United States of America et al v. Bluewave Healthcare Consultants Inc et al

Filing 550

ORDER AND OPINION granting 444 the Government's Motion to Exclude the expert testimony of Jennifer Bolen. AND IT IS SO ORDERED. Signed by Honorable Richard M Gergel on 7/21/2017.(sshe, )

IN THE UNITED STATES DISTRICT coimt{!VHJ CLERK'S OFFICE
DISTRICT OF SOUTH CAROLINA
CHARLESTON DIVISION
ZOil JUL 2lt 1 A g: 3b

United States of America, et al.,
Plaintiffs,
ex rel. Scarlett Lutz, et al.,

Plaintiffs-Relators,
v.

Berkeley Heartlab, Inc., et al.,

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Civil A~tion No, ~:14~~~dP+c:Wl.Nr1JJ,:
(Consolidated with 9:U-cv7aP9~:-R:MG and
9:15-cv-2458-RMG)

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ORDER and OPINION

Defendants.
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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 Blue Wave 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
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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.
BlueWave 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. 4441.) 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.
II.

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
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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

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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 BlueWave 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

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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 collection stations; and (3)
utilization of an internal framework for specimen handling. (Dkt. No. 444-1 at 8-10.)
Bolen relies on national average charges from Find-a-Code's "Map-a-Code" tool, a
commercial website that purports to provide physicians' average Medicare charge amounts by
code and by year. (Dkt. No. 444-1 at 8.) Relying on this charge data, Bolen concludes that the
P&H fees HDL and Singulex paid for collection by physician office personnel were
commercially reasonable because "the average charges are all within the fee spread paid by
HDL and/or Singulex." (Dkt. No. 444-1at8.) Relying on the average charge data, she reached
the same conclusion for the fees HDL and Singulex paid for free standing specimen collection
stations. Bolen's commercial reasonableness opinion relies almost entirely on an average
charge analysis. Bolen acknowledged that she did not consider "what [physicians] have been
paid." (Dkt. No. 444-3 at 46.) For the reasons outlined in this Court's order granting the
motion to exclude Curtis Udell's expert testimony (Dkt. No. 527), a charge-based analysis is
not a reliable methodology for determining the fair market value of physician services. A
commercial reasonableness opinion that relies primarily on a charge-based fair market value
analysis is likewise inadmissible.
b. The Portions of Bolen's Commercial Reasonableness Opinion that Do Not
Rely on a Charge-Based Analysis are Inadmissible
Only a few lines of Bolen's commercial reasonableness opinion suggest that she
considered data outside of the average charges from the "Map-a-Code" tool. For example, she
noted that "in some cases" HDL or Singulex purchased time and services from business
competitors, which she says would "justify" a higher P&H fee. Bolen also writes that "the
regulatory framework" for specimen collection, "especially for advanced cardiac/metabolic

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panels" "further demonstrate[s] the commercial reasonableness of the payment framework."
(Dkt. No. 444-1 at 9-10.) It is not clear whether Bolen is asserting that these circumstances (a)
justify fees that are consistent with the average charges she identified or (b) justify fees that are
higher than the average charges she identified. If she intended to assert the latter, she failed to
explain how she determined that these practices were not already accounted for by the average
charge analysis. Bolen's opinion is inadmissible because it is not based on sufficient facts or
data, and it appears to use the fatally-flawed average-charge data as a baseline.
i. Laboratory Test Methodologies
Bolen also challenges McNamara's opinion that the P&H fee framework HDL and
Singulex used to pay physicians was not commercially reasonable because the laboratories only
paid P&H fees when physicians ordered panels of tests, not when physicians ordered single tests.
Bolen claims that McNamara's analysis failed to consider the "test methodologies" and clinical
utility oftest panels. (Dkt. No. 444-1 at 11.)
Bolen asserts that it would be commercially reasonable for a lab to pay physicians P&H
fees for a panel of several tests because the various tests require "different laboratory test
methodologies." (Dkt. No. 444-1 at 12.) She provides no explanation as to how the testing
methodologies used by the laboratories have any impact on a physician's P&H costs for
collecting and transporting specimens to the laboratories. Although the Court might surmise that
P&H costs for a panel may be higher due to the need for more tubes or labels, Bolen has not
provided sufficient facts or data to support the conclusion that it is commercially reasonable to
charge a P&H fee for a panel and not a single test.
ii. Clinical Utility of the Profile

Bolen's expert report includes a brief discussion outlining her opinion that the Advanced
Cardiovascular/Metabolic Test Profile (the "Profile") relevant to this case "served a clinical
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purpose." (Dkt. No. 444-1 at 12.) Bolen is unqualified to provide an expert opinion about the
clinical utility of the Profile because she possesses absolutely no knowledge about the Profile,
including under what circumstances a doctor might order any of the individual tests included in
the Profile (e.g., a patient's symptoms or medical history). (Dkt. No. 444-3 at 66-68.) During her
deposition, Bolen reminded the deposing attorney that she was "not a physician" and indicated
that she would need to consult a physician to answer any questions about the tests included in the
Panel. (Id.)
Even if Bolen were qualified to offer an opinion on the clinical utility of the Profile, the
opinion she has provided is a complete non-sequitur. Her opinion is brief, so the Court has
excerpted it here in full:
McNamara's suggestion that HDL/Singulex tied the P&H fees to the Profile so
that physicians would order pre-bundled test panels instead of a single test is
misplaced. In my years of experience auditing clinical laboratory claims, I know
that physicians typically order pre-bundled laboratory test profiles (multiple tests)
instead of a single laboratory test because the profile or bundle combines tests
necessary to give the physician a complete clinical picture of the patient's medical
condition. Thus, laboratory test profiles are commonly used in the clinical
laboratory industry to meet the clinical needs of their physician clients. The
Profile likely had significant clinical utility to ordering physicians separate and
apart from the value of the P&H fees. In my opinion, and based on the items I
have reviewed to date, HDL and Singulex encouraged healthcare providers to
request the Profile when necessary for the care of their patients. The healthcare
provider was free to modify his/her decision at any time. The P&H fees were
commercially reasonable and appropriate, separate and apart from the value of the
referrals. HDL and Singulex structured the Profile to serve a clinical purpose for
its customers; [t]his is what laboratories do.
(Dkt. No. 444-1 at 12.) Bolen's assertion that test panels can be clinically useful because they
may provide full picture of a patient's medical status does not support her conclusion that this
Profile "likely" has clinical utility. 1 (Dkt No. 444-1 at 1.) Bolen' s opinion about the clinical

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The Blue Wave defendants have also asked the Court to take judicial notice that the lab tests at
issue have "clinical utility and efficacy." (Dkt. No. 477 at 20, n.5.) The BlueWave defendants
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utility of the Profile is not admissible because she is not qualified to give the opinion, her opinion
is not based on sufficient facts or data, and there is too great an analytical gap between the data
and the opinion provided.
For the reasons above, the Court concludes that Bolen's commercial reasonableness
opinion is overwhelmingly based on a fair market value analysis that relies on physician charges.
The portions of her report that do not rely on an average charge analysis are inadmissible
because they are not based on sufficient facts or data.
c. Zero-Balance Billing

Bolen's report also includes her opinion about the allegations in the complaint that
Defendants improperly waived Tricare's copayments and deductibles. (Dkt. No. 444-1 at 5-7.)
Bolen says she attempts only to "address the issues of patient responsibility in general terms."
(Id. at 5.) Bolen's actual opinion on this issue appears in the section titled "Application to

HDL/Singulex" in which she concludes that HDL's requisition form, which contains language
advising patients of their financial responsibilities with regard to copayments and deductibles, is
consistent with industry standards for notification of patient responsibility for these payments.
(Dkt. No. 444-1 at 7.) It is not clear whether Bolen's opinion is the product of any particular
methodology, that she reliably applied that methodology to the facts of this case, or that she
relied on sufficient facts or data. As she was unable to speak to the laboratories' actual payment
policies and practices during her deposition, she does not appear to have applied any
methodology to the facts of this case. Bolen cannot provide expert testimony about what
constitutes "industry practice" for notification about patient responsibility in the context of a
did not identify which specific tests they were referring to with regard to this request. The Court
declines to take judicial notice of the clinical utility or efficacy of any tests relevant to this
lawsuit because, for the reasons explained by the Government in its brief, the Court does not
have enough information to make this determination. (Dkt. No. 486 at 2-3.)

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particular payment policy when she has no knowledge about the payment policy at issue. For this
and the other reasons outlined in the Government's brief, Bolen's opinion on patient notification
practices is inadmissible because it is not based on sufficient facts or data and there is too great
an analytical gap between the data relied on and the conclusion reached. (Dkt. No. 444 at 16-17.)
Her opinion provides so little supporting data and context that it is likely to confuse a jury.
IV.

Conclusion

For the reasons set forth above, the Government's motion to exclude the expert testimony
of Jennifer Bolen (Dkt. No. 444) is GRANTED.
AND IT IS SO ORDERED.

United States District Court Judge
July -3::.__L, 2017
Charleston, South Carolina

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