UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

New Hampshire Hospital Association et al.

v. Civil No. 15-cv-460-LM Opinion No.

Alex M. Azar,1 Secretary, U.S. Department of Health and Human Services et al.

O R D E R

In November 2015, several New Hampshire hospitals2 and the

New Hampshire Hospital Association (“NHHA”), a non-profit trade

association, brought this suit against the Secretary of Health

and Human Services (the “Secretary”), the Centers for Medicare

and Medicaid Services (“CMS”), and the Administrator of CMS.

Plaintiffs alleged that defendants set forth certain “policy

clarifications” regarding the method of calculating supplemental

Medicaid payments to certain hospitals. They alleged these

policy clarifications were issued in responses to frequently

asked questions posted on medicaid.gov, and that both the

1 Alex M. Azar became Secretary of the U.S. Department of Health and Human Services on January 29, 2018, replacing Thomas Price. See Fed. R. Civ. P. 25(d).

2 Plaintiff hospitals are Mary Hitchcock Memorial Hospital, LRGHealthcare, Speare Memorial Hospital, and Valley Regional Hospital, Inc. policies themselves and the manner in which they were

promulgated contradicted the plain language of the Medicaid Act

and violated the Administrative Procedure Act (“APA”).

On March 2, 2017, the court granted in part plaintiffs’

motion for summary judgment, holding that defendants’

enforcement of the policy clarifications set forth in the

responses to the frequently asked questions violated the APA.

N.H. Hosp. Ass’n v. Burwell, No. 15-cv-460-LM,

,

at *8-14 (D.N.H. Mar. 2, 2017) (“March 2 Order”). The court

permanently enjoined defendants from enforcing the policies in

the responses to the frequently asked questions.

at *12

n.16. Defendants appealed the March 2 Order, and the First

Circuit Court of Appeals affirmed.3 N.H. Hosp. Ass’n v. Azar,

(1st Cir. 2018).

After the appeal concluded, NHHA moved for an award of

attorneys’ fees (doc. no. 64), arguing that it is entitled to

recover such fees under the Equal Access to Justice Act (“EAJA”

3 After the court issued the March 2 Order, defendants published a final rule regarding the calculation of the supplemental payments. See Medicaid Program: Disproportionate Share Hospital Payments—Treatment of Third Party Payers in Calculating Uncompensated Care Costs, 82 Fed. Reg. 16114–02, 16117 (Apr. 3, 2017) (“2017 Rule”). The 2017 Rule expressly included within its text the policies that had been set forth in the responses to the frequently asked questions. That rule has since been vacated. See Children’s Hosp. Ass’n of Texas v. Azar,

(D.D.C. 2018).

2 or “Act”),

Defendants objected, arguing that

NHHA is not entitled to attorneys’ fees under the EAJA and, if

it is, that those fees must be substantially reduced.

While NHHA’s motion was pending, defendants moved for

“modification or, in the alternative, clarification of March

2017 permanent injunction” (doc. no. 69). In that motion,

defendants argued that the First Circuit’s decision affirming

the March 2 Order was “based on reasoning that differed from the

reasoning of this Court’s decision.” Doc. no. 69 at 8.

Defendants requested that the court modify or clarify its

permanent injunction to be in conformance with the First

Circuit’s decision.

Plaintiffs objected to defendants’ motion. In addition,

NHHA filed a supplement to its motion for attorneys’ fees (doc.

no. 77), in which it seeks additional fees incurred in

responding to defendants’ motion to modify or clarify the

injunction and in preparing the motion for fees. In response to

the supplement, defendants reiterate their arguments that NHHA

is not entitled to fees under the EAJA or, in the alternative,

that the court should significantly reduce those fees.

The court addresses defendants’ motion first before turning

to NHHA’s request for attorneys’ fees.

4 For reasons discussed further below, NHHA only, and not the plaintiff hospitals, moved for an award of attorneys’ fees. 3 I. Motion to Clarify or Modify Injunction

A. Background

Because the court has set forth the background of this case

in other orders, it assumes a general level of familiarity with

the facts and provides only a brief summary. Because Medicaid

payments received from the government often do not cover the

full costs of an indigent patient’s care, the Medicaid Act,

et seq., authorizes the payment of additional

funds to hospitals that serve a high number of such patients.

Those payments to the hospitals are limited to each hospital’s

“costs incurred” in providing services to the indigent patients.5

The phrase “costs incurred” includes two specific sources of

payment that must be offset against the total cost of care,

neither of which is relevant to this case. Costs incurred may

further be defined “as determined by the Secretary” of the

United States Department of Health and Human Services.

States are required to provide to the Secretary an annual

report and audit on their DSH program. In 2008, the Secretary

promulgated a final rule implementing the statutory reporting

and auditing requirement (“2008 Rule”). The 2008 Rule did not

These payments are often referred to as “disproportionate- 5

share hospital” or “DSH” payments. 4 elaborate on the meaning of the phrase “costs incurred” as it is

contained in the Medicaid Act.

In 2010, the Secretary announced, in the form of answers to

“Frequently Asked Questions” posted on medicaid.gov (“FAQs 33

and 34”), that the payments to be offset against total costs in

calculating “costs incurred” also included reimbursements from

Medicare and private insurance. Plaintiffs brought this suit,

alleging that the policies set forth in the responses to FAQs 33

and 34 conflicted with the plain language of the Medicaid Act

and were promulgated in violation of the APA.

In its order granting in part plaintiffs’ motion for

summary judgment, the court held that defendants’ actions in

promulgating and enforcing the policies set forth in the

responses to FAQs 33 and 34 violated the APA. The court

permanently enjoined defendants from enforcing those policies

and stated that defendants “shall follow the policies and

procedures in effect before defendants issued FAQs 33 and 34,

until and unless those policies and procedures are replaced by

an enforceable and properly promulgated regulation.” Burwell,

at *16. The First Circuit affirmed the court’s

decision.

5 B. Discussion

In their motion to modify or clarify the court’s permanent

injunction, defendants note that the First Circuit agreed with

this court’s holding in the March 2 Order that the policies set

forth in the responses to FAQs 33 and 34 “represented a

substantive policy decision that could not be adopted without

notice and comment” under the APA. Azar,

. They

argue, however, that the First Circuit’s decision relied on

different reasoning than the March 2 Order, and that this

alternate reasoning requires modification or clarification of

the court’s permanent injunction.

Specifically, defendants point to this court’s directive in

the March 2 Order that they must “follow the policies and

procedures in effect before defendants issued FAQs 33 and 34,

until and unless those policies and procedures are replaced by

an enforceable and properly promulgated regulation.” Burwell,

at *16 (emphasis added). According to

defendants, the court must modify or clarify that portion of its

injunction because that statement suggests that CMS had a

specific policy of not including Medicare or private insurance

payments in the costs-incurred calculation. Defendants argue

that the First Circuit’s order, in contrast, made it clear that

“CMS did not have any lawfully adopted policy governing the

proper treatment of third-party payments.” Doc. no. 69 at 12.

6 Thus, defendants ask the court to modify or clarify the

permanent injunction “to make clear that the injunction only

prohibits the defendants from enforcing the defendants’

preferred policy of requiring subtraction of Medicare and

private insurance payments, and does not additionally direct the

defendants to ‘follow’ the plaintiffs’ preferred policy of

requiring that such payments be disregarded.”

Defendants base their motion on Federal Rule of Civil

Procedure 60(b)(5), which provides that a court may relieve a

party or its legal representative from a final judgment or order

if “applying it prospectively is no longer equitable.” The

Supreme Court explained in Horne v. Flores,

(2009),

that:

Rule 60(b)(5) may not be used to challenge the legal conclusions on which a prior judgment or order rests, but the Rule provides a means by which a party can ask a court to modify or vacate a judgment or order if “a significant change either in factual conditions or in law” renders continued enforcement “detrimental to the public interest.” The party seeking relief bears the burden of establishing that changed circumstances warrant relief . . . .

(citations omitted).

Defendants have not met their burden of showing that relief

under Rule 60(b)(5) is warranted. The First Circuit’s decision,

which affirmed this court’s decision on the “same ground,” Azar,

, does not represent a significant change, or any

change at all, in the law.

7 The Medicaid Act specifies that a DSH payment cannot

exceed:

the costs incurred during the year of furnishing hospital services (as determined by the Secretary and net of payments under this subchapter, other than under this section, and by uninsured patients) by the hospital to individuals who either are eligible for medical assistance under the State plan or have no health insurance (or other source of third party coverage) for services provided during the year.

42 U.S.C. § 1396r–4(g)(1)(A) (emphases added). Thus, the

Medicaid Act specifies the two types of payments that can be

subtracted from the total costs incurred during the year by

hospitals: (1) “payments under this subchapter,” i.e., payments

made by Medicaid; and (2) payments made by uninsured patients.

The Medicaid Act also delegates to the Secretary the

authority to determine “costs incurred.” As this court and

every other court to consider the issue has held, the Secretary

may only make such a determination through a properly-

promulgated regulation. And, as this court and every other

court to consider the issue has held, the 2008 Rule did not

change the definition of “costs incurred.”

Nevertheless, after repeatedly and unsuccessfully

litigating that issue, defendants now seek to backdoor their

preferred policy with an argument that the First Circuit’s

decision changed the governing law. Defendants do not hide

their motive in doing so—they intend to leave open the

8 possibility that state governments could choose, if they so

desire, to require disproportionate-share hospitals to subtract

payments from Medicare and private insurance in the costs-

incurred calculation. See doc. no. 69 at 12-13 (“If the

requested modification or clarification is granted, CMS intends

to advise the New Hampshire State Government that there is no

operative federal policy governing the treatment of Medicare and

private insurance payments for the time periods governed by this

suit.”); id. at 13 (“It will then be left to the New Hampshire

State Government to determine how such payments should be

treated in the absence of a federal policy in the calculation of

the hospital-specific limit.”).

Defendants’ attempt to navigate around what amounts to

black-letter law is unpersuasive. The argument that the First

Circuit’s order satisfies the Rule 60(b)(5) standard is without

merit. Defendants’ motion is denied.

II. Motion for Attorneys’ Fees

NHHA requests an award of attorneys’ fees and costs under

the Equal Access to Justice Act,

(a)(1) and (d).

The EAJA “departs from the general rule that each party to a

lawsuit pays his or her own legal fees.” Scarborough v.

Principi,

(2004). “The EAJA renders the

United States liable for attorney’s fees for which it would not

9 otherwise be liable, and thus amounts to a partial waiver of

sovereign immunity.” Ardestani v. I.N.S.,

(1991). Consequently, this waiver must be strictly construed in

favor of the government.

The Act’s purpose is “to ensure

that certain individuals, partnerships, corporations or other

organizations will not be deterred from seeking review of, or

defending against, unjustified governmental action because of

the expense involved.” Scarborough,

(internal

quotation marks and ellipsis omitted).

As relevant here, the EAJA provides:

a court shall award to a prevailing party other than the United States fees and other expenses . . . incurred by that party in any civil action . . . including proceedings for judicial review of agency action, brought by or against the United States in any court having jurisdiction of that action, unless the court finds that the position of the United States was substantially justified or that special circumstances make an award unjust.

(d)(1)(A). The Act requires that a party

seeking an award of fees under this section submit an

application establishing: (1) that it is a prevailing party; (2)

that it is “eligible to receive an award”; and (3) the amount

sought, “including an itemized statement from any attorney

representing . . . the party.”

(d)(1)(B); see

also Scarborough,

. The party seeking fees must

also allege that the government’s position was not

“substantially justified.”

(d)(1)(B); see also

10 Scarborough,

. Once that party makes such an

allegation, however, the burden of demonstrating that the

government’s position was indeed substantially justified shifts

to the government. Scarborough,

.

NHHA moves for attorneys’ fees under the EAJA, arguing that

it meets the Act’s requirements. Defendants object, arguing

that NHHA is not “eligible to receive an award” under the EAJA

because it litigated the suit in cooperation with and for the

benefit of member hospitals that are not eligible for fees.6

Defendants also contend that, even if NHHA is eligible to

receive attorneys’ fees, its motion should be denied because

defendants’ position was substantially justified. In addition,

defendants argue that if the court awards NHHA attorneys’ fees,

those fees should be significantly reduced for several reasons.

6 Defendants do not dispute that NHHA was a “prevailing party” under the EAJA. See, e.g., Aronov v. Napolitano,

(1st Cir. 2009) (holding that a prevailing party under the EAJA is one that attained “a material alteration of the legal relationship of the parties and a judicial imprimatur on the change,” such as a judgment on the merits). And, as discussed below, although defendants take issue with the content of NHHA’s submission, they do not dispute that NHHA specified the amount of fees and costs it seeks and submitted with its motion an itemized billing statement from its attorneys. Therefore, the court does not address those factors. 11 A. Entitlement to Fees

Defendants argue that NHHA is not entitled to an award of

attorneys’ fees because it is not an eligible party under the

EAJA and because defendants’ position was substantially

justified. The court addresses each argument in turn.

1. Eligible Party

The EAJA defines an eligible party as “any partnership,

corporation, association, unit of local government, or

organization, the net worth of which did not exceed $7,000,000

at the time the civil action was filed, and which had not more

than 500 employees at the time the civil action was filed.” 28

U.S.C § 2412(d)(2)(B)(ii) (emphasis added). Where the party

seeking EAJA fees is an association, a majority of courts

addressing the issue have held that the association’s

eligibility is premised upon its net worth and number of

employees, regardless of the net worth or employment figures of

its members, either individually or collectively. See Diamond

Sawblades Mfrs. Coal. v. United States,

(Ct. Int’l Trade 2012) (collecting cases); see also Nat’l

Ass’n of Mfrs. v. Dep’t of Labor,

(D.C. Cir.

1998); Texas Food Indus. Ass’n v. United States Dep’t of Agric.,

, 581 (5th Cir. 1996); Love v. Reilly,

,

12 1494 (9th Cir. 1991). But see Nat’l Truck Equip. Ass’n v. Nat’l

Highway Traffic Safety Admin.,

(6th Cir. 1992)

(interpreting EAJA as requiring aggregation of trade

association’s members’ net worth and employment figures to

determine whether it was an eligible party).

Defendants do not dispute, and the court agrees, that the

majority approach is more reasoned and that NHHA meets the

requirements under that approach. NHHA is a not-for-profit

trade association that advocates on behalf of its member

hospitals and health care delivery systems. Doc. no. 64-2 at 2.

It is registered in New Hampshire as a nonprofit corporation.

At the time this action was filed, NHHA had approximately

eight employees and its net worth did not exceed $5,000,000.

Therefore, NHHA satisfies the definition of an eligible

party under 28 U.S.C § 2412(d)(2)(B)(ii).

Nevertheless, defendants argue that NHHA is not eligible

for fees because it is not the “real party in interest” for the

purposes of awarding such fees. Doc. no. 68 at 9-10. They

contend that the four plaintiff hospitals—which they assert do

not qualify as eligible parties under the EAJA—essentially

controlled the litigation.7 NHHA counters that it is the real

7 Defendants provide no support for their contention that the four plaintiff hospitals are ineligible for attorneys’ fees under the EAJA. In its reply, NHHA states that two of the plaintiff hospitals—Speare Memorial Hospital and Valley Regional 13 party in interest because it paid all the attorneys’ fees

incurred on behalf of plaintiffs in this litigation. It also

asserts that there is insufficient evidence in the record that

the plaintiff hospitals actually controlled the litigation.

The parties do not cite, and the court is not aware of, any

First Circuit case applying the real-party-in-interest test to

the EAJA. Because both parties assume that the real-party-in-

interest test is relevant here, however, the court conducts it.

To determine the real party in interest for purposes of fees,

the court considers whether there is a clear arrangement among

the plaintiffs regarding the responsibility for fees. See Am.

Ass’n of Retired Persons v. E.E.O.C.,

(D.C.

Cir. 1989). Absent a clear fee agreement among the plaintiffs,

a district court may consider a “variety of factors” to

determine the real party in interest.

; Design &

Prod., Inc. v. United States,

(1990)

(applying “totality of the facts” approach to determine the real

party in interest).

Here, there is no evidence of an express fee agreement

between plaintiffs. However, the evidence in the record shows

Hospital, Inc.—are eligible parties under the Act. See doc. no. 72 at 2 n.1. Because, as discussed further below, NHHA is an eligible party under the EAJA and may recover attorneys’ fees, the court assumes without deciding that the four plaintiff hospitals are not eligible for attorneys’ fees under the Act. 14 that (1) the same law firm, Nixon Peabody LLP (“Nixon Peabody”),

represented all five plaintiffs; and (2) NHHA paid Nixon Peabody

for all legal fees incurred in this litigation for the benefit

of its members, including the other plaintiffs. See doc. nos.

64-2 at 3, 64-4 at 3. Such an arrangement, without more, has

been found to be sufficient to establish that the plaintiff that

paid the legal fees was the “real party in interest” and

eligible to recover fees under the EAJA. See Unification Church

v. I.N.S.,

(D.C. Cir. 1985) (“Whatever the

outcome of our consideration of fees here, then, the individual

appellants will not pay the fees. If we deny fees, the Church

will pay the fees. If we award fees, the INS will pay the fees.

The Church is the beneficiary of any award of fees, not the

individual appellants, and thus the Church can fairly be

characterized as the real party in interest.”).

Nevertheless, defendants argue that “there is good reason

to believe that NHHA’s members actually controlled the

litigation.” Doc. no. 68 at 6. They note that (1) all five

plaintiffs were represented by the same counsel; (2) a senior

executive of plaintiff LRGHealthcare was the chair of NHHA until

two weeks before the suit was filed, and billing records

submitted by NHHA indicate that he remained closely involved

after he was no longer the chair of NHHA; (3) the billing

records show that Nixon Peabody worked closely with the

15 plaintiff hospitals independent of NHHA; and (4) NHHA’s

affidavits “do not rule out” that the plaintiff hospitals

reimbursed or indemnified the association for the fees paid.

Contrary to defendants’ argument, they offer no legitimate

reason to believe that the plaintiff hospitals actually

controlled the litigation. First, there is no evidence that any

hospital reimbursed or indemnified NHHA for the fees paid.

Further, although the billing records show that Nixon Peabody

had contact with the principals of the four plaintiff hospitals

independent of NHHA, see, e.g., doc. no. 64-8 at 1-20, they also

demonstrate that Nixon Peabody had contact with NHHA independent

of the plaintiff hospitals, see, e.g., doc. no. 64-8 at 36.

Defendants do not explain why Nixon Peabody’s contact with

plaintiffs other than NHHA supports their contention that those

plaintiffs actually controlled the litigation.

The court’s review of the billing records reveals nothing

to indicate that any of the plaintiff hospitals exercised

superior control over Nixon Peabody and/or litigation decisions.

Cf. United States v. Lakeshore Terminal and Pipeline Co.,

(E.D. Mich. 1986) (concluding that fee applicant

was not real party in interest where it was a wholly owned

subsidiary of another company, the two companies shared offices

and same president, and non-party parent company was “active[ly]

16 involve[d]” in litigation). In fact, the records show that,

although all plaintiffs were in contact with Nixon Peabody and

involved in the litigation, Nixon Peabody most frequently

contacted Steven Ahnen, the President of NHHA, especially on

matters of strategy. See, e.g., doc. no. 64-8 at 17, 48.

Defendants’ contention that NHHA was not the real party in

interest for purposes of recovering fees under the EAJA is

speculative and unsupported. Based on the evidence in the

record, the court concludes that NHHA has shown that it is the

real party in interest.

2. Substantial Justification for Defendants’ Position

As required by the EAJA, NHHA alleged in its fee

application that defendants’ position in this litigation was not

“substantially justified.”8 Doc. nos. 64 at 2, 64-1 at 6-12.

Therefore, NHHA is entitled to a fee award unless defendants

have carried their burden of demonstrating by a preponderance of

the evidence that their position in this litigation was

substantially justified. See Saysana v. Gillen,

(1st Cir. 2010).

8 NHHA also alleged that no “special circumstances” exist that would make an award of fees unjust. Defendants do not argue to the contrary. 17 The position of the United States is “substantially

justified” if it “has a reasonable basis in law and in fact” or,

in other words, is “justified to a degree that could satisfy a

reasonable person.” Pierce v. Underwood,

, 566

n.2 (1988). “If the government reasonably believes the action

or inaction is required by law, then, by definition it cannot be

the basis for an award of EAJA fees.” McLaughlin v. Hagel,

(1st Cir. 2014) (internal quotation marks

omitted). The government’s position can be substantially

justified “even if a court ultimately determines the agency’s

reading of the law was not correct.” Saysana,

(internal quotation marks omitted). In determining whether

defendants’ position was substantially justified, the court

should consider defendants’ pre-litigation and litigation

positions “holistically.” McLaughlin,

; see also

Saysana,

(“[The court] must arrive at one

conclusion that simultaneously encompasses and accommodates the

entire civil action.” (internal quotation marks omitted)).

Defendants have not satisfied their burden to show that

their position was substantially justified. Defendants’

introduction of their policies in the responses to FAQs 33 and

34 was successfully challenged by hospitals across the country

as improper under the APA. At no point prior to or during this

litigation have defendants been able to legitimately point to a

18 source for those policies other than the FAQs themselves.9 Thus,

defendants’ position—that the policies in the FAQs were proper

because they merely reflected CMS’s longstanding policy—was not

substantially justified.

In arguing that their position was substantially justified,

defendants point to two cases that they claim “closely

parallel[]” this case—Saysana,

, and Aronov,

. Neither case, however, supports the government’s

argument.

In Saysana, the First Circuit addressed a request for fees

under the EAJA which followed a plaintiff’s successful challenge

to the Board of Immigration Appeals’ (“BIA”) interpretation of

the Immigration and Nationality Act,

. In

denying the request for fees, the First Circuit noted:

the crux of the Government’s position, from the outset of the litigation, was that, in light of the Board's decision in Matter of Saysana, the district court was required to apply Chevron [to the BIA’s interpretation of § 1226]. In its opinion, however, the district court did not apply Chevron; it did not explain why that analysis was inapplicable, and, indeed, it did not mention Chevron.

9 Repeating their failed arguments from this case and other cases, defendants assert that a 2002 letter to State Medicaid directors and the Preamble to the 2008 Rule set forth the policies in question. As the court explained in the March 2 Order, neither piece of evidence could reasonably be read to support defendants’ arguments. 19 Saysana,

. The First Circuit further stated: “We

cannot say that the Government’s argument with respect to the

applicability of Chevron was not substantially justified.

Indeed, in deciding the merits of this action, we determined

that the Chevron analysis was implicated by the Board's

decision.”

Thus, the court held that the government’s

“position was not unreasonable.”

.

That is not the case here. Unlike in Saysana, the crux of

defendants’ position here was not that the court was required to

apply Chevron. Rather, it was that the policies set forth in

the responses to FAQs 33 and 34 were promulgated in a

procedurally proper manner. For the reasons discussed above and

in the March 2 Order, defendants’ position throughout this

litigation lacked a reasonable basis in law and fact.

Therefore, Saysana does not help defendants in this case.

Defendants’ reliance on Aronov is equally unavailing. In

that case, the plaintiff argued that the terms of the applicable

statute and regulation required the United States Citizenship

and Immigration Service (“USCIS”) to act on an application for

citizenship within 120 days of the applicant’s citizenship

interview examination. Aronov,

. When the USCIS

failed to act on the plaintiff’s application within the required

120-day timeframe, the plaintiff sued, and the parties quickly

settled.

The plaintiff then moved for attorneys’ fees

20 under the EAJA, and the district court granted the motion.

.

The First Circuit reversed, holding that the plaintiff was

not a prevailing party (because the parties had settled the

case) and, in any event, that defendants’ position was

substantially justified.

. The court noted that the

defendants were operating “under two statutory mandates,” one of

which could lead the USCIS to “reasonably believe it does not

violate the statute by not acting within 120 days” of the

plaintiff’s application.

.

Defendants’ actions here are not analogous to those taken

by the defendants in Aronov. As the First Circuit stated in

that case, the “test is whether a reasonable person could think

the agency position is correct.”

. Here, no

reasonable person could think that defendants had the right to

promulgate the challenged policies in the manner in which they

did.

In sum, the court concludes that NHHA is entitled to an

EAJA award of attorneys’ fees. The court next turns to

determining the amount of that award.

B. Amount of Award

Defendants argue that any fee award should be reduced on

the following grounds: (1) NHHA is seeking fees for certain

21 activities that are categorically not payable under the Act; (2)

plaintiffs achieved only limited success on their claims; (3)

some of NHHA’s billing entries cannot be evaluated because they

are too vague or redacted; and (4) NHHA’s billing entries reveal

unnecessary or unreasonable spending. Doc. no. 68 at 15-21.

Before addressing defendants’ grounds for a fee reduction,

the court first discusses the appropriate rate for fees.

Although defendants do not contest NHHA’s proposed rate, because

the appropriate rate requires a cost-of-living enhancement, the

court addresses the issue here.

1. Appropriate Rate

NHHA requests a fee award for 1,889.2 hours of attorney

work. The attorneys working on this case billed these hours at

rates ranging from $350 per hour to $475 per hour. The EAJA

provides that “attorney fees shall not be awarded in excess of

$125 per hour unless the court determines that an increase in

the cost of living or a special factor . . . justifies a higher

fee.”

(d)(2)(A). NHHA requests that the court

adjust the fee award by increasing the EAJA standard hourly

reimbursement rate to reflect a cost-of-living adjustment.

The $125 per hour cap was enacted in March 1996, over

twenty years ago. See Castaneda-Castillo v. Holder,

(1st Cir. 2013). Given the passage of time and that the

22 government does not oppose NHHA’s request for a cost-of-living

adjustment, the court finds the requested enhancement is

appropriate. See

The court calculates and applies the

cost-of-living adjustment here as did the First Circuit in

Castaneda-Castillo. See

. This adjustment will

reflect the increase in the cost of living experienced in the

Northeast geographic area since March 1996, as established by

the Bureau of Labor Statistics (“BLS”). See

.

The Annual Consumer Price Index for all Urban Consumers

(“CPI-U”) in the Northeast in March 1996 was 162.8.10 In this

case, Nixon Peabody attorneys performed work in 2015, 2016,

2017, and 2018. See generally doc. no. 64-8. The CPI-U in the

Northeast region for those years respectively was 252.185,

254.850, 259.538, and 265.139.11 The court divides each of these

numbers by 162.8 and multiplies each result by $125 to arrive at

10 Defendants do not contest the use of the Northeast region’s CPI-U to determine the proper cost-of-living adjustment.

11 Some of this data was offered by NHHA in the form of a chart generated through the BLS’s website. See doc. no. 64-7 at 2. This data can also be found by visiting the BLS website. See https://www.bls.gov/cpi/data.htm . While there, one can use the “One Screen Data Search” tool to search the CPI-U for the Northeast region for the years 1996 through 2018. The court takes judicial notice of the data represented for those years on the BLS website. See Fed. R. Evid. 201(b)(2), (c)(1) (providing that the court may take judicial notice on its own of a fact “that is not subject to reasonable dispute because” the fact “can accurately and readily be determined from sources whose accuracy cannot reasonably be questioned”). 23 the adjusted hourly rate for each year: $193.63 (2015); $195.67

(2016); $199.27 (2017); and $203.57 (2018). These rates apply

consistently to all the attorneys that worked on the case.

NHHA also requests reimbursement for fees incurred by

paralegals. NHHA appears to assume that the same statutory rate

of $125 per hour applies to paralegal work. See doc. no. 64-4

at 9. The Supreme Court has held that a party entitled to an

award of EAJA fees may recover its paralegal fees from the

government at prevailing market rates. Richlin Sec. Serv. Co.

v. Chertoff,

(2008). The same is true of

other individuals who contribute to the attorneys’ work product,

such as law clerks or administrative assistants. See Castaneda-

Castillo,

. Other district courts in the First

Circuit have recently found the prevailing market rate for

paralegal services to be below the $125-per-hour attorney rate.

See, e.g., Rosemary C. v. Berryhill, No. 1:17-CV-00282-GZS,

, at *3 (D. Me. Dec. 19, 2018), report and

recommendation adopted, No. 1:17-CV-00282-JDL,

(D. Me. Feb. 5, 2019) (awarding paralegal fees at rate of $105

per hour); Colon v. Berryhill, No. 17-CV-12053-ADB,

, at *2 (D. Mass. Nov. 14, 2018) (awarding paralegal fees

at rate of $90 per hour).

NHHA has not offered any evidence of the prevailing market

rate for paralegal fees. Its submissions demonstrate that the

24 paralegals who worked on this case billed their time at between

$210 to $250 per hour. See doc. no. 64-5 at 2. Given that $125

is only slightly higher than recent market rates awarded for

paralegal work in other district courts in the First Circuit and

because defendants have not objected to that rate, the court

awards fees for paralegal work at $125 per hour.

The court now turns to defendants’ arguments as to a

reduction in fees.

2. Activities not payable under the Act

Defendants identify four categories of activities reflected

in NHHA’s attorneys’ billing records that they argue are

“categorically not payable” under the EAJA: (1) amounts spent

seeking administrative relief from CMS prior to this litigation;

(2) amounts spent in dealing with the New Hampshire State

government outside of this litigation; (3) amounts spent

opposing the New Hampshire State government’s efforts in this

lawsuit; and (4) amounts spent in lawsuits other than this one.

a. Fees incurred related to administrative proceedings

First, defendants argue that the EAJA authorizes recovery

of fees incurred in any civil action but does not apply to fees

incurred seeking administrative relief prior to litigation.

25 NHHA counters that the EAJA allows a prevailing party to recover

for pre-litigation work, including, in this case, NHHA’s pursuit

of administrative relief from CMS. NHHA relies primarily on

Sullivan v. Hudson,

(1989), to support its

position.

In Hudson, the Supreme Court held that, under some

circumstances, “administrative proceedings may be so intimately

connected with judicial proceedings as to be considered part of

the ‘civil action’ for purposes of a fee award [under the

EAJA].”

. Subsequently, in Melkonyan v. Sullivan,

(1991), the Court clarified that Hudson “stands for

the proposition that in those cases where the district court

retains jurisdiction of the civil action and contemplates

entering a final judgment following the completion of

administrative proceedings, a claimant may collect EAJA fees for

work done at the administrative level.”

; see also

Glenwood W. v. Soc. Sec. Admin. Comm’r, No. 1:17-CV-00353-JAW,

, at *4 (D. Me. June 26, 2018) (“It is true that

fees for services rendered at the administrative level are non-

compensable under the EAJA in the absence of a court-ordered

remand.” (internal quotation marks omitted)).

This case does not fall within Hudson’s reach. NHHA’s

administrative petition to CMS to withdraw the FAQs preceded

this litigation. Further, NHHA does not contend, and the record

26 does not show, that NHHA was required to exhaust administrative

remedies with CMS prior to pursuing this litigation. See

Friends of Boundary Waters Wilderness v. Thomas,

,

888 (8th Cir. 1995). Therefore, NHHA is not entitled to recover

attorneys’ fees for services performed during those

administrative proceedings.12

b. Fees incurred in dealing with New Hampshire State government outside of this litigation

Next, defendants argue that NHHA cannot claim attorneys’

fees incurred in its dealings with the New Hampshire State

government (“State”) outside of this lawsuit. NHHA counters

that “communications and negotiations with the State—a party to

the litigation—were unavoidable and necessary.” Doc. no. 72 at

6.

Neither NHHA nor defendants offer any case law to support

their positions as to whether time spent dealing with the State

outside of this litigation should be compensable. Given the

case law cited above concerning a party’s pre-litigation work,

however, the court agrees with defendants’ position.

Defendants note that NHHA also seeks to recover certain 12

costs associated with the administrative proceedings. For the same reasons, NHHA is not entitled to recover such costs under the EAJA. 27 First, although NHHA describes the State as a party to this

litigation, that is incorrect. As discussed further below,

although the State moved to intervene in this case, plaintiffs

objected, see doc. no. 49, and the court denied the State’s

motion in the March 2 Order. Second, as with its pursuit of

administrative relief from CMS, NHHA was not required to

negotiate with the State before instituting this litigation.

Indeed, as plaintiffs argued in their objection to defendants’

motion to dismiss, the State was certain to follow defendants’

lead in determining the appropriate method to calculate

uncompensated care costs. See doc. no. 25-1 at 5-12.

NHHA offers no support for its contention that fees

incurred in connection with extra-litigation efforts with the

State, a non-party to this action, should be compensable under

the EAJA. Therefore, it has not satisfied its burden to show

that it is entitled to attorneys’ fees in relation to those

efforts. See Knudsen v. Colvin, No. 2:14-CV-155-JHR,

, at *3 (D. Me. July 31, 2015) (noting that in an

application for fees under the EAJA, “it is the plaintiff who

has the burden to demonstrate that the fees that he seeks are

reasonable”).

28 c. Fees incurred in opposing the State’s efforts in this lawsuit

Third, defendants argue that NHHA cannot be awarded fees

for time its attorneys spent opposing the State’s efforts in

this lawsuit. Specifically, defendants contend that NHHA should

not be compensated for fees associated with NHHA’s opposition to

and motion to strike the State’s motion to intervene or its

opposition to the State’s request to file an amicus brief. NHHA

argues that it can recover such fees because defendants did not

oppose the State’s efforts to intervene or file an amicus brief

and that the State’s efforts were a “logical outgrowth” of this

litigation.

Defendants rely primarily on Love v. Reilly,

(9th Cir. 1991) to support their argument. In Love, the

plaintiffs successfully sought a preliminary injunction against

the Environmental Protection Agency (“EPA”) to stop the banning

of a pesticide. The EPA sought an expedited appeal, and certain

intervenors filed a motion to stay the preliminary injunction

pending the appeal. Although the EPA would have benefitted from

the stay, it took no position on the intervenors’ motion. The

district court denied the motion, and later awarded attorneys’

fees under the EAJA against the EPA for the work incurred by

plaintiffs’ attorneys attributable to opposing the intervenors’

motion to stay.

29 The Ninth Circuit reversed, holding that the district court

erred in awarding attorneys’ fees under the EAJA for those

efforts. Relying on Avoyelles Sportsmen's League v. Marsh,

(5th Cir. 1986), the Ninth Circuit held that “where

plaintiffs are litigating an issue and are opposed only by” a

party other than the federal government, “a fee award against

the government would be manifestly unfair and contrary to

historic fee-shifting principles.” Love,

(internal quotation marks and citation omitted).

As in Love, the intervenor in this case took a position

that was not adverse to that of defendants, but defendants did

not join in or take a position on the intervenor’s motions.

Therefore, it would be “unjust” to award fees against defendants

for NHHA’s attorneys’ work in opposing the State’s efforts to

intervene and file an amicus brief in this case. Id.; see Sw.

Ctr. for Biological Diversity v. Bartel, No. 98-CV-2234 BJMA,

, at *8-9 (S.D. Cal. Aug. 30, 2007) (refusing to

award fees incurred in opposing third party’s intervention when

federal defendants did not take position adverse to plaintiffs);

see also Watson v. Cty. of Riverside,

, 1097 (9th

Cir. 2002) (under a different fee-shifting statute, trial court

properly denied fees incurred opposing intervention of third

party where defendant did not join in motion to intervene, and

30 intervenor’s actions were not made necessary by defendant’s

position in the litigation).

d. Amounts spent on lawsuits other than this lawsuit

Defendants next argue that NHHA cannot recover fees

associated with lawsuits other than the instant case. They

point specifically to entries in NHHA’s itemized statement that

show attorneys’ fees incurred in connection with a separate case

in front of this court, New Hampshire Hosp. Ass’n v. Azar, No.

17-cv-349-LM (D.N.H. 2017). In that case, which plaintiffs

instituted after the court entered judgment in the instant

action, plaintiffs challenged the 2017 Rule which expressly

included within its text the policies that had been set forth in

the responses to the frequently asked questions.13 NHHA responds

that the subsequent lawsuit “must be viewed as intimately

related to this litigation” and, as such, it is entitled to

attorneys’ fees associated with that litigation. Doc. no. 72 at

6.

NHHA provides no support for the theory that the EAJA

permits a party to recover attorneys’ fees incurred in a

separate litigation, even one arising out of a similar subject

The court denied the parties’ cross-motions for summary 13

judgment without prejudice after the 2017 Rule was vacated. 31 matter. Indeed, after defendants published the 2017 Rule,

plaintiffs in this case moved to alter or amend the court’s

judgment to enjoin defendants from enforcing the 2017 Rule and

the policies reflected therein.

In denying plaintiffs’ motion, the court held:

Plaintiffs’ complaint in this action challenged the policies in FAQs 33 and 34, and alleged that defendants’ implementation and enforcement of those policies violated the APA. The allegations in the complaint necessarily required the court to analyze defendants’ policies through the prism in which they were promulgated: the FAQs. The court’s analysis in the March 2 order was limited to defendants’ authority to implement and enforce the policies based on the manner and process in which defendants adopted them. See, e.g., Encarnacion v. Astrue,

(2d Cir. 2009) (“Whether a court defers to an agency’s interpretation ‘depends in significant part upon the interpretative method used and the nature of the question at issue.’” (quoting Barnhart v. Walton,

(2002))). The complaint did not challenge the policies as contained in the 2017 Rule and, indeed, that Rule was promulgated after the court’s March 2 order and after judgment was entered. Therefore, there is no basis for amending or altering the court’s judgment. Accordingly, plaintiffs’ motion is denied.

Doc. no. 56 at 9-10. Thus, as the court held, the complaint in

this case challenged defendants’ implementation of the policies

in FAQs 33 and 34, and the court’s analysis in the March 2 Order

on the parties’ cross-motions for summary judgment was limited

to that specific challenge. NHHA is not entitled to recover

attorneys’ fees for work performed in connection with a separate

litigation that began after the court entered judgment in this

32 case.14 See Castaneda-Castillo,

; Lundin v.

Mecham,

(D.C. Cir. 1992).

In addition, defendants note that NHHA’s billing records

reflect work done on cases in other jurisdictions, including in

state court. See, e.g., doc. no. 64-8 at 23 (billing entry for

“work on preparation of State Court action”). NHHA does not

explain those entries in its reply. To the extent NHHA seeks to

recover fees associated with any case outside of this court’s

jurisdiction, that request is denied. See, e.g., Lundin,

(“[A] court may not award fees under EAJA for work

performed in other jurisdictions . . . .”).

3. Plaintiffs’ limited success in this case

Defendants next argue that NHHA’s fee award should be

discounted because plaintiffs achieved only limited success on

their claims. Plaintiffs’ complaint set forth four counts, all

of which alleged violations of the APA: (1) violation of

(2)(C) (Count I); (2) violation of

(2)(A), (D) (Count II); (3) violation of

(2)(A), (D) (Count III); and (4) violation of

(2)(A) (Count IV). At the summary judgment stage, plaintiffs

14 As defendants note, NHHA also appears to seek to recover certain copying and filing costs incurred in connection with the second suit. For similar reasons, NHHA is not entitled to recover costs incurred in connection with that suit. 33 abandoned Count IV. In the March 2 Order, the court held that

plaintiffs were entitled to summary judgment on Counts I and II

and that defendants were entitled to summary judgment on Count

III. Defendants contend that NHHA’s request for fees must be

reduced to reflect the fact that plaintiffs were successful on

only two of their four claims.

The court disagrees. If a plaintiff has achieved only

limited or partial litigation success, “the product of hours

reasonably expended on the litigation as a whole times a

reasonable hourly rate may be an excessive amount” for a fee

award. Dalles Irrigation Dist. v. United States,

(Fed. Cl. 2010) (quoting Hensley v. Eckerhart,

(1983)). However, “[a] plaintiff need not prevail on

every contention raised in the lawsuit to recover a full fee.”

“Litigants in good faith may raise alternative legal

grounds for a desired outcome, and the court’s rejection of or

failure to reach certain grounds is not a sufficient reason for

reducing a fee.”

(quoting Hensley,

). In

determining whether a fee award should be reduced based on

partial or limited success, the court “should focus on the

significance of the overall relief obtained by the plaintiff in

relation to the hours reasonably expended on the litigation.”

at 704 (quoting Hensley,

).

34 The court finds that, based on the substantial relief

plaintiffs obtained, reduction of fees on the ground that

plaintiffs were successful on only two of their claims is

inappropriate. Plaintiffs raised four claims in their

complaint. All four claims alleged that the policies reflected

in FAQs 33 and 34 violated the APA and sought the same outcome:

an injunction prohibiting enforcement or implementation of the

policies embodied in FAQs 33 and 34.

That is precisely the relief plaintiffs received from this

court and that was upheld by the First Circuit. See Burwell,

, at *16; Azar,

. The fact that

plaintiffs achieved the full relief that they sought is not

undermined by the fact that plaintiffs dropped Count IV at the

summary judgment stage, that this court granted summary judgment

to defendants on Count III, or that the First Circuit’s opinion

affirming this court’s order focused only on Count II. See

Sakhawti v. Lynch,

(6th Cir. 2016) (declining

to limit fees to those related to single claim addressed in

prior appeal where plaintiff “obtained the most relief that she

could have received, and indeed that she requested, on her

appeal”).15

15 In addition, defendants argue that NHHA is not entitled to recover attorneys’ fees with regard to time spent on any unsuccessful motion or even any unsuccessful argument set forth in any motion. The court declines defendants’ invitation to 35 Accordingly, the court declines defendants’ request to

reduce NHHA’s requested fee award on the basis of allegedly

partial or limited success.

4. Vague or redacted billing entries

Defendants next argue that any fee award should be

discounted because some of the billing entries in NHHA’s

itemized statement are worded in general terms or are redacted

“in a way that makes it impossible to tell whether they relate

to reasonable expenditures for which fees are authorized under

EAJA.” Doc. no. 68 at 19.

An application for fees under the EAJA must include “an

itemized statement from any attorney or expert witness

representing or appearing on behalf of the party stating the

actual time expended and the rate at which fees and other

expenses were computed.”

(d)(1)(B). The

records submitted in support of any fee request should be clear

enough to “allow[] the paying party to dispute the accuracy of

the records as well as the reasonableness of the time spent.”

Lipsett v. Blanco,

(1st Cir. 1992) (alteration

deny NHHA’s request for attorneys’ fees for time spent relating to any argument that was not ultimately successful. For the reasons stated above, the EAJA does not impose such a high burden on a plaintiff. 36 in original) (quoting Calhoun v. Acme Cleveland Corp.,

(1st Cir. 1986)).

As defendants note, many of the entries in NHHA’s itemized

statement are heavily redacted, and many entries lump together

multiple distinct activities, some of which may be related to

matters that fall outside the purview of the EAJA, as discussed

above. See doc. no. 64-9. NHHA did not respond to defendants’

arguments regarding the nature of its billing entries.

The court agrees with defendants that certain billing

entries should either be unredacted or broken down to detail

specific tasks. As discussed more fully below, NHHA and

defendants shall confer and attempt to reach an agreement as to

which of the billing entries are compensable under the EAJA in

light of the court’s order.16

5. Unnecessary and/or unreasonable spending

Finally, defendants request that the fee award be reduced

to account for what they categorize as “unnecessary or

unreasonable spending.” Doc. no. 68 at 20. Specifically,

defendants claim that many of plaintiffs’ filings were excessive

in length and that plaintiffs’ attorneys spent an inordinate

amount of time writing certain pleadings and preparing for

16 Defendants raise the same issue concerning redactions with regard to the billing records included with NHHA’s supplement to its request for attorneys’ fees (doc. no. 77). 37 certain hearings. NHHA does not respond to defendants’

arguments.

This case presented issues of critical importance to

plaintiffs, and many of the filings had to be completed in an

expedited manner. Nothing in the record suggests that the hours

billed in preparing filings or arguments were objectively

unreasonable. The court will not reduce NHHA’s requested fees

based on defendants’ arguments that certain filings were too

lengthy or that attorneys spent too much time preparing for oral

argument on the parties’ motions for summary judgment.

Defendants point to particular entries, however, in which

the time spent by NHHA’s attorneys seems excessive. For

example, they point to an entry in which an attorney billed more

than eighteen hours to prepare “graphics” for the preliminary

injunction hearing.17 Therefore, NHHA shall review the itemized

statement and reduce the request for fees as to certain entries,

where appropriate.

C. Summary

NHHA has shown that it is entitled to recover attorneys’

fees and costs under the EAJA, and defendants have not carried

17 To the extent plaintiffs’ attorneys used graphics during the hearing, they were not a significant part of plaintiffs’ presentation. 38 their burden to show that their position was substantially

justified. For those reasons, the court grants NHHA’s motion to

the extent it seeks to recover attorneys’ fees and costs at the

rates set forth above in accordance with this order.

Under the EAJA, the district court “retains substantial

discretion in fixing the amount of an EAJA award.” Comm’r,

I.N.S. v. Jean,

, (1990). In determining a

reasonable fee award, the court may identify specific hours that

should be eliminated, or it may reduce the total attorney hours

by a percentage. See Conservation Force v. Salazar,

(D.D.C. 2013); Stromness MPO, LLC v. United

States,

, 431 (Fed. Cl. 2018);

As discussed above, defendants raise certain legitimate

concerns regarding NHHA’s request for fees and costs. For

example, NHHA seeks, but is not entitled to recover, attorneys’

fees and costs related to: (1) administrative proceedings; (2)

dealing with the State outside of this litigation; (3) opposing

the State’s efforts in this case; and (4) lawsuits other than

the instant action. In addition, defendants’ complaints that

certain entries are vague, over-redacted, or show unnecessary

fees incurred, are valid.

The parties shall confer and attempt to reach an agreement

as to the appropriate award of attorneys’ fees and costs in

accordance with the parameters of this order. NHHA and

39 defendants shall notify the court as to whether they have

reached an agreement within 45 days. To the extent they are

unable to reach an agreement, NHHA shall file a revised motion

for attorneys’ fees in light of this order within 14 days of the

day notification is provided to the court. Defendants shall

then have 14 days to object.

CONCLUSION

For the foregoing reasons, defendants’ motion for

modification or, in the alternative, clarification of March 2017

permanent injunction (doc. no. 69) is denied. NHHA’s motion for

attorneys’ fees and costs (doc. no. 64) is granted to the extent

NHHA seeks to recover fees and costs under the EAJA at the rate

provided in and in accordance with the holding of this order.

The parties shall confer and attempt to reach an agreement

as to the appropriate award of attorneys’ fees and costs in

accordance with the parameters of this order. Within 45 days,

NHHA and defendants shall notify the court if they have reached

an agreement. To the extent they are unable to reach an

agreement, NHHA shall file a revised motion for attorneys’ fees

40 within 14 days of the day notification is provided to the court.

Defendants shall have 14 days to object.

SO ORDERED.

__________________________ Landya B. McCafferty United States District Judge

March 28, 2019

cc: Counsel of Record

41