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United States v. Berkeley Heartlab, Inc.

United States District Court, D. South Carolina, Charleston Division

July 24, 2017

United States of America, et al., Plaintiffs,
Berkeley Heartlab, Inc., Defendants. ex rel Scarlett Lutz, Plaintiffs-Relators,



         This matter is before the Court on the United States' motion to exclude Jennifer Bolen's expert testimony proffered by Blue Wave Healthcare Consultants, Inc., Floyd Calhoun Dent, III, and Robert Bradford Johnson (collectively, "the BlueWave Defendants"). (Dkt. No. 444.) For the reasons set forth below, the motion to exclude is granted.

         I. Background

         The 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. The P&H fees - which purportedly covered physicians' processing, handling and shipping of blood specimens for laboratory diagnostic testing - were paid pursuant to written P&H fee agreements between HDL and Singulex and the physicians or their practices. Blue Wave marketed HDL and Singulex lab testing services to physicians pursuant to written sales agreements with the two laboratories.

         The United States has proffered Kathy McNamara to provide an expert opinion about the commercial reasonableness of Defendants' offering P&H fees to physicians and about the FMV of those P&H fees. The Blue Wave Defendants have proffered Jennifer Bolen's expert testimony in response to McNamara's report. Bolen's report includes opinions about (1) the commercial reasonableness of the P&H fees (Dkt. No. 477 at 2); (2) the clinical utility of HDL and Singulex's lab tests; and (3) the zero-balance billing allegations in the complaint. (Dkt. No. 444-1.) The parties disagree about whether Bolen has the requisite qualifications to provide these opinions. (Dkt. Nos. 477 at 3-9; 444 at 3-6.) All of Ms. Bolen's opinions fail to meet the Rule 702 requirements for admissible expert testimony, so the Court has not considered the particulars of Bolen's various professional affiliations and her prosecutorial misconduct.

         Legal Standard - Daubert

         Under 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) - (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: (1) "whether a theory or technique . . . can be (and has been) tested"; (2) "whether the theory or technique has been subjected to peer review and publication"; (3) the "known or potential rate of error"; (4) the "existence and maintenance of standards controlling the technique's operation"; and (5) 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) (quoting United States v. Crisp, 324 F.3d 261, 266 (4th Cir. 2003)), and "merely illustrate[] the types of factors that will bear on the inquiry, " Hassan, 742 F.3d at 130 (quoting Crisp, 324 F.3d at 266).

         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 (4th Cir. 2010).

         Rule 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).

         The 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), (citing Fed.R.Evid. 702 advisory committee's note), 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." Fultz, 591 F.App'x at 227 (quoting Cooper, 259 F.3d at 199).

         III. Discussion

         a. Bolen's Commercial Reasonableness Opinion is Inadmissible Because it Relies on an Average Charge Analysis

         Bolen's opinion about the commercial reasonableness of the P&H fees that the laboratories paid to physicians appears to be the focus of her report. The Government argues that Bolen's commercial reasonableness opinion is inadmissible because it inappropriately relies on a charge-based methodology. According to the Blue Wave defendants, Bolen's commercial reasonableness opinion merely "included an FMV analysis" (Dkt. No. 477 at 2), and she "referenced and relied in part on a charge methodology as a component of her [commercial reasonableness] analysis and opinion." (Dkt. No. 477 at 10.)

         The commercial reasonableness section of Bolen's report is titled "HDL and Singulex's P&H Fees were Commercially Reasonable Based on an Average Charge Analysis." (Dkt. No. 444-1 at 7.) In that section, Bolen outlines what she believes are the commercially reasonable fee ranges for each of the three methods available to HDL and Singulex for specimen collection: (1) collection by physician office personnel; (2) free-standing specimen ...

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