United States District Court, D. South Carolina, Charleston Division
United States of America, et al., Plaintiffs, ex rel Scarlett Lutz, Plaintiffs-Relators,
Berkeley Heartlab, Inc., Defendants. Nos. 9:ll-cv-1593-RMG, 9:15-cv-2458-RMG
ORDER AND OPINION
Richard Mark Gergel United States District Court Judge
matter is before the Court on the United States' motion
to exclude the opinions in Sections II and VI of Jessica
Schmor's expert report proffered by BlueWave Healthcare
Consultants, Inc., Floyd Calhoun Dent, III, and Robert
Bradford Johnson (collectively, "the BlueWave
Defendants"). (Dkt. Nos. 441, 441-1.) For the reasons
set forth below, the motion to exclude is granted.
Government has filed a complaint in intervention against the
BlueWave Defendants and Latonya Mallory alleging violations
of the Anti-Kickback Statute ("AKS"), 42 U.S.C.
§ 1320a-7b(b), and the False Claims Act
("FCA"), 42 U.S.C. § 3729(a). (Dkt. No. 75.)
The alleged FCA violations arise from BlueWave's
marketing of laboratory tests for two laboratory companies,
Health Diagnostic Laboratory, Inc. ("HDL") and
Singulex, Inc. ("Singulex"), between 2010 and 2014.
The Government has alleged that Defendants violated the FCA
when they engaged in multiple kickback schemes to induce
physicians to refer blood samples to HDL and Singulex for
large panels of blood tests, many of which were medically
unnecessary. For example, the Government alleges that
Defendants offered and facilitated the payment of processing
and handling ("P&H") fees to physicians to
induce referrals, in violation of the AKS and FCA.
Legal Standard - Daubert
Rules 104(a) and 702, "the trial judge must ensure that
any and all scientific testimony or evidence admitted is not
only relevant, but reliable." Daubert v. Merrell Dow
Pharm., Inc., 509 U.S. 579, 589 (1993). The trial court
must ensure that (1) "the testimony is the product of
reliable principles and methods, " (2) "the expert
has reliably applied the principles and methods to the facts
of the case, " and (3) the "testimony is based on
sufficient facts or data." Fed.R.Evid. 702(b), (c), (d).
"This entails a preliminary assessment of whether the
reasoning or methodology underlying the testimony is
scientifically valid, " Daubert, 509 U.S. at
592-93, and whether the expert has "faithfully appl[ied]
the methodology to facts." Roche v. Lincoln Prop.
Co., 175 F.App'x 597, 602 (4th Cir. 2006). To make
this determination, Courts consider several factors,
including "whether a theory or technique . . . can be
(and has been) tested, " "whether the theory or
technique has been subjected to peer review and publication,
" the "known or potential rate of error, " the
"existence and maintenance of standards controlling the
technique's operation, " and whether the theory or
technique has garnered "general acceptance."
Daubert, 509 U.S. at 593-94; accord United
States v. Hassan, 742 F.3d 104, 130 (4th Cir. 2014).
However, these factors are neither definitive nor exhaustive,
United States v. Fultz, 591 F.App'x 226, 227
(4th Cir. 2015), and "merely illustrate the types of
factors that will bear on the inquiry." Hassan,
742 F.3d at 130.
have also considered whether the "expert developed his
opinions expressly for the purposes of testifying, "
Wehling v. Sandoz Pharms. Corp., 162 F.3d 1158 (4th
Cir. 1998), or through "research they have conducted
independent of the litigation, " Daubert v. Merrell
Dow Pharms., Inc., 43 F.3d 1311, 1317 (9th Cir.
1995) (on remand), and whether experts have "failed to
meaningfully account for . . . literature at odds with their
testimony." McEwen v. Bait. Wash. Med. Ctr.
Inc., 404 F.App'x 789, 791 (4th Cir. 2010).
702 also requires courts "to verify that expert
testimony is 'based on sufficient facts or
data."' EEOC v. Freeman, 778 F.3d 463, 472
(4th Cir. 2015) (quoting Fed.R.Evid. 702(b)). Thus,
"trial judges may evaluate the data offered to support
an expert's bottom-line opinions to determine if that
data provides adequate support to mark the expert's
testimony as reliable." Id. The court may
exclude an opinion if "there is simply too great an
analytical gap between the data and the opinion
offered." Id. (internal citations and
quotations omitted). "The proponent of the [expert]
testimony must establish its admissibility by a preponderance
of proof." Cooper v. Smith & Nephew, Inc.,
259 F.3d 194, 199 (4th Cir. 2001).
Court is mindful that the Daubert inquiry involves
"two guiding, and sometimes competing, principles."
Westberry v. Gislaved Gummi AB, 178 F.3d 257, 261
(4th Cir. 1999). "On the one hand, . . . Rule 702 was
intended to liberalize the introduction of relevant expert
evidence, " id., and "the trial
court's role as a gatekeeper is not intended to serve as
a replacement for the adversary system." United
States v. Stanley, 533 F.App'x 325, 327 (4th Cir.
2013) cert. denied, 134 S.Ct. 1002 (2014). On the
other hand, "[b]ecause expert witnesses have the
potential to be both powerful and quite misleading, ' it
is crucial that the district court conduct a careful analysis
into the reliability of the expert's proposed
opinion." United States v. Fultz, 591
F.App'x 226, 227 (4th Cir. 2015).
United States has disclosed expert reports from Kathy
McNamara, opining on the commercial reasonableness of
Defendants' offering P&H fees to physicians and the
fair market value of P&H fees, and Eric Hines,
calculating the damages to the United States resulting from
the alleged false claims. The Blue Wave Defendants have
proffered Jessica Schmor, a nurse and professional coder, to
"examine [Hines's and McNamara's] implicit and
explicit coding opinions." (Dkt. No. 473 at 1.) Schmor
states that her expert opinion is limited to "coding,
billing and reimbursement of the [Current Procedural
Terminology] Code 99000 - handling and/or conveyance of
specimen for transfer from the office to a laboratory."
(Dkt. No. 441 at 3.) Specifically, she intends to testify as
to the following four opinions:
(1) The non-payment of Code 99000 is a payment policy, and
the costs are not included in the evaluation and management
(2) Physicians are ultimately responsible for their claims
(3) Code 99000 billed by physicians should not have resulted