United States of America et al v. Bluewave Healthcare Consultants Inc et al
ORDER AND OPINION The Court has reconsidered its prior Order (Dkt. No. 736 ) on the Government's Motion in Limine with respect to the testimony of treating physicians not disclosed as experts. Those physicians may testify consistent with the findings in this Order. AND IT IS SO ORDERED. Signed by Honorable Richard M Gergel on 12/1/2017.(sshe, ) Modified docket text to correct document link on 12/1/2017 (sshe, ).
IN THE UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH CAROLINA
United States of America, et al.,
ex rel. Scarlett Lutz, et al.,
Berkeley Heartlab, Inc., et al.,
Civil Action No. 9: 14-cv-00230-RMG
(Consolidated with 9:11-cv-1593-RMG and
ORDER and OPINION
This matter is before the Court on the BlueWave Defendants' Motion for Clarification
(Dkt. No. 763) of this Court's prior Order on the Government' s Motions in Limine (Dkt. No.
736). The Court has reconsidered and clarified its prior Order as set forth below.
In its Motion in Limine, the Government asked the Court to exclude testimony from
physician witnesses not disclosed as expert witnesses about the medical necessity of laboratory
tests. (Dkt. No. 588.) The Court ruled as follows on that issue:
Under Rule 26(a)(2)B) of the Federal Rules of Civil Procedure and this Court's
Scheduling Order, Defendants were required to identify and disclose all experts
by February 6, 2017, including the subject matter on which the expert was
expected to testify and a summary of the expert' s opinions. The BlueWave
Defendants have disclosed and provided an expert report from Dr. Robert
Fishberg on the issue of medical necessity of laboratory tests. The Government
did not move to exclude Dr. Fishberg. Defendants disclosed no other experts to
testify on the issue of medical necessity. Later, in their pre-trial disclosures,
Defendants identified several physicians they intend to call at trial , including Dr.
Joseph McConnell, Dr. Tauqueer Alam, Dr. Joe Hollins, Dr. Rex Butler, Dr. John
Eberly, Dr. Samual Fillingane, and Dr. Szilard Voros. (Dkt. Nos. 563 at 3-4; 583
at 4.) The BlueWave Defendants also stated that they intended to present the
deposition testimony of Dr. Tara Dall, HDL's former Chief Medical Officer.
Defendants claim that these physicians may testify as lay witnesses because they
are treating physicians.
To the extent that these physicians would testify about the medical necessity of
laboratory tests either in routine clinical practice or for a particular patient, that
testimony is based on "scientific, technical, or other specialized knowledge" so
falls in the category of expert testimony. FRE 701, 702. The testimony of treating
physicians that involves "diagnosis, prognosis, and future medical care is opinion
testimony that falls under Rule 26(a)(2)(A)'s expert disclosure requirement." See,
e.g., Stogsdill v. SC Dep 't of Health & Human Servs., Civ. A. No. 3:12-0007JFA, 2017 WL 3142497, *15 (D.S.C. July 25, 2017) (appeal pending); Ingram v.
ABC Supply Co., Civ. A. No. 3:08-1748-JFA, 2010 WL 233859, *2 (D.S.C. Jan.
14, 2010). If it is true, as Defendants claim, that the physicians' testimony is "a
far cry from utilizing medical training and expertise to evaluate an individual
patient's symptoms, course of treatment, and medical history, offer a diagnosis or
prognosis ... " (Dkt. No. 642 at 15), then the physicians' testimony is not probative
of any material issue in this case.
For these reasons, any probative testimony these physicians would provide falls
under the disclosure requirements of Rule 26. Defendants did not comply with
Rule 26, and their argument that their failure to do so is justified or harmless fails.
Defendants have offered no justification for their failure to identify these
physicians as expert witnesses earlier, and the Government would be prejudiced
by the introduction of expert testimony for which it had no opportunity to procure
a rebuttal report. While the Government did have the opportunity to depose some
of these physician witnesses, it did not at the time of those depositions have notice
of the facts and opinions those physicians would introduce at trial if they testified
as expert witnesses. Because Defendants failed to comply with Rule 26 and their
failure was neither justified nor harmless, they may not introduce the testimony of
these physician witnesses about the medical necessity of laboratory tests.
Defendants will have the opportunity to introduce the expert testimony of their
[expert] Robert Fishberg about the medical necessity of laboratory tests, so the
Court is not concerned that its decision to exclude certain testimony from these
physicians is unfairly prejudicial. For the reasons set forth above, the
Government's motion to exclude the physician testimony discussed in the parties'
briefs is granted.
(Dkt. No. 736 at 14-16.)
Defendants have asked the Court to clarify or reconsider this portion of its prior Order to
allow them to introduce testimony from treating physicians regarding their personal knowledge
of essential facts in this case and their reasons for making diagnosis and treatment decisions for
particular patients. Defendants anticipate that the physicians' testimony would cover the
following issues :
( 1) background information on their medical practices, patient populations and
their reasons for ordering lab tests; (2) BlueWave' s sales and marketing practices;
(3) process and handling (P&H) agreements between the physicians and labs
HDL and/or Singulex; (4) P&H fees paid to the physicians; (5) waiver of
copayments and deductibles for TRICARE beneficiaries; (6) testing services and
test panels of the labs; (7) the process and handling work involved to prepare
blood samples for shipment; (8) relationships and communications with the
Defendants, entities owned or controlled by any defendant and sales
representatives; (9) their intent to file, or cause or conspire with any Defendant to
file, fraudulent claims to Medicare or TRI CARE; (10) the impact, if any, of the
Defendants' conduct on the medical judgment of the physician; ( 11) topics which
the witnesses have information relevant to the allegations in the United States'
Complaint in Intervention and defendants' Answers thereto; and, (12) topics
which may be brought out in the Government's case-in-chief of which the
witnesses have relevant information.
(Dkt. No. 763 at 2-3.)
The Court has reconsidered its prior Order, specifically its finding about risk of prejudice
to the Government that could result from allowing Defendants to call these physicians as trial
witnesses . Although the Government had the opportunity to depose several of these treating
physicians, the Court indicated in its prior Order that the Government would still be prejudiced
because it did not have the opportunity to review an expert report and procure a rebuttal report.
However, treating physicians are not necessarily required to provide an expert report under Rule
26 of the Federal Rules of Civil Procedure:
The requirement of a written report in paragraph (2)(B), however, applies only to
those experts who are retained or specially employed to provide such testimony in
the case or whose duties as an employee of a party regularly involve the giving of
such testimony. A treating physician, for example, can be deposed or called to
testify at trial without any requirement for a written report. By local rule, order, or
written stipulation, the requirement of a written report may be waived for
particular experts or imposed upon additional persons who will provide opinions
under Rule 702.
Fed. R. Civ. P. 26, Notes of Advisory Committee on 1993 Amendment. Additionally, "A witness
who is not required to provide a report under Rule 26(a)(2)(B) may both testify as a fact witness
and also provide expert testimony under Evidence Rule 702, 703, or 705 . Frequent examples
include physicians or other health care professionals .. ." Id., Notes of Advisory Committee on
2010 Amendment; see also Drennen v. United States, 375 F. App 'x 299, 306 (4th Cir. 2010)
(treating physician "was not retained or specially employed to provide expert testimony in this
case" so did not need to produce an expert report).
The physicians in this case were not retained or specially employed to provide expert
testimony, so they were exempt from having to produce an expert report for some testimony.
"Numerous courts have held that a physician is exempt from this written report requirement only
as to opinions formed during the course of treatment." Morris v. Bland, 666 F. App'x 233, 239
(4th Cir. 2016) (emphasis added). The Blue Wave Defendants were therefore not required to file
an expert report disclosing the opinion of a treating physician that the physician formed during
the course of treatment. Defendants were still obligated to identify such witnesses under Rule
26(a)(2)(A) and provide the disclosure required under Rule 26(a)(2)(C) 1 which provides that
"Unless otherwise stipulated or ordered by the court, if the witness is not required to provide a
written report, this disclosure must state: (i) the subject matter on which the witness is expected
to present evidence under Federal Rule of Evidence 702, 703, or 705 ; and (ii) a summary of the
The Rule 26(a)(2)(C) disclosure obligation does not include facts unrelated to the expert
opinions the witness will present." Fed. R. Civ. P. 26, Notes of Advisory Committee on 2010
facts and opinions to which the witness is expected to testify." Defendants did not comply with
the disclosure requirements of either Rule.
Under Rule 37(c)(l), "If a party fails to provide information or identify a witness as
required by Rule 26(a) or (e), the party is not allowed to use that information or witness to
supply evidence on a motion, at a hearing, or at a trial, unless the failure was substantially
justified or is harmless." In evaluating whether nondisclosure was justified or harmless, the
Court "should be guided by the following factors: (1) the surprise to the party against whom the
evidence would be offered; (2) the ability of that party to cure the surprise; (3) the extent to
which allowing the evidence would disrupt the trial ; (4) the importance of the evidence; and (5)
the non-disclosing party's explanation for its failure to disclose the evidence." Wilkins v.
Montgomery, 751 F.3d 214, 221 (4th Cir. 2014) (quoting S. States Rack & Fixture v. SherwinWilliams Co. , 318 F.3d 592, 597 (4th Cir. 2003)) (emphasis omitted).
The Court has considered the Southern States factors and determined that (1) the
physicians ' testimony is important because the Government has alleged that Defendants
orchestrated a scheme to pay kickbacks to these physicians to induce them to order medically
unnecessary tests; (2) the Government is subject to some prejudice and surprise due to
Defendants' failure to disclose the physicians in accordance with the rules, but that prejudice is
mitigated by the fact that the Government had the opportunity to depose several of the
physicians; and (3) allowing the physicians to testify about opinions they formed during the
course of treatment will not disrupt the trial. Balancing these considerations, the Court finds that
even though Defendants have provided no compelling justification for their failure to comply
with the disclosure requirements under Rule(26), their failure is harmless under Rule 37(c)(l).
Defendants may call the physician witnesses to testify about any opinions they formed during the
course of treatment.
The physician witnesses may also testify as fact witnesses2 about relevant issues that fall
within their own personal knowledge and experience. Such topics include but are not limited to
several of those enumerated in Defendants' brief: "( 1) background information on their medical
practices, patient populations and their reasons for ordering lab tests; (2) BlueWave's sales and
marketing practices; (3) process and handling (P&H) agreements between the physicians and
labs HDL and/or Singulex; (4) P&H fees paid to the physicians; (5) waiver of copayments and
deductibles for TRICARE beneficiaries; (6) testing services and test panels of the labs; (7) the
process and handling work involved to prepare blood samples for shipment; (8) relationships and
communications with the Defendants, entities owned or controlled by any defendant and sales
representatives; (9) their intent to file, or cause or conspire with any Defendant to file, fraudulent
claims to Medicare or TRICARE; (10) the impact, if any, of the Defendants' conduct on the
medical judgment of the physician. 3" ((Dkt. No. 763 at 2-3.)
The treating physicians may not, consistent with this Court's prior Order, testify as
experts about any of these issues. The treating physicians may not rely on legal terms like
"medical necessity" because they were not disclosed as experts and have not produced expert
reports. The Court acknowledges that the physicians' testimony may unavoidably toe the line
between permissible opinions formed during the course of treatment and impermissible expert
The Government has not objected to the physicians testifying as fact witnesses. The parties did
not previously brief the issue of the admissible scope of the physicians' testimony as fact
The Court has not included Numbers 11 and 12 from Defendants list because they are catch-all
descriptions of all relevant testimony.
opinion testimony. The Court will consider specific objections to the physicians' testimony at
Correction to Typographical Error in Prior Order
In preparing this Order, the Court identified a typographical error in its Order on the
Government's Motion in Limine. (Dkt. No. 736.) The final sentence of the section titled
"Settlement Amounts in Related Matters" reads: "Because the probative value of evidence about
settlement amounts outweighs the risk of unfair prejudice for any purpose Defendants have
disclosed that they intend to use it, the Government' s motion to exclude this evidence is
granted." (Dkt. No. 736 at 9.) That sentence is hereby amended to read: "Because the risk of
prejudice inherent to evidence about settlement amounts in related matters outweighs the
probative value such evidence of for any purpose Defendants have disclosed that they intend to
use it, the Government ' s motion to exclude this evidence is granted."
For the reasons set forth above, the Court has reconsidered its prior Order (Dkt. No. 736)
on the Government' s Motion in Limine with respect to the testimony of treating physicians not
disclosed as experts. Those physicians may testify consistent with the findings in this Order.
AND IT IS SO ORDERED.
Richard Mark ergel
United States District Court Judge
December 1, 2017
Charleston, South Carolina
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