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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Alaina Adkins & Maxim Healthcare Services, Inc. v Jesse Michael Collens (7/12/2019) sp-7386
Notice: This opinion is subject to correction before publication in the P ACIFIC REPORTER.
Readers are requested to bring errors to the attention of the Clerk of the Appellate Courts,
303 K Street, Anchorage, Alaska 99501, phone (907) 264-0608, fax (907) 264-0878, email
corrections@akcourts.us.
THE SUPREME COURT OF THE STATE OF ALASKA
ALAINA ADKINS and MAXIM )
HEALTHCARE SERVICES, INC., ) Supreme Court No. S-16930
)
Appellants,
) Superior Court No. 3AN-14-05961 CI
)
v.
) O P I N I O N
)
JESSE MICHAEL COLLENS, ) No. 7386 - July 12, 2019
)
Appellee. )
)
Appeal from the Superior Court of the State of Alaska, Third
Judicial District, Anchorage, Frank A. Pfiffner, Judge.
Appearances: Gregory S. Fisher, Nicholas I. Bajwa, and
Kristal L. Leonard, Davis Wright Tremaine LLP, Anchorage,
for Appellants. Susan Orlansky, Reeves Amodio LLC;
Jeffrey M. Feldman, Summit Law Group; and Michael T.
Stehle, Law Office of Michael Stehle, PC, Anchorage, for
Appellee. Roger F. Holmes, Biss & Holmes, Anchorage, for
Amicus Curiae Alaska State Medical Association. John J.
Tiemessen, Clapp, Peterson, Tiemessen, Thorsness &
Johnson, Fairbanks, for Amicus Curiae Alaska Dental
Society.
Before: Bolger, Chief Justice, Winfree, Stowers, Maassen,
and Carney, Justices.
BOLGER, Chief Justice.
----------------------- Page 2-----------------------
I. INTRODUCTION
Maxim Healthcare Services and its Alaska office manager, Alaina Adkins,
made misrepresentations while discharging Jesse Collens from Maxim's care, in
violation of the company's own policies and procedures. Collens sued them for breach
of contract, fraudulent misrepresentation, unfair and deceptive acts and practices under
Alaska's Unfair Trade Practices and Consumer Protection Act (UTPA),1 and intentional
infliction of emotional distress (IIED). The superior court ruled for Collens on all his
claims and entered a $20,379,727.96 judgment against Adkins and Maxim, which
included attorney's fees. Maxim and Adkins now appeal, arguing that (1) they were not
liable under the UTPA; (2) the superior court erred in precluding their expert witnesses
from testifying at trial; (3) the court's damages award was excessive; and (4) the court's
attorney's fee award was unreasonable. We agree that the superior court's attorney's fee
award was unreasonable, but on all other issues we affirm the superior court's decision.
II. FACTS AND PROCEEDINGS
In May 2009 Jesse Collens, then 21 years old, was permanently injured in
a bicycle accident that left him a C-1 quadriplegic, paralyzed from the neck down, and
dependent on a ventilator to breathe. Collens was living in Anchorage when the accident
occurred, and he chose to remain there after recuperating to be near friends and family.
Because long-term care facilities in Anchorage are not prepared to serve a
ventilator-dependent individual such as Collens, he sought in-home care. In December
2009 he contracted with Maxim, a national healthcare corporation with a home
healthcare division, to provide his nursing care. At the time Collens had a prescription
for in-home nursing care that was refillable for life. Maxim was licensed as a home
health agency in Alaska at all relevant times.
1 The UTPA is codified at AS 45.50.471-.561.
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In late 2011 issues arose between Collens and Maxim over the company's
management of his care. These issues escalated, and in early March 2012, Alaina
Adkins, Maxim's Alaska office manager, met with Collens to discuss his main concerns
with Maxim's services.
The following business day, Adkins emailed various members of Maxim's
legal and administrative staff about one of the issues Collens had raised. Internal
concerns surfaced about the legal compliance of the staff working with Collens.
Maxim's Compliance Department produced a report on March 21 that suggested some
issues with how Collens's nurses were supplying him insulin as well as other scheduling
and dosage discrepancies. In an email responding to the report, Maxim's area vice
president wrote, "We are in dangerous territory right now with the liability of this case
and we are going to have to seriously consider discharge."
Collens's contract with Maxim included a form that told him of his rights
as a patient. In this document Maxim affirmed that Collens had the right to:
Know that the home health plan of care/treatment will be
developed by the physician, in cooperation with the
appropriate Maxim professional staff member, and with the
patient and family to the extent possible.
The document also affirmed that Collens had the right:
Not to be transferred or discharged unless:
a. Theindividual'smedicalneeds requiretransfer;
b. The individual's health and safety or that of
another personrequires transfer or discharge;or
c. The individual fails to pay for services, except
as such transfer or discharge is prohibited by
law.
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----------------------- Page 4-----------------------
d. The individual does not meet any criteria for
continued service set forth by Maxim, federal,
state, or local statute or regulation.
In accordance with state regulations, Maxim had adopted policies and
2 Those policies and
procedures to govern its provision of home healthcare services.
procedures stated that a patient could not be discharged from Maxim's home healthcare
program without a physician's order.
Collens's care plan was subject to routine recertification every 60 days.
Maxim's Alaska Director of Clinical Services visited Collens's house to complete the
review necessary for this recertification on March 23. Three days later she submitted the
recertification paperwork, noting that "discharge is not warranted."
Thatsameday Adkins requestedthatMaxim'slegaldepartmentprovideher
a draft discharge letter for Collens. This draft letter stated that the discharge had been
discussed with Collens's physician and care coordinator and that they agreed with the
discharge decision. But in fact neither approved the discharge.3 The draft discharge
letter also included a space for names of other entities that could provide the care needed
by the patient. Although Adkins emailed the legal department saying, "Wealready know
that there are no providers in our area that provide this type of service," the discharge
letter she eventually delivered to Collens filled in the blank with four agency names.
Adkins delivered and read aloud the discharge letter at Collens's home on March 30.
2 See 7 Alaska Administrative Code (AAC) 12.507(b)(3) (2015) (requiring
home health agencies to adopt written policies and procedures).
3 Maxim spoke with Collens's care coordinator prior to delivering the
discharge letter but did not speak to his physician. Both sent letters to Maxim several
days after Collens's discharge disagreeing with the decision.
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----------------------- Page 5-----------------------
Collens filed suit against Maxim in early 2014, alleging breach of contract
4
and fraudulent misrepresentation.
Maxim moved for summary judgment on these
claims. Collens opposed and cross-moved for partial summary judgment on the contract
claim. In the memorandum supporting that motion, Collens asserted claims under the
UTPA for the first time. The superior court denied all motions, finding the existence of
disputed facts relevant to the fraud and contract claims. Its order did not address the
UTPA claims.
During a protracted pretrial period, multiple discovery disputes arose.
Among other things, Collens moved to strike Maxim's expert witnesses, arguing that it
had not submitted their reports before the relevant deadline. In April 2017 the superior
court granted this motion and precluded Maxim's experts from testifying at trial.
After a six-day bench trial in June 2017, the superior court ruled for Collens
on all counts. The court awarded him $4,315,007 in damages for his breach of contract
claim. This was trebled under the UTPA's damages provision to total $12,945,021. The
court also awarded Collens $400,000 in damages for IIED and $500,000 in punitive
damages. The court later awarded Collens $5,676,668.17 in attorney's fees. Maxim
appeals.
III. DISCUSSION
Maxim asks us to vacate the superior court's judgment and remand for a
new trial on contract and tort damages, with instructions that Maxim was not liable under
the UTPA. It also asks us to vacate the fee award as unreasonable. We agree that the
superior court's attorney's fee award was unreasonable, but in all other respects we
affirm the superior court's judgment. Maxim is liable under the UTPA; its conduct is
4
Maximalso suedAdkins individually. For convenience, wereferto thetwo
defendants collectively as "Maxim."
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----------------------- Page 6-----------------------
clearly subject to sanctions under the Act. The superior court's decision to preclude
Maxim from presenting expert testimony on damages was not an abuse of discretion.
And the court's damages assessment was not excessive.
A. Maxim Is Liable Under The UTPA.
On appeal Maxim makes two main arguments for why the UTPA does not
5
apply to its conduct.
First Maxim argues that Collens's UTPA claim was exempt from
the Act's coverage because it involved conduct already prohibited by statute or
6
regulation. We refer to this argument as Maxim's "statutory exemption defense."
Second Maxim argues that the conduct at issue was a healthcare, not business, decision
7
that should be exempt from UTPA liability. We refer to this as Maxim's "healthcare
exemption defense." In response Collens argues that these defenses have been waived
as issues for appeal because Maxim failed to develop them sufficiently before the
superior court. If they are preserved, he contends that neither exempts Maxim from
UTPA liability.
1. Maxim preserved both UTPA defenses.
Whether a particular claim has been waived is a question of law reviewed
5 Maxim also briefly argues that Collens failed to prove his claim under
AS 45.50.471(b)(12), the particular subsection of the UTPA cited in his trial brief. But
the superior court concluded that Maxim was liable under different provisions of the Act
- AS 45.50.471(a) and AS 45.50.471(b)(14) - and Maxim does not challenge that
conclusion. Thus we do not address Maxim's liability under AS 45.50.471(b)(12).
6 AS 45.50.481(a)(1) provides that the UTPA does not apply to "an act or
transaction regulated by a statute or regulation administered by the state."
7 The Alaska State Medical Association joined in this argument as amicus
curiae.
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----------------------- Page 7-----------------------
8 9
de novo. Arguments raised for the first time on appeal are generally waived, but those
10
explicitly raised in the trial court may be expanded or refined in appellate argument.
Collens contends that Maxim waived the statutory exemption defense by failing to
develop it at trial after mentioning it in summary judgment briefing. But Collens's
complaint did not include an express claim based on the UTPA. And Maxim later raised
the defense in objections to Collens's proposed findings of fact and conclusions of law
on this claim. In those objections Maxim cited the statutory exemption and argued that
certain statutes and regulations of the nurse licensing board prohibited its disputed
conduct. This was adequate to preserve the defense.
Although it is a closer question, Maxim also preserved the healthcare
exemption defense. Maxim repeatedly argued that its decision to discharge Collens had
nothing to do with the sale or advertisement of goods and services and thus was not
covered by the UTPA. The basic premise behind the healthcare exemption defense
Maxim asserts on appeal is that the UTPA is intended to apply to a circumscribed set of
commercial transactions, not disputes involving the provision of healthcare. Since this
defense is fairly characterized as an "expansion or refinement" of arguments Maxim
made before the superior court, we also consider it preserved for our review.
8 Mitchell v. Mitchell, 370 P.3d 1070, 1076 (Alaska 2016).
9 See Wells v. Barile, 358 P.3d 583, 589 n.17 (Alaska 2015).
10 See Zeman v. Lufthansa German Airlines , 699 P.2d 1274, 1280 (Alaska
1985) (stating that appellants "can expand or refine details of an argument otherwise
preserved on appeal").
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----------------------- Page 8-----------------------
2. Collens's UTPAclaimwas notexemptunderAS45.50.481(a)(1).
Both of Maxim's exemption defenses involve arguments about how to
11
interpret the UTPA. Reviewing these legal questions de novo,
we find neither
argument persuasive.
Maxim's statutory exemption defense relies on AS 45.50.481(a)(1). This
subsection provides that the UTPA does not apply to:
an act or transaction regulated by a statute or regulation
administered by the state, including a state regulatory board
or commission, unless the statute or regulation does not
prohibit the practices declared unlawful in AS 45.50.471.
Put another way, if acts declared unlawful under the UTPA are prohibited by some other
state law or regulation, then they are exempt from the UTPA.
WehavepreviouslynotedthatAS45.50.481(a)(1) "exempts only thoseacts
12 And we have
or transactions which are the subject of 'ongoing, careful regulation.' "
emphasized that such regulation must prohibit the specific act in question: "Mere
regulation under a separate and distinct statutory scheme, however, satisfies only one
prong of [the UTPA's exemption provision]; unfair acts and practices are exempt from
the purview of the Act only where the business is both regulated elsewhere and the unfair
acts and practices are therein prohibited."13 To qualify for the statutory exemption,
11 See Kenai Chrysler Ctr., Inc. v. Denison , 167 P.3d 1240, 1255 n.37 (Alaska
2007) ("Interpretation of the UTPA presents a question of law that we review
independently."). Under this standard of review, we "adopt the rule of law that is most
persuasive in light of precedent, reason, and policy." City of Fairbanks v. Amoco Chem.
Co., 952 P.2d 1173, 1176 (Alaska 1998).
12 Matanuska Maid, Inc. v. State, 620 P.2d 182, 186 (Alaska 1980).
13 State v. O'Neill Investigations, Inc., 609 P.2d 520, 528 (Alaska 1980).
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----------------------- Page 9-----------------------
Maxim must show both that its conduct is subject to ongoing, careful regulation and that
such regulation prohibits the conduct the superior court identified as violating the UTPA
- Maxim's failure to follow its own policies and procedures and its misrepresentations
14
to Collens about his discharge.
Maximhas not metthis burden. Alaska Statute 47.32.010-.900, the chapter
governing "Centralized Licensing and Related Administrative Procedures" for a range
of social service providers, establishes a regulatory scheme that governs Maxim's
conduct as a home health agency.15 But Maxim has not established the exemption
provision's second prong, that the regulations governing home health agencies prohibit
the specific conduct at issue. Although the regulations require home health agencies to
adopt a set of policies and procedures, they do not explicitly require home health
16 And Maxim provided no
agencies to comply with these policies and procedures.
14 See Alaska Interstate Constr., LLC v. Pac. Diversified Invs., Inc. , 279 P.3d
1156, 1167 (Alaska 2012) ("PDI did not meet its burden of showing the UTPA
exemption was applicable to AIC's claims because it did not establish that the Federal
AviationAdministration(FAA)specificallyregulatesthefraudulentconductAICalleged
in connection with its aircraft leases.").
15 Seealso 7AAC12.500-.590 (regulations governinghomehealthagencies).
Amicus curiae Alaska State Medical Association argues that Maxim's conduct is
regulated by AS 09.55.530-.560, the Article governing medical malpractice actions. But
these statutory provisions do not provide for the sort of ongoing, careful regulation this
court has held is necessary to satisfy prong one of the statutory exemption. See
Matanuska Maid, 620 P.2d at 186 (holding existence of statute simply prohibiting
conduct not enough to consider conduct "regulated" by statutory scheme). Moreover,
while these statutes govern how medical malpractice claims may be brought, they do not
themselves prohibit or regulate the specific conduct at issue.
16 See 7 AAC 12.507(b)(3) (requiring home health agencies to "adopt written
by-laws, policies, and procedures"); 7 AAC 12.531(a) ("A home health agency shall
(continued...)
-9- 7386
----------------------- Page 10-----------------------
evidence at trial or in briefing to show that the Department of Health and Social Services
interprets or enforces the regulations as if they impose such an obligation. As a result
Maxim has not established that the regulations governing home health agencies prohibit
noncompliance with a home health agency's own procedures. 17
It is also ambiguous whether the regulations promulgated under
AS 47.32.010-.900 prohibit Maxim's misrepresentation to Collens about the reason for
his discharge. The regulations state that "[a] patient receiving home health services has
the right to . . . be informed of the reason for impending discharge."18 Admittedly a right
to information is not worth much if the information is not accurate. But it is not clear
that the regulations' statement of this right translates, in practice, to a prohibition on
misrepresentations such as Maxim's. The regulations' emphasis on the existence of
policies and procedures, rather than compliance with them, suggests that the Department
focuses enforcement on home health agencies' adoption of procedures and policies that
are generally protective of patients' rights. Whether the Department devotes
16 (...continued)
establish, implement, and make available to all personnel, written policies and
procedures appropriate to the services offered by the agency. These policies and
procedures must be reviewed at least annually and revised as necessary.");
7 AAC 12.531(b)(2) ("A home health agency shall establish policies and procedures
covering . . . conditions for acceptance, transfer, discharge, and continuing care of
patients."); 7 AAC 12.600(f) ("A home health agency must comply with 7 AAC 12.500-
7 AAC 12.590.").
17 SeeAlaska Interstate, 279 P.3dat1167-68(holdingdefendant did not prove
the UTPA exemption's second prong because defendant's specific conduct was not
regulated by regulations' terms and expert trial testimony had not established FAA
regulated it in practice).
18 7 AAC 12.534(b)(10).
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----------------------- Page 11-----------------------
enforcement resources to policing individual acts of misrepresentation is uncertain.
Absent evidence that the Department does so, Maxim has not met its burden of proving
the statutory exemption provision's second prong. Maxim's conduct is not exempt from
UTPA liability under AS 45.50.481(a)(1).
3. We decline to adopt the "entrepreneurial aspect" rule on the
facts of this case; regardless, it would not exempt Maxim's
conduct.
Maxim also argues that there is a general healthcare exemption from the
UTPA. It contends that health professionals should be subject to the UTPA only for
conduct related to the business or "entrepreneurial" aspects of the health profession -
not conduct involving the provision of medical care. But we are not convinced that we
should adopt this proposed common law exclusion on the facts of this case.
Other jurisdictions have limited the scope of consumer protection laws as
19
applied to the so-called "learned professions," such as law and medicine. Such
jurisdictions generally conclude that state consumer protection laws may apply to
medical and legal professionals when the"entrepreneurial"or "business"aspectsofthese
20
professionals' services are implicated. But if a claim raises questions about a
professional's competence, the professional is exempt from liability under the state
19 See, e.g. , Haynes v. Yale-New Haven Hosp. , 699 A.2d 964, 972-74 (Conn.
1997); Short v. Demopolis , 691 P.2d 163, 168 (Wash. 1984). See generally Brookins v.
Mote, 292 P.3d 347, 358-60 (Mont. 2012) (cataloging approach of other states before
holding Montana's consumer protection law applied only to the "entrepreneurial,
commercial, or business aspects of running a hospital").
20 See, e.g., Haynes, 699 A.2d at 974.
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21
consumer protection law. Courts that adopt such an "entrepreneurial aspect" rule
reason that "[t]o hold otherwise would transform every claim for . . . malpractice into a
[consumer protection act] claim." 22
We have previously applied the UTPA to professional misconduct in the
23 In those cases we saw
legal profession and to claims involving the medical industry.
no need to apply or delineate the scope of a professional services exemption to the
UTPA. Under the right circumstances, it may be appropriate to exempt some conduct
of the learned professions from UTPA liability. But those circumstances are not present
here. The only medical professional involved in the decision to discharge Collens
advised Maxim that the discharge was not warranted for medical reasons - Collens's
discharge was unquestionably a business decision. Thus even if we were to adopt an
"entrepreneurial aspect" exception for the UTPA's application to certain professional
services, Maxim would still be liable under the Act. The superior court did not err by
concluding that Maxim could be liable under the facts of this case.
21 See, e.g. , id.
22 See id.; see also Brookins, 292 P.3d at 359 ("[F]ailing to exempt
professional negligence in the course of the 'actual practice' of medicine could render
medical malpractice law 'obsolete.' " (quoting Nelson v. Ho, 564 N.W.2d 482, 486
(Mich. App. 1997))).
23 See Jones v. Westbrook, 379 P.3d 963, 969-71 (Alaska 2016) (resolving
statute of limitations dispute for UTPA claims against attorney); Pepper v. Routh
Crabtree, APC, 219 P.3d 1017, 1025 (Alaska 2009) (holding lawyers liable under the
UTPA for debt collection misconduct); Smallwood v. Cent. Peninsula Gen. Hosp., 151
P.3d 319, 329 (Alaska 2006) (holding claim regarding hospital's billing practices
covered by the UTPA); Odom v. Fairbanks Mem'l Hosp., 999 P.2d 123, 131-32 (Alaska
2000) (allowing UTPA claims related to alleged coercive trade practices by hospital to
go forward).
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B. The Superior Court's Attorney's Fee Award Was Unreasonable.
The superior court awarded Collens attorney's fees in accordance with
Alaska Civil Rule 82(b)(1) for his successful IIED and punitive damage claims. It then
determined attorney's fees for Collens's UTPA claim per AS 45.50.537(a), which states
that a prevailing private plaintiff in an UTPA action "shall be awarded costs as provided
by court rule and full reasonable attorney fees at the prevailing reasonable rate." The
superior court noted that we have not yet decided whether "full reasonable attorney fees"
under this provision can mean attorney's fees as defined by the prevailing party's
contingency fee agreement. The court concluded that defining attorney'sfees in this way
was consistent with the statute, so long as the contingency fee agreement in question was
reasonable.
The superior court found that the 45% contingency fee in the agreement
between Collens and his counsel was not a prevailing reasonable rate. The court
adjusted this down to a 40% contingency rate and used that to calculate the attorney's
fees for Collens's UTPA damages award. The court acknowledged that the resulting
24 but
award was nearly four times the award under Rule 82 proposed by Maxim,
concluded that the award was reasonable given the case's complexity and the effort and
quality of Collens's counsel's work.
Maxim challenges the superior court's construction of AS 45.50.537(a),
namely its conclusion that "full reasonable attorney fees" can be based on a contingency
fee agreement, rather than a calculation of the reasonable hours worked multiplied by a
reasonable hourly rate. We review the superior court's statutory construction de novo,25
24 $5,676,668.17 compared to $1,492,950.40.
25 Michael W. v. Brown, 433 P.3d 1105, 1109 (Alaska 2018).
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----------------------- Page 14-----------------------
26
considering the statute's language, legislative history, and legislative purpose.
Ultimately we reject its interpretation of the statute.
The UTPA's current attorney's fee language was adopted through a 1998
27 The committee minutes related to the amendment indicate that its drafters
amendment.
hoped to enhance UTPA enforcement by encouraging private litigation under the Act.28
The phrase "full reasonable attorney fees at the prevailing reasonable rate" was
specifically intended to ensure that attorney's fees for prevailing plaintiffs would not be
capped by Rule 82.29 Some legislators also suggested that the provision was inspired by
26 City of Valdez v. State, 372 P.3d 240, 248 (Alaska 2016).
27 Ch. 96, § 5, SLA 1998.
28 See Minutes, H. Labor & Commerce Standing Comm. Hearing on
H.B. 203, 20th Leg., 1st Sess. No. 1513 (Apr. 23, 1997) (comments of Rep. Dyson); id.
at No. 1889 (testimony of Daveed Schwartz, Assistant Att'y Gen.); Minutes, H. Judiciary
Standing Comm. Hearing on H.B. 203, 20th Leg., 2d Sess. No. 0763 (Feb. 9, 1998)
(comments of Rep. Dyson that "the problem has been with 'the small guy going after
Goliath' "); id. at No. 0847 (comments of Chairman Green "that a transaction for a
$2,000 car . . . could quickly go beyond $5,000 just in time, motions, and that sort of
thing").
29 For committee testimony comparing Rule 82 awards to the more generous
award expected under the amended attorney's fee provision's new language, see
Minutes, H. Labor & Commerce Standing Comm. Hearing on H.B. 203, 20th Leg.,
1stSess. No. 2146 (Apr. 23, 1997) (testimony of Daveed Schwartz, Assistant Att'y Gen.)
and Minutes, H. Judiciary Standing Comm. Hearing on H.B. 203, 20th Leg., 2d Sess.,
No. 0006 (Feb. 9, 1998) (comments of Rep. Croft).
Rule82establishesseveralcontext-dependent schedules for attorney's fees.
In cases where the prevailing party recovers no money judgment, the Rule requires the
court to award acertain percentage oftheprevailing party's"reasonableactual attorney's
fees" depending on whether the case went to trial. Alaska R. Civ. P. 82(b)(2). We have
held that since "[t]he purpose of Civil Rule 82 is to compensate partially a prevailing
(continued...)
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30
similar fee-shifting provisions in civil rights statutes.
The fee-shifting provision's legislative history indicates the intent to
encourage private lawsuits by providing more generous attorney's fee awards than those
available under Rule 82. But the legislative history does not indicate how legislators
intended courts to calculate "full reasonable attorney fees" under the statute. For
guidance we look to federal interpretation of the fee-shifting provisions in the Clayton
Act and civil rights statutes. The Clayton Act, like the UTPA, is a consumer protection
act providing a private right of action, and its fee-shifting provision's language is similar
31 Federal courts acknowledge that rules guiding interpretation of
to the UTPA's.
attorney's fee provisions in civil rights statutes apply to their interpretation of
"reasonable attorney's fee" under the Clayton Act.32 Moreover the legislative history of
29 (...continued)
party[,] . . . full attorney's fees are never awarded absent 'justification' and consideration
of the 'good faith' nature of the unsuccessful party's claim or defense." Heritage v.
Pioneer Brokerage &Sales, Inc., 604 P.2d 1059, 1065-66 (Alaska 1979) (quoting Malvo
v. J.C. Penney Co., 512 P.2d 575, 587 (Alaska 1973)).
30 Representative Dyson, for example, noted that the proposed legislation
"follows a practice learned during the civil rights era, when most people realized that
state attorney general's offices didn't have the resources, or perhaps the inclination, to
file . . . civil rights actions . . . . So, they allowed for, if you were successful in an action,
[ ]s fees and, therefore, the cost of bringing the
that you could recover your attorney '
action." Minutes, H. Judiciary Standing Comm. Hearing on H.B. 203, 20th Leg.,
2d Sess. No. 0577 (Feb. 9, 1998).
31 See 15 U.S.C. § 15(a) (2012) ("[A]ny person . . . injured . . . by reason of
anything forbidden in the antitrust laws may sue therefor . . . and shall recover threefold
the damages by him sustained, and the cost of suit, including a reasonable attorney's
fee.").
32 See, e.g., Copper Liquor, Inc. v. Adolph Coors Co., 624 F.2d 575, 581 (5th
(continued...)
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the UTPA's fee-shifting provision indicates it was at least partly inspired by those of
civil rights statutes. We also look to how courts in other jurisdictions have interpreted
fee-shifting provisions in similar consumer protection acts. After reviewing these
persuasive authorities, we conclude that the superior court's calculation of Collens's
attorney's fee award deviates from the norm likely intended by the statute.
Courts calculating reasonable attorney's fees under similar fee-shifting
33
provisions generally employ what we have called the "modified lodestar" method.
Trial courts following this approach first calculate a baseline attorney's fee award by
determining the reasonable number of hours the attorney worked and multiplying that
by a reasonable hourly rate.34 Courts then have the discretion to adjust this baseline
32 (...continued)
Cir. 1980) (citing Johnson v. Ga. Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974)
(adopting 12 factors used to determine reasonable attorney's fees in employment
discrimination law for attorney's fees disputes under Clayton Act), abrogated on other
grounds by City of Burlington v. Dague, 505 U.S. 557 (1992).
33 See State, Dep't of Health & Soc. Servs. v. Okuley, 214 P.3d 247, 253
(Alaska2009) (describing modified lodestar method); seealsoHensleyv.Eckerhart,461
U.S. 424, 433-34 (1983) (applying modified lodestar method to fee shifting under Civil
Rights Attorney's Fee Awards Act of 1976); Advanced Constr. Corp. v. Pilecki , 901
A.2d 189, 199 (Me. 2006) (stating that "when analyzing entitlement to attorney fees
pursuant to Maine consumer protection statutes . . . the methods of analysis courts use
in cases involving the federal civil rights attorney fee provision . . . are appropriate");
Furst v. Einstein Moomjy, Inc., 860 A.2d 435, 446-48 (N.J. 2004) (affirming modified
lodestar approachto fee-shifting provision in NewJersey'sconsumer protection statute).
34 See, e.g., Hensley, 461 U.S. at 433 ("The most useful starting point for
determining the amount of a reasonable fee is the number of hours reasonably expended
on the litigation multiplied by a reasonable hourly rate."); see also Okuley, 214 P.3d at
253 ("[A] court following the modified lodestar method first 'determines the number of
hours an attorney reasonably spent on the case and multiplies that number by a
(continued...)
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35
"lodestar" amount to arrive at the final fee award. They may consider a variety of
factors in calculating the lodestar and deciding whether to adjust it, including what we
have called the Johnson-Kerr factors:
(1) The time and labor required. . . .
(2) The novelty and difficulty of the questions
involved. . . .
(3) The skill requisite to perform the legal service
properly. . . .
(4) The preclusion of other employment by the attorney
due to acceptance of the case. . . .
(5) The customary fee. . . .
(6) Whether the fee is fixed or contingent. . . .
(7) Time limitations imposed by the client or the
circumstances. . . .
(8) The amount involved and the results obtained. . . .
(9) The experience, reputation, and ability of the
attorneys. . . .
(10) The "undesirability" of the case. . . .
34 (...continued)
reasonable hourly rate.' " (quoting Edwards v. Alaska Pulp Corp., 920 P.2d 751, 757
(Alaska 1996))).
35 See Okuley, 214 P.3d at 253; see also Hensley, 461 U.S. at 434 ("The
product of reasonable hours times a reasonable rate does not end the inquiry. There
remain other considerations that may lead the district court to adjust the fee upward or
downward, including the important factor of the 'results obtained.' "); Furst, 860 A.2d
at 447-48 (describing considerations trial court should make when determining whether
to adjust lodestar amount).
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(11) The nature and length of the professional relationship
with the client. . . .
(12) Awards in similar cases. [36]
Unlike the superior court's approach, the modified lodestar method does
not invite a situation in which fees could vary widely depending on the plaintiff's
recovery. We are convinced that Alaska courts should employ it when determining "full
reasonable attorney fees" under the UTPA's fee-shifting provision. We note, however,
that the modified lodestar approach we adopt today differs from that favored by the
United States Supreme Court. The U.S. Supreme Court has "held that an enhancement
[in the second step of the modified lodestar calculation] may not be awarded based on
a factor that is subsumed in the lodestar calculation."37 And some of the Court's
decisions strongly suggest that certain factors, including whether an attorney's fee is
fixed or contingent, are inherent to the considerations necessary for a lodestar
determination and thus may never serve as grounds for decrease or enhancement in the
second step of the modified lodestar calculation.38
36 Johnson, 488 F.2d at 717-19; see also Kerr v. Screen Extras Guild, Inc. ,
526 F.2d 67, 70 (9th Cir. 1975) (adopting these factors); Okuley, 214 P.3d at 251 n.13
(labeling these the " Johnson-Kerr factors").
37 Perdue v. Kenny A. ex rel. Winn, 559 U.S. 542, 553 (2010).
38 See City of Burlington v. Dague, 505 U.S. 557, 562 (1992) ("We note at the
outset that an enhancement for contingency would likely duplicate in substantial part
factors already subsumed in the lodestar."); Pennsylvania v. Del. Valley Citizens'
Council for Clean Air, 483 U.S. 711, 726 (1987) ("[I]t may well be that using a
contingency enhancement is superfluous and unnecessary under the lodestar approach
to setting a fee."); Blum v. Stenson, 465 U.S. 886, 898-901 (1984) (holding that
complexity of litigation, novelty of issues, high quality of representation, and benefit to
class were factors subsumed in lodestar calculation and thus insufficient justification for
(continued...)
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But the U.S. Supreme Court's interpretation of fee-shifting provisions in
federal statutes is not binding on our interpretation of the UTPA's fee-shifting provision.
And like other jurisdictions that have sought guidance in federal jurisprudence when
interpreting fee-shifting provisions in their own state statutes, we are not entirely
39 For one, we agree with the courts of
persuaded by the Court's reasoning in this area.
other jurisdictions, and the dissenting opinions of key U.S. Supreme Court cases, that a
contingency enhancement in the second step of the lodestar determination can provide
a "risk premium"necessary toinducecompetent counsel to litigate claims when payment
for legal services is contingent on success in the case.40 We thus leave it within the trial
court's discretion to consider the contingent nature of a fee agreement when calculating
an attorney's fee award under the modified lodestar approach, and to incorporate
38 (...continued)
enhancement of lodestar).
39
See, e.g., Schefke v. Reliable Collection Agency, Ltd., 32 P.3d 52, 94, 96
(Haw. 2001) (concluding that Dague 's and Delaware Valley 's dissenting opinions are
better reasoned than Dague 's majority opinion and therefore holding that contingency
enhancements of a lodestar are permissible); Rendine v. Pantzer, 661 A.2d 1202, 1228
(N.J. 1995) (holding that despite U.S. Supreme Court jurisprudence to the contrary, trial
courts should consider whether contingency enhancementsto a lodestar awardwill result
in a more reasonable attorney's fee).
40 See Del. Valley, 483 U.S. at 735-36 (Blackmun, J., dissenting); Ketchum
v. Moses , 17 P.3d 735, 744 (Cal. 2001); Joyce v. Federated Nat'l Ins. Co., 228 So. 3d
1122, 1130, 1132-33 (Fla. 2017); Schefke, 32 P.3d at 96-97; Rendine, 661 A.2d at
337-38; see also Blum, 465 U.S. at 903 (Brennan, J., concurring) (stating that permitting
lodestar enhancements to "compensate for the contingent nature of success, and thus for
the risk of nonpayment in a particular case" is "entirely consistent with [a] market-based
approach to hourly rates").
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----------------------- Page 20-----------------------
considerations about this factor into either the first or second step of the modified
lodestar calculation. 41
Here the superior court erred in its assessment of full reasonable attorney's
fees. It did not complete the first step in a modified lodestar determination: calculating
a baseline award based on an approximation of hours reasonably worked multiplied by
a reasonable hourly rate. We reverse the superior court's attorney's fee award and
remand for an award based on a reasonable rate for the services, as calculated using the
modified lodestar method outlined above. We note that the Johnson-Kerr factors are
similar to the factors we apply to determine reasonable attorney's fees in other situations
using Alaska Rule of Professional Conduct 1.5(a) and Alaska Bar Rule 35(a).42 The trial
41 As for the other factor, the U.S. Supreme Court has indicated may be
subsumed in the lodestar calculation, we need not determine at this time whether they
must always be incorporated in the first step of the modified lodestar approach.
However, we note our agreement with the statement in Hensley that trial courts
considering the Johnson-Kerr factors "should note that many of these factors usually are
subsumed within the initial calculation of hours reasonably expended at a reasonable
hourly rate." 461 U.S. at 434 n.9.
42 The factors are:
(1) the time and labor required, the novelty and difficulty
of the questions involved, and the skill requisite to perform
the legal service properly;
(2) the likelihood[] that the acceptance of the particular
employment will preclude other employment by the lawyer;
(3) the fee customarily charged in the locality for similar
legal services;
(4) the amount involved and the results obtained;
(continued...)
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court may draw on its experience with these factors when determining how to calculate
a baseline reasonable rate award and whether to enhance or decrease that baseline
amount.
C. We Affirm The Superior Court's Decision In All Other Respects.
1. It was not an abuse of discretion to preclude Maxim from
presenting expert testimony on damages at trial, and Maxim
failed to preserve this as an issue for appeal.
Maxim retained two expert witnesses - one to testify about Collens's
"claimed economic damages" and another to testify about his "medical treatment and
costs" - but did not disclose their reports before the deadline set by the superior court.
The court eventually issued an order precluding Maxim's experts from testifying at trial.
Maxim claims this was an abuse of discretion, but we do not agree.
As a threshold matter, Maxim did not preserve this issue because it never
filed the expert reports. Under Alaska Evidence Rule 103, error may not be predicated
on a ruling that excludes evidence unless "the substance of the evidence was made
known to the court by offer or was apparent from the context within which questions
42 (...continued)
(5) the time limitations imposed by the client or by the
circumstances;
(6) the nature and length of the professional relationship
with the client;
(7) the experience, reputation, and ability of the lawyer or
lawyers performing the services; and
(8) whether the fee is fixed or contingent.
Alaska R. Prof. Conduct 1.5(a); see also Nautilus Marine Enters., Inc. v. Exxon Mobil
Corp., 332 P.3d 554, 558 n.18 (Alaska 2014) (noting that these factors are listed in
"near-identical parallel" in Bar Rule 35(a)).
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----------------------- Page 22-----------------------
43
were asked." Under the Rule, "a party ordinarily 'waives its right to challenge the
exclusion of evidence unless an offer of proof as to the substance of the evidence is made
44 The purpose of the offer of proof requirement
at the time the evidence is excluded.' "
45
is to "resolve doubts as to what testimony the witness would have in fact given."
Maxim's January 2017 expert disclosure does not serve as an offer of proof because
without the substance of the proposed experts' testimony, it is impossible to determine
whether Maxim suffered any prejudice by its exclusion. By failing to file expert reports
with the superior court, Maxim waived this claim of error.
Even if Maxim had not waived the issue, we would affirm the superior
court's preclusion orders, for they were not an abuse of discretion. Alaska Civil
Rule 26(a)(2) mandates timely disclosure of expert witness reports. Alaska Civil Rules
16(f) and 37(c)(1) authorize the imposition of sanctions if a party fails to disclose
required information or fails to obey a pretrial order. Rule 37(c)(1) makes exclusion of
testimony the presumptive rule when evidence is not disclosed as required:
A party that without substantial justification fails to disclose
information required by Rule[] 26(a) . . . shall not, unless
such failure is harmless, be permitted to use as evidence at a
trial . . . any witness or information not so disclosed. In
addition to or in lieu of this sanction, the court, on motion
and after affording an opportunity to be heard, may impose
other appropriate sanctions.
43 Alaska R. Evid. 103(a)(2).
44 Muellerv.Buscemi , 230P.3d 1153, 1155 (Alaska2010) (quoting Agostinho
v. Fairbanks Clinic P'ship , 821 P.2d 714, 717 (Alaska 1991)).
45 Alaska R. Evid. 103 cmt. (quoting Fed. R. Evid. 103(b), Advisory
Committee's Notes to 1972 proposed rules).
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Trial courts generally have discretion to determine the appropriate sanction
for the violation of a discovery order, but this discretion is limited when the sanction's
effect "is to impose liability on the offending party, establish the outcome of or preclude
46 Here, precluding Maxim's
evidence on a central issue, or end the litigation entirely."
expert witness testimony did not entirely eliminate evidence on a central issue -Maxim
was free to interrogate Collens's expert witnesses through cross-examination after they
presented evidence on damages.47 In reviewing the superior court's discovery sanction
for abuse of discretion, we therefore grant it the wide latitude generally afforded trial
courts in these situations.
Under Civil Rule 37(c)(1), the trial court must generally exclude
undisclosed evidence unless there is substantial justification for the party's failure to
make timely disclosure and this failure is harmless. Here, Maxim's justification for the
delay was disputed by Collens, and weighing the parties' conflicting accounts against
one another, the court reasonably determined that Maxim's delay was unjustified.
Maxim's failure to produce expert reports was not harmless since, absent the sanction,
it would have unacceptably delayed an already oft-postponed trial. The superior court's
application of Rule 37(c)(1) was not an abuse of discretion.
46 Khalsa v. Chose , 261 P.3d 367, 372 (Alaska 2011) (quoting Sykes v. Melba
Creek Mining, Inc., 952 P.2d 1164, 1169 (Alaska 1998)). We review discovery
sanctions for abuse of discretion. Id .
47 See Cartee v. Cartee, 239 P.3d 707, 719-20, 722 (Alaska 2010) (affirming
the exclusion of expert witness testimony where the sanctioned party had an opportunity
to challenge and critique the opposition's expert).
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2. The damages award was not excessive.
Maxim raises multiple objections to the damages award. We address only
thosearguments that meritdiscussion and affirmthe superior court's award on all counts.
First the court's compensatory damages for breach of contract were not
excessive. Trial evidence established that Collens's medical condition is permanent and
that he will need full-time nursing care for his lifetime. The superior court calculated
Collens's breach of contract damages as the value of nursing care Maxim promised but
failed to provide; the past and future value of services Collens lost when he was
discharged from Maxim and forced to move to Washington state, where he was not
eligible for these services; and Collens's past and future out-of-pocket costs resulting
from his discharge and subsequent move to Washington.
We review a trial court's assessment of compensatory damages for clear
48
error,
upholding the award as long as the trial judge "follows the correct rules of law,
49 Collens's
and [the] estimation appears reasonable and is grounded upon the evidence."
plan of care might vary over his lifetime, but nothing in the record suggests that such
variations would create meaningful deviations from the court's estimated damages. And
no evidence establishes how to calculate and deduct from the estimated damages the
impact of other factors that Maxim alleges the court failed to consider. The superior
court's compensatory damages for breach of contract are not clearly erroneous.
Second damages for Collens's IIED claim were appropriate. Maxim
challenges the $400,000 in IIED damages, apparently on grounds that it was error for the
48 See Burton v. Fountainhead Dev., Inc. , 393 P.3d 387, 393 (Alaska 2017).
49 Pluid v. B.K. , 948 P.2d 981, 983 (Alaska 1997) (quoting Morrison v. State ,
516 P.2d 402, 405 (Alaska 1973)).
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----------------------- Page 25-----------------------
50
superior court to find that Collens suffered severe distress. We have defined severe
emotional distress as "distress of such substantial quality or enduring quantity that no
51 "In some
reasonable person in a civilized society should be expected to endure it."
cases, the circumstances surrounding a claim may be sufficient to persuade a jury that
the plaintiff has actually suffered serious emotional trauma."52 The symptoms Collens
described experiencing after learning of his premature discharge, corroborated by
testimony from his mother, doctor, and care coordinator, support the superior court's
finding that his emotional distress was severe, as do the circumstances of this stress.
Based on this record, it was not clear error for the superior court to conclude that these
elements of the tort were established.53 Compensatory damages for IIED were
warranted.
50 To prevail on an IIED claim, the plaintiff must show "(1) that the
defendant's conduct was extreme and outrageous, (2) that the conduct was intentional
or reckless, (3) that this conduct caused the plaintiff emotional distress, and (4) that the
distress was severe." Cameron v. Beard , 864 P.2d 538, 548 (Alaska 1993). Maxim also
contends that the statutory cap on non-economic damages in medical malpractice actions
should apply here. See AS 09.55.549. But this is not a medical malpractice action.
51 State v. Carpenter, 171 P.3d 41, 59 (Alaska 2007) (quoting Fyffe v. Wright,
93 P.3d 444, 456 (Alaska 2004)).
52 Chizmar v. Mackie, 896 P.2d 196, 205 (Alaska 1995).
53 "We review the superior court's factual findings for clear error, which
occurs when a review of the entire record leaves us with a definite and firm conviction
that a mistake has been made." See Offshore Sys.-Kenai v. State, Dep't of Transp. &
Pub. Facilities, 282 P.3d 348, 354 (Alaska 2012).
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Third the superior court's award of punitive damages was not erroneous.
To recover punitive damages, a plaintiff must establish that
the wrongdoer's conduct was outrageous, such as acts done
with malice or bad motives or a reckless indifference to the
interests of another. Actual malice need not be proved.
Rather, [r]eckless indifference to the rights of others, and
conscious action in deliberate disregard of them . . . may
provide the necessary state of mind to justify punitive
[54]
damages.
A trial court's determination that punitive damages are warranted must be supported by
clear and convincing evidence.55
The record provides ample support for the superior court's finding that
Maxim committed outrageous conduct demonstrating reckless indifference to Collens's
health and safety. Adkins admitted that she delivered Collens's discharge letter without
first speaking to his physician, that at the time of delivery she knew his care coordinator
did not consent to discharge, and that she knew of no alternative care providers for
Collens. Giventheseadmissions,Collens'sdischargedemonstrated disregardfor critical
54 Cummings v. Sea Lion Corp., 924 P.2d 1011, 1022 (Alaska 1996)
(alteration and omission in original) (quoting Barber v. Nat'l Bank of Alaska , 815 P.2d
857, 864 (Alaska 1991)).
55 Brandner v. Hudson, 171 P.3d 83, 89 (Alaska 2007); see also
AS 09.17.020. " 'Clear and convincing' evidence is evidence establishing that
something is 'highly probable.' " In re Reinstatement of Wiederholt, 89 P.3d 771, 772
n.6 (Alaska 2004) (quoting Denuptiis v. Unocal Corp., 63 P.3d 272, 275 n.3 (Alaska
2003)).
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health professionals' careassessments and recklessness as to Collens'sfuture health. We
affirm the punitive damages award. 56
Finally Collens was not required to elect his remedies as between punitive
and treble damages. "[E]lection of remedies is the choice by a party to an action of one
of two or more coexisting remedies or rights or theories of recovery[] arising out of the
same facts."57
Some jurisdictions implement election of remedies as a common law
doctrine and require plaintiffs to choose one of multiple potential remedies when those
remedies are "so inconsistent or repugnant that pursuit of one necessarily involves
negation of the other."58 In those jurisdictions plaintiffs who could claim both punitive
damages and consumer protection act treble damages for a single claim may be required
59 Courts in such jurisdictions reason that permitting
to choose between thetwo remedies.
receipt of both would allow "impermissible double recovery because the two forms of
56 Maximalso argues that thesuperior court's punitivedamagesaward should
be reversed because the court never held a separate proceeding to determine the punitive
damages amount, as required by AS 09.17.020. But Maxim failed to object to this error
in either of its post-trial motions responsive to the superior court's findings of fact and
conclusions of law. Failing to contemporaneously object to the superior court's
procedural error waives the issue for appeal. See Berry v. Berry , 277 P.3d 771, 775
(Alaska 2012).
57 28A C.J.S. Election of Remedies § 1, Westlaw (database updated
Mar. 2019).
58 E.g., Miller v. United Automax, 166 S.W.3d 692, 696-97 (Tenn. 2005)
(quoting Forbes v. Wilson Cty. Emergency Dist. 911 Bd., 966 S.W.2d 417, 421 (Tenn.
1998)).
59 Id. at 697.
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60
enhanced damages serve the same functions." Whether to adopt the election-of-
61
remedies doctrine is a question of law to which we apply our independent judgment.
We have not previously applied the election of remedies doctrine in a
context such as this one. But in Kenai Chrysler Center, Inc. v. Denison, we were asked
to determine whether UTPA treble damages are a form of punitive damages such that a
plaintiff waiving his claim for punitive damages also waives his right to treble damages
under the Act.62 We held that the UTPA authorizes individuals suing for treble damages
under the Act to also pursue "common law relief such as punitive damages."63 And we
noted that the UTPA's treble damages provision serves "important purposes" that
punitive damages do not.64 Given our precedent it was not error for the superior court
to conclude that Collens could claim both punitive and treble damages for the same
65 Our statements in Kenai indicate that the rationale behind the common law
conduct.
60 Id. (quoting Concrete Spaces, Inc. v. Sender, 2 S.W.3d 901, 906 (Tenn.
1999)).
61 See Mat-Su Valley Med. Ctr., LLC v. Advanced Pain Ctrs. of Alaska, Inc.,
218 P.3d 698, 700 (Alaska 2009); Beal v. McGuire, 216 P.3d 1154, 1162 (Alaska 2009).
62 167 P.3d 1240, 1259 (Alaska 2007).
63 Id. at 1260.
64 Id.
65 Collens argues that the damages awards were for different conduct. But the
superior court identified Maxim's UTPA violations as the false promises made in their
Patients' Rights document and their deceptive discharge of Collens. The discharge was
the basis for Maxim's IIED liability, and the false promises are the conduct the court
identified as misrepresentation. Even though the punitive damages flow from the IIED
and misrepresentation claims, they were awarded for the same conduct as the UTPA
(continued...)
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election of remedies doctrine - to avoid double recovery - does not apply here. We
decline Maxim's invitation to read the doctrine into the statute.
IV. CONCLUSION
We REVERSEthe superior court's attorney's feeaward andREMANDfor
an award consistent with this opinion. We AFFIRM the superior court's judgment on
all other issues.
65 (...continued)
treble damages, contrary to the superior court's statement otherwise.
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