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The class-action attorneys who reached a data breach settlement with Logan Health are entitled to around $1.4 million in attorneys’ fees – one-third of the $4.3 million settlement – despite objections from the current and former mayors of Kalispell, a Cascade County District Court judge ruled Thursday.
Kalispell Mayor Mark Johnson and former mayor Tammi Fisher, who were among the victims of the data breach, had filed an objection to the proposed settlement last month through attorney Matthew Monforton alleging the attorneys’ fees for the four lawyers who represented the class were unreasonable compared to what the victims of the data breach would receive.
In Judge John W. Parker’s courtroom Thursday, Monforton argued that as objectors, he and his clients should have access to a redacted insurance policy that backed up statements made by attorneys for the class and Logan Health that the legal defense insurance fund for the hospital system had been depleted.
Monforton additionally argued the class attorneys were taking a large part of the settlement without showing their receipts for how they handled and billed hours in the case and should not be entitled to the full $1.4 million.
But Judge Parker sided with the class attorneys, approving the settlement agreement and denying Monforton’s request for additional discovery. He also told the court the class attorneys had done their due diligence and received an “excellent result” for the class members, which justified their request for one-third of the settlement fees.
“I don’t think there’s any indication that the class members, individually, could have afforded this scope and type of detailed legal work through their own resources,” Parker said.
The data breach, which occurred in November 2021 and was disclosed to those whose information was compromised in February 2022, affected 213,000 Logan Health patients, including 175,000 Montanans.
The breach potentially compromised patients’ addresses, dates of birth, phone numbers and email addresses, physicians, billing account numbers, health insurance information and Social Security numbers, according to the settlement.
The original lawsuit in the latest breach was filed in March 2022 and amended a month later to consolidate other lawsuits filed regarding the data breach.
Court documents show that Helena law firm Morrison Sherwood Wilson Deola PLLP sought to represent the class and that it would cap attorneys’ fees to one-fifth of the settlement money rather than one-third.
But the original attorneys stayed on the case and the settlement was signed in October 2022, according to the documents.
Under the settlement, people whose data was compromised could be compensated for up to $25,000 for out-of-pocket losses and up to $125 for time reimbursement. Victims could also be provided three years of credit monitoring, or cash as an alternative.
But the attorneys’ fees will come out of the settlement first; those directly financially harmed by the breach would get paid next; and Monforton argued Thursday the remaining funds could leave the rest of the victims of the breach with little coming back to them.
Monforton told the Daily Montanan after the hearing that he, Fisher and Johnson were disappointed in the judge granting the attorneys’ fees and said he planned to appeal.
“That is grossly disproportionate to the three-to-four months of contested litigation,” he said.
Class counsel John Heenan, who will receive a portion of the $1.4 million, told Judge Parker that the settlement was “excellent” for the class. He advocated the judge grant the third of the settlement requested as opposed to multiplying the estimated number of hours spent on the case by an average rate.
Heenan told the court that sometimes there are “professional objectors” who he said hold parties hostage and try to “extort” payouts.
Heenan also cited other Montana class-action settlements in which the attorneys were also paid one-third of the settlement money, arguing there was plenty of precedent.
“Even if the case got settled for $4.3 million in three weeks, I’d be standing before the court saying we earned the one-third contingent fee because we delivered a phenomenal result to the class,” Heenan told the judge.
When Monforton told the court it should be able to look at the billing hours for the class counsel, attorneys for the class and Logan Health disagreed and told him he should trust their word. Attorneys for the class said Monforton was on a “fishing expedition.”
Monforton, though, said class counsel was withholding the billing data “because it would show just how obscene the billing request is.”
“They have an affirmative obligation to produce competent evidence to support the fee award,” he told the judge.
Following a break, Parker issued his rulings, calling the case “extremely significant litigation” that required skilled class-action attorneys.
Further, Judge Parker said, if additional discovery was allowed, it would delay recourse for the class members and potentially expose the objectors “to legal risk.”
Logan Health did not respond to a phone call and message seeking comment on the settlement by the provided deadline. The attorneys for the class did not respond to emails seeking comment on the hearing and settlement.
In interviews following the hearing, both Fisher and Johnson, whose data were compromised, said they were not surprised by the decision but were disappointed.
“It’s basically giving free license for attorneys who are wanting to represent strangers so that they don’t have to reveal what they did to get a good result for their clients,” Fisher said. “… I think the clients are entitled to know what the result is and how they got there.”
Fisher said she felt the judge’s ruling took away rights of Montanans wishing to object to settlements and took issue with what she called “attacks” on Monforton.
“We’re exercising our rights. Now, we are cautioned as a victim that for exercising your rights, you may be penalized,” she said. “Well, that’s crazy. That is antithetical to justice, that is antithetical to transparency, and that is antithetical to due process.”
Johnson said he was not looking to hurt Logan Health but that he felt the difference in what victims and attorneys would receive did not add up. Logan Health attorneys said since its insurance coverage was already depleted, the company was paying the costs of Thursday’s hearing.
“I guess they’re asking me as mayor to forget that they potentially negatively impacted my constituents to a huge degree of discomfort and financial cost, and I’m gonna worry about a few days of attorneys’ time for Logan Health? Really?” he said.
Johnson said he thinks the state legislature should look at adding more balance and equity to attorneys’ fees in class-action litigation and make lawyers track their hours for the benefit of the citizens of the class.
“They deserve to know that the time was put in and that the fees paid represent the fair value for the work provided,” he said. “Right now, their one-third may very well be fair. We have no way of knowing unless we ask. And when we asked, we were told to sit down on the back pew and shut up.”
Fisher said the hearing left her with the feeling that Montanans were “pawns” in political and court games that disregarded citizens and transparency.
“It is wrong today; it was wrong for the last 50 years,” she said. “And I’ve had it up to my chin in this kind of stuff where Montanans are taken advantage of.”
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