Saint Alphonsus Medical Center - Nampa et al v St Luke's Health System Ltd

Filing 356

MEMORANDUM DECISION AND ORDER denying 172 Motion in Limine To excludetestimony of Ahern. Signed by Judge B. Lynn Winmill. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (cjm)

UNITED STATES DISTRICT COURT
IN THE DISTRICT OF IDAHO
SAINT ALPHONSUS MEDICAL CENTER NAMPA, INC., TREASURE VALLEY
HOSPITAL LIMITED PARTNERSHIP,
Case No. 1:12-CV-00560-BLW (Lead
SAINT ALPHONSUS HEALTH SYSTEM,
Case)
INC., AND SAINT ALPHONSUS
REGIONAL MEDICAL CENTER, INC.
MEMORANDUM DECISION AND
ORDER
Plaintiffs,
v.
ST. LUKE’S HEALTH SYSTEM, LTD.
Defendant.
FEDERAL TRADE COMMISSION; STATE
OF IDAHO

Case No. 1:13-CV-00116-BLW

Plaintiffs,
v.
ST. LUKE’S HEALTH SYSTEM, LTD.;
SALTZER MEDICAL GROUP, P.A.
Defendants.

INTRODUCTION
The Court has before it a motion to exclude certain testimony from defense expert
Lisa Ahern. The motion is fully briefed and at issue. For the reasons explained below,
the Court will deny the motion.

Memorandum Decision & Order – page 1

LEGAL STANDARD
Under Federal Rule of Evidence 702, this Court may exercise discretion to allow
expert testimony if the testimony (1) “will help the trier of fact to understand the
evidence or to determine a fact in issue;” (2) “is based on sufficient facts or data;” (3) “is
the product of reliable principles and methods;” and (4) the expert “has reliably applied
the principles and methods to the facts of the case.” Rule 702 requires this Court to
determine that the expert testimony “both rests on a reliable foundation and is relevant to
the task at hand.” Primiano v. Cook, 598 F.3d 558, 564 (9th Cir.2010) (quoting Daubert
v. Merrell Dow Pharm., 509 U.S. 579, 597 (1993)). “Expert opinion testimony is
relevant if the knowledge underlying it has a valid connection to the pertinent inquiry.
And it is reliable if the knowledge underlying it has a reliable basis in the knowledge and
experience of the relevant discipline.” Id. at 565.
Because this is a bench trial “there [is] little danger under the circumstances that
the court [will be] . . . unduly impressed by the expert’s testimony or opinion,” and the
Court can give “it the weight [the Court feels] it deserved.” Shore v Mohave County,
State of Ariz., 644 F.2d 1320, 1322-23 (9th Cir. 1981).
ANALYSIS
St. Luke’s will call Ms. Ahern to provide expert testimony on, among other things,
the financial impact on Saltzer if its acquisition by St. Luke’s is undone. Plaintiffs have
moved to preclude Ms. Ahern from testifying on two issues: (1) the ability of an
unwound Saltzer to successfully recruit additional physicians; and (2) her opinion that an
unwound Saltzer would be “far less competitive” in the event of a divestiture than it had
Memorandum Decision & Order – page 2

been prior to its affiliation with St. Luke’s. Plaintiffs argue that Ms. Ahern lacks the
requisite expertise to offer these opinions.
The Court begins its analysis by identifying those portions of Ms. Ahern’s
testimony that are not being challenged by plaintiffs. Plaintiffs concede that Ms. Ahern
has sufficient expertise to (1) conduct her financial analysis of the reduced revenues and
increased costs she estimates would be faced by an unwound Saltzer, and (2) critique the
referral analyses and projections performed by St. Al’s witnesses. See Plaintiffs’ Brief
(Dkt. No. 173) at p. 1.
Ms. Ahern begins her analysis with these unchallenged opinions. She estimates
that if Saltzer is unwound, compensation for the remaining Saltzer physicians will drop
by 36% (when compared to 2012 compensation) due to the loss of 13 physicians. See
Ahern Report (Dkt. No. 173-1) at ¶ ¶ 179, 217. These reductions, she opines, will drop
Saltzer compensation below “regional norms.” Id. at ¶ 218. For example, she describes
one specific Saltzer physician who in 2012 was above the 50th percentile for
compensation in his area, and she estimates that his compensation will drop below the
25th percentile. Id. at ¶ 218. This will make Saltzer appear to be a “struggling practice,”
according to Ms. Ahern.
Plaintiffs do not challenge this analysis. But they do object to the conclusions Ms.
Ahern draws from this analysis concerning recruiting and competitiveness. She
summarized her conclusions as follows: “The decreased compensation levels will likely
negatively affect future recruiting efforts as post-unwound Saltzer physician
compensation is generally even less when compared to regional medians than it was prior
Memorandum Decision & Order – page 3

to the Saltzer Affiliation, making Saltzer a less competitive employer than it would have
been before the departed physicians left Saltzer.” Id. at ¶ 232 (emphasis added).
Ms. Ahern did not pull her opinion on recruitment out of thin air. Her report
contains a footnote reference to testimony from William Savage, the CEO of Saltzer, who
testified that Saltzer had difficulties recruiting even under the 2012 compensation levels.
Id. at n. 262. Savage confirmed that testimony during this trial when he described in
depth the difficulties Saltzer would have in recruiting physicians if this deal is unwound.
See Trial Testimony (Oct. 17, 2013).
It is true that Ms. Ahern stated in her deposition that “I am not a physician
recruiter.” See Ahern Deposition (Dkt. No. 173-3) at p. 32. But she also described how
in her past experience, she “did work through with the clients their plans for recruitment.”
Id. Her resume, which is not challenged, shows extensive experience advising clients
about the financial impacts of hospital mergers. In this work, she evaluated whether
additional physicians “could be recruited given the joint organization.” Id. at 20. While
she has never recruited physicians, she has experience in advising clients about
recruitment issues arising in hospital mergers. From her experience detailed above, she
has the expertise to testify regarding those matters.
With regard to competitiveness, the Court does not interpret her opinions as being
broad-based legal opinions taking into account all the factors that go into
competitiveness. Her testimony is narrower, focusing on the effect of a reduction in
revenue that will cause Saltzer to struggle in attracting recruits. This will, in her opinion,
make Saltzer less competitive than it might have been if revenues were higher and
Memorandum Decision & Order – page 4

recruitment more robust. This testimony relies on her long experience in the health care
industry that allows her to make the comparison she makes here. The Court cannot find
it objectionable.
For all of these reasons, the Court will deny the motion.
ORDER
In accordance with the Memorandum Decision above,
NOW THEREFORE IT IS HEREBY ORDERED, that the motion to exclude
testimony of Ahern (docket no. 172) is DENIED.

DATED: October 18, 2013

_________________________
B. Lynn Winmill
Chief Judge
United States District Court

Memorandum Decision & Order – page 5