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Fight Erupts Over Legal Fee Division in Eating-Disorder Class Action Settlement
New Jersey Law Journal
December 09, 2008
Two litigators who have been arguing about the breakup of their firm for two years are squabbling now over shares of a proposed $2.45 million fee in a class action settlement with Horizon Blue Cross Blue Shield.
Who gets to trumpet the settlement in the media is also an issue.
Bruce Nagel and David Mazie represent separate plaintiffs in consolidated class-action suits aimed at getting Horizon to increase benefits for eating-disorder patients, but it has been a strained alliance.
Since the 2007 split of Nagel, Rice & Mazie in Roseland, N.J., the ex-partners have been in arbitration to complete the disengagement and they have made no secret of their dislike for each other.
The lack of regard became apparent in November when Nagel, without telling Mazie in advance, made an agreement with Horizon to ask U.S. District Judge Faith Hochberg to approve a settlement that would provide $1.18 million to both lawyers' clients and hundreds of other insureds whose eating-disorder benefits had been limited in the past.
The deal in Drazin v. Horizon Blue Cross Blue Shield, Civ-6-6219, would also be worth $20 million in benefits to future eating-disorder claimants and it called for Nagel's firm, Nagel Rice, to be class counsel.
Horizon agreed to pay $2.45 million in plaintiffs legal fees, presumably to be divided at Hochberg's direction.
What happened after the Nov. 24 settlement proposal is detailed in pleadings Mazie filed Thursday.
Mazie says Nagel's "surreptitious" settlement violated the spirit, if not the letter, of a court directive that co-counsel co-ordinate their efforts.
Not that Mazie is voicing any substantive objections. He says that with the guidance of retired Superior Court Judge Mark Epstein, who is arbitrating the law firm breakup, he agreed to support the proposed Horizon pact and to accept 42.5 percent of the fees, with Nagel getting the rest.
Mazie also conceded to Nagel the almost exclusive right to speak for the plaintiffs in the media. No one at Mazie's firm, Mazie Slater Katz & Freeman in Roseland, could go on television about the Horizon settlement for 60 days. They could talk to other media "but may not take any credit for the settlement," the draft of the fee deal said.
Nagel later sought to add a provision that Mazie couldn't speak to any media except the New Jersey Law Journal until five days after the court hearing for preliminary approval, making Nagel the sole spokesman to the general press during the period of utmost public attention.
Nagel also wanted a clause giving Epstein the power to levy punitive damages against Mazie's firm if it violated the media provision.
Mazie demurred and Nagel sent an e-mail Nov. 28 saying the settlement was off.
Even so, Mazie says there was a deal and he wants the judge to enforce it. In the alternative, she should appoint his firm co-lead class counsel. That would be appropriate because his firm's work on the case outshone Nagel's and made the settlement possible, Mazie argues.
He says his firm expended billable time worth $1.2 million and spent $250,000 in litigation costs.
He also says his firm's criticism of a June settlement Nagel made in a similar eating-disorder case against Aetna spurred Nagel to seek better results in the Horizon case.
In that settlement, Aetna said it would pay a total of $300,000 to 119 insureds whose eating-disorder claims were limited.
In the proposed Horizon settlement, the company would pay a total of $1.2 million to 500 insureds, including many who didn't make claims because they knew they would be turned down.
"In short, although Mr. Nagel and Horizon intentionally cut Mazie Slater out of he settlement process, they nevertheless fully considered our legitimate criticisms of the earlier Aetna settlement and have adopted our proposals designed to enhance the benefits offered to class members," Mazie's certification says.
Nagel, interviewed on Friday, says there is no settlement over fees because he never signed one. He says he is barred from talking about the proposed terms because he and Mazie agreed they would not take the discussions public.
"It was understood it would never go to the court and Mazie breached it unabashedly," he says of his adversary's filings.
Without that settlement, both lawyers are free to argue for the fee split they want, he says.
As for Mazie's alternative request that he be named co-lead counsel, Nagel asks, "Why in the world would anybody appoint a lawyer, who is in litigation with my firm, who wants in for no other reason but to disrupt the deal which I negotiated and has been signed by all parties?"
While Mazie says his firm's criticism of the Aetna deal brought about the better Horizon settlement, Nagel says the Aetna settlement he crafted provided the template that made the Horizon pact viable and that Mazie is at odds with the concept.
To support that, he notes that at the June 6 hearing in which Hochberg gave tentative approval to the Aetna settlement, Mazie's partner, Eric Katz, said he would never agree to settle the Horizon case on the same terms.
At that hearing, Hochberg expressed a hope that the ex-partners would get along. It hasn't worked out.
"I certainly hope at some point in time we'll have peace in the courtroom," she said. "I don't mean that -- seriously, it's clear to me that the two of you don't get along. You would have to be brain dead not to see that."
