarding attorneys' fees to class counsel. On July 31, 2003, the Final Judgment was entered. However, on August 4, 2003, the trial court sua sponte entered an "Order Vacating Final Judgment, Order Approving Joint Stipulation and Order Awarding Attorneys Fees and Costs for Reconsideration" in which it explained that it would reconsider the factual and legal basis for the attorneys' fee amount. On October 10, 2003, the trial court reinstated the July 31, 2003, Final Judgment and the order approving the settlement. SunTrust Bank was ordered to immediately disburse $31,444,726 to the class members and to retain $21,020,450 pending a hearing on attorneys' fees.

Following the fee hearing, the trial court entered the order on appeal in which it reduced the attorneys' fee. With respect to the allocation of the attorneys' fee burden, the trial court set forth:

Obtaining refunds for taxes paid during the pendency of the litigation was highly beneficial to class members paying all taxes into the...