United States District Court, D. South Carolina, Charleston Division
ORDER AND OPINION
RICHARD MARK GERGEL UNITED STATES DISTRICT COURT JUDGE.
matter is before the Court on the United States' motion
to exclude the testimony of Daniel Mulholland, III, an expert
proffered by BlueWave Healthcare Consultants, Inc., Floyd
Calhoun Dent, III, and Robert Bradford Johnson (collectively,
"the BlueWave Defendants"). (Dkt. No. 442.) The
BlueWave Defendants have filed a response in opposition to
the Government's motion. (Dkt. No. 474). 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.
§ l32Oa-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. The Government alleges that the kickback schemes
violated the Anti-Kickback Statute, resulted in false claims
submitted to the Medicare and TRICARE programs, and caused
the Government to pay HDL more than $330 million.
Blue Wave Defendants have proffered Daniel Mulholland, III,
as an expert witness. Mulholland is an attorney who "has
advised clients for over 30 years whether the relevant
federal healthcare programs allow or disallow certain
practices." (Dkt. No. 474 at 1.) The Blue Wave
Defendants say Mulholland will "apply an accepted
methodology in his field-review of relevant executive
guidance documents-to opine whether such documents would have
put [the BlueWave Defendants] and/or their attorneys on
notice that the relevant federal healthcare authorities
considered a specific practice-process and handling fees paid
by a laboratory- implicated or violated the Anti-Kickback
statute." (Dkt. No. 474 at 1.) Mulholland will opine
that the BlueWave Defendants had "no reason to know
that" their conduct violated the AKS which they claim is
a "factual issue" relevant to whether they had the
necessary scienter to violate the FCA. (Dkt. No. 474 at 5-6.)
Government seeks to exclude Mulholland's testimony based
on Federal Rules of Evidence 104(a), 401, 402, 403, 702, and
703, arguing that Mulholland's testimony would
"usurp the role of the Court to instruct on the law and
the jury's role to apply the facts to the law, " and
is based on unreliable methods and insufficient facts. The
Government further argues that Mulholland's opinion,
"that the BlueWave Defendants would have no reason to
know that paying compensation to physicians for laboratory
process and handling fees would violate the Anti-Kickback
Statute until 2014, " is based on unreliable methodology
because Mulholland limited the evidence he reviewed to reach
his opinion to a limited class of documents rather than the
full range of information available to the Blue Wave
Defendants. (Dkt. Nos. 442 at 5-10; 442-1 at 2.)
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. Courts 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, 791-92 (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. "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).
False Claims Act Liability
test for False Claims Act liability is (1) whether there was
a false statement or fraudulent course of conduct; (2) made
or carried out with the requisite scienter; (3) that was
material; and (4) that involved a "claim, " because
it caused the government to pay out money or to forfeit
moneys due. 31 U.S.C.A. § 3729 et seq.; Harrison v.
Westinghouse Savannah River Co., 176 F.3d 776
(4th Cir. 1999). Claims that include items or services
resulting from a violation of the AKS are false or fraudulent
under the FCA. 42 U.S.C. §1320a-7b(g). The Government
bears the burden of showing that Defendant acted with the
requisite scienter which, under the FCA, is "knowingly,
" meaning with actual knowledge, deliberate ignorance,
or reckless disregard of the truth or falsity of the
information. 31 U.S.C. § 3729(a).