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Inclusion, Inc. v. Idaho Department of Health and Welfare

Supreme Court of Idaho

November 23, 2016

INCLUSION, INC., an Idaho corporation; INCLUSION NORTH, INC., an Idaho corporation; and INCLUSION SOUTH, INC., an Idaho corporation, Plaintiffs-Respondents,
v.
IDAHO DEPARTMENT OF HEALTH AND WELFARE, a department of the State of Idaho, and RICHARD ARMSTRONG, in his official capacity as Director of the Idaho Department of Health and Welfare, Defendants-Appellants.

         2016 Opinion No. 138

         Appeal from the District Court of the Fourth Judicial District, State of Idaho, Ada County. Hon. Richard D. Greenwood, District Judge.

         District court award of attorney fees, vacated. IDHW's requested award is granted.

          Hon. Lawrence D. Wasden, Idaho Attorney General, Boise, for appellants. Carl J. Withroe, Deputy Attorney General argued.

          Charney & Associates, Eagle, for respondents. Dennis M. Charney argued.

          BURDICK, Justice

         The Idaho Department of Health and Welfare (IDHW) appeals the Ada County district court's award of attorney fees under Idaho Code section 12-120(3). IDHW contends the district court abused its discretion by basing the award on the amount billed by the Attorney General. We agree.

         I. FACTUAL AND PROCEDURAL BACKGROUND

         Inclusion, Inc., Inclusion North, Inc., and Inclusion South, Inc., (collectively Inclusion) provide residential rehabilitation support services to Idahoans eligible for Medicaid. In September 2012, Inclusion filed a complaint against IDHW, alleging IDHW breached binding Medicaid Provider Agreements by failing to adequately reimburse Inclusion for its services. In June 2013, Inclusion amended its complaint with unjust enrichment and quasi-estoppel claims.

         In April 2014, the district court granted summary judgment for IDHW, concluding no triable issue of fact supported Inclusion's claims. IDHW then moved for attorney fees under Idaho Code section 12-120(3) and requested $74, 925.00 in fees. IDHW's requested award reflects 599.4 hours of work billed at a rate $125.00 per hour. Though $125.00 per hour is not the actual hourly rate billed during litigation, IDHW contended its requested award was reasonable based on prevailing hourly rates for comparable legal services in the local market (Boise).

         The district court found that IDHW's requested award was based on a reasonable amount of hours and a reasonable hourly rate, as determined by the Boise market. As the district court acknowledged, "the hourly rate requested is reasonable and certainly well within the rate in the marketplace in the Fourth District in Ada County, in particular." Even so, the district court took issue with how IDHW's requested award was not based on the actual hourly rate billed during litigation. As the district court explained, "[e]xcept where the award of attorney fees is paid to the lawyer, fees awarded to a party should not exceed the amount the client actually paid for the lawyer." To that end, the district court multiplied 599.4 hours of work by $54.00 per hour[1] to award a total of $30, 857.11. IDHW moved to reconsider, but the district court upheld the award for $30, 857.11. IDHW timely appealed.

         II. ISSUES ON APPEAL

         1. Did the district court abuse its discretion when fashioning the award of reasonable attorney fees under Idaho Code section 12-120(3)?

         2. Is the prevailing party entitled to attorney fees on appeal?

         III. STANDARD OF REVIEW

         "An award of attorney fees and costs is within the discretion of the trial court and subject to an abuse of discretion standard of review." Smith v. Mitton, 140 Idaho 893, 901, 104 P.3d 367, 375 (2004). To determine whether the district court abused its discretion, this Court evaluates whether the district court: (1) correctly perceived the issue as one of discretion; (2) acted within the outer boundaries of its discretion and consistently with relevant legal standards; and (3) ...


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