Mayor, former mayor challenge settlement of class-action lawsuit against Logan Health

Logan Health has agreed to settle a class-action lawsuit stemming from a 2021 data breach, but a pair of prominent Flathead Valley residents are objecting to its terms, saying that the arrangement amounts to a bigger win for attorneys than the victims.

Kalispell Mayor Mark Johnson and former Mayor Tammi Fisher, represented by Bozeman-based attorney Matthew Monforton, filed their objections in Cascade County District Court last week. With the four firms representing the plaintiffs requesting a 33.33% fee award, they stand to pull in an estimated $1.43 million of the $4.3 million Logan Health agreed to set aside in a settlement fund, according to an objection filed by Monforton.

“The proposed settlement is certainly not a ‘phenomenal’ result for the class members,” Monforton wrote. “Many of them might not recover a dime.”

“The only people who will benefit phenomenally under the proposed settlement agreement are class counsel — $1.43 million for a few weeks of work,” he added.

A flurry of firms filed lawsuits against Logan Health following the 2021 breach, just the latest for the hospital system in recent years. Although occurring in November of that year, patients learned about the breach from a February 2022 letter signed by Craig Lambrecht, Logan Health CEO.

Hospital officials learned of the breach after evidence of outside access to a file server used for business operations surfaced. By Jan. 5, an investigation determined outside actors accessed patient files, though not medical records.

The hospital system suffered a previous data breach in 2019 that led to a $4.2 million settlement in 2020.

In response to the 2021 breach, Logan Health offered affected patients a year of identity monitoring services and officials said the hospital system had adopted additional safeguards to protect client data.

Still, lawyers from multiple firms filed suits in several local venues, including Flathead County District Court, and in federal court. By the summer of 2022, a judge in Cascade County had appointed four firms as interim class counsel. After meeting with Logan Health, the parties agreed upon the $4.3 settlement July 19, according to court documents.

IN HIS objection, Monforton employed a multifaceted argument starting with what he deems an outsized award heading to the attorneys in a straightforward and quickly resolved case. Courts can choose between a percentage fee or what’s known as a lodestar method, which multiples the hours spent on the case by the hourly rate in the community, he wrote.

Moving ahead with the percentage model represents a “seven-figure fee for a few weeks of work,” Monforton argued.

The attorneys leading the case also have thus far omitted any billing data, he wrote. That leaves the court unable to determine which of the two methods is more applicable given the circumstances of the litigation.

In his filing, Monforton assumes the case generated, at most, about 300 billable hours for the firms. He estimates the proposed fee scheme represents a billing rate of nearly $5,000 an hour.

“And they would be paid first — thousands of class members, on the other hand, might receive no recovery at all,” he wrote.

He also notes the relative ease the firms would have had in handling the case, which he described as a clone of an earlier class-action suit against Logan Health for a data breach. Several of the firms involved in this latest suit also acted as a class counsel in that case.

“[They] did not have to reinvent the wheel,” Monforton wrote.

In their motion for attorney’s fees, representatives of the four firms — two are based in Montana, one in Florida and another in Pennsylvania — argued they spent hours mediating with Logan Health only to be followed with lengthy negotiations on the terms of the settlement. They described the case as complex and their results “excellent.”

“In addition to the non-reversionary cash settlement fund, the settlement also promises significant remedial measures that are narrowly tailored to help prevent a breach like this from occurring again,” reads the plaintiff’s motion for fees. “This is a phenomenal result and well in-line with any other national data breach cases settlement on record.”

Monforton, though, argues the fee the firms seek goes beyond what is customarily awarded in Cascade County, the risk of coming away without any financial recovery was low and the class members appear poised to be victimized again by their own attorneys.

Monforton also raises the specter of collusion between the firms representing the patients and the hospital system. There exists the possibility Logan Health agreed to work with the four firms because they offered the most lenient terms in exchange for going along with their proposed fee scheme, he argued.

“This court is obliged to rigorously examine this proposed settlement,” Monforton wrote.

ALONG WITH the objection, Monforton has filed a motion for discovery. That document asks that the attorneys representing the class members turn over all timesheets, billing records or any other records related to the request for the award.

It requests the same for any expenses claimed while working on the lawsuit and any information regarding the hospital systems’ insurance coverage as it relates to the damages stemming from the data breach.

And it seeks records of any communication between the attorneys and Logan Health as well as anyone who served as a mediator between the parties.

Monforton, in an interview, said the judge has set a hearing for both sides to make their arguments. The results of the request for discovery should prove helpful in providing the court with suggestions, Monforton said.

While neither Johnson nor Fisher could be reached for comment, Monforton said the pair deemed the settlement agreement unfair as it shunted a bulk of the funds to the attorneys involved.

“$1.43 million for a few weeks of work is an unfair windfall, which will devour much of the recovery for the victims in this matter,” Monforton said. “Mayor Johnson is very concerned about the people of his community — most of the class members are members of his community — and he is deeply concerned about much of their recovery being devoured by windfall attorney fees.”

News Editor Derrick Perkins can be reached at 758-4430 or dperkins@dailyinterlake.com.