United States of America et al v. Laboratory Corporation of America Holdings
ORDER AND OPINION Defendant's motion to exclude the testimony of Relators' expert witness Raja Sekaran (Dkt. No. 325 ) is GRANTED IN PART and DENIED IN PART. Defendant's motion is denied, except it is partially granted only as to the specifically discussed opinion on Defendants motivation. AND IT IS SO ORDERED. Signed by Honorable Richard M Gergel on 6/3/2021.(sshe, )
IN THE UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH CAROLINA
United States of America, et al., ex rel.
Scarlett Lutz and Kayla Webster,
Laboratory Corporation of America
C/A No. 9:14-3699-RMG
ORDER AND OPINION
Before the Court is Defendant’s motion to exclude the testimony of Relators’ expert
witness, Raja Sekaran. (Dkt. No. 325.) Relators responded in opposition. (Dkt. No. 346.) For
the reasons set forth below, the motion is granted in part and denied in part.
This is a qui tam action in which the United States of America declined to intervene.
Relators allege that Defendant violated the False Claims Act and Anti-Kickback Statute by
submitting false claims to Government healthcare programs relating to blood draw services for
tests referred by physicians to third-parties Health Diagnostic Laboratory (“HDL”) and Singulex,
Inc., which Defendant knew were paying illegal inducements to the referring physicians. (Dkt.
Rule 702 of the Federal Rules of Evidence governs expert witness testimony and
A witness who is qualified as an expert by knowledge, skill, experience, training,
or education may testify in the form of an opinion or otherwise if:
the expert’s scientific, technical, or other specialized knowledge will help
the trier of fact to understand the evidence or to determine a fact in issue;
the testimony is based on sufficient facts or data;
the testimony is the product of reliable principles and methods; and
the expert has reliably applied the principles and methods to the facts of
Fed. R. Evid. 702(a)-(d). “Implicit in the text of Rule 702 is a district court’s gatekeeping
responsibility ‘to ensur[e] that an expert’s testimony both rests on a reliable foundation and is
relevant to the task at hand.’” Nease v. Ford Motor Co., 848 F.3d 219, 229 (4th Cir. 2017)
(emphasis in original) (quoting Daubert v. Merrell Dow Pharms., 509 U.S. 579, 597 (1993)).
First, “[w]ith respect to reliability, the district court must ensure that the proffered expert
opinion is based on scientific, technical, or other specialized knowledge and not on belief or
speculation, and inferences must be derived using scientific or other valid methods.” Nease, 848
F.3d at 229 (internal quotation marks omitted).
“As the Supreme Court has repeatedly
explained, Daubert v. Merrell Dow Pharmaceuticals, Inc. [ ] offers district courts several
guidepost factors that the court ‘may consider’ in assessing an expert’s evidentiary reliability to
the extent that the factors are relevant to the specific facts of the case at hand.” McKiver v.
Murphy-Brown, LLC, 980 F.3d 937, 959 (4th Cir. 2020) (emphasis in original). The “emphasis
on the word ‘may’ [ ] reflects Daubert’s description of the Rule 702 inquiry as ‘a flexible one.’”
Kumho Tire Co. v. Carmichael, 526 U.S. 137, 149 (1999) (quoting Daubert, 509 U.S. at 594).
Factors that the district court may consider include: (1) “[w]hether 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) its “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).
“These factors may or may not be pertinent in assessing reliability, depending on the
nature of the issue, the expert’s particular expertise, and the subject of his [or her] testimony.”
McKiver, 980 F.3d at 959 (alteration in original) (internal quotation marks omitted).
Daubert list of factors is not “definitive or exhaustive.” United States v. Crisp, 324 F.3d 261, 266
(4th Cir. 2003). Instead, “the law grants a district court the same broad latitude when it decides
how to determine reliability as it enjoys in respect to its ultimate reliability determination.”
Kumho Tire Co., 526 U.S. at 142. For instance, courts have also considered whether experts
“developed [their] opinions expressly for the purposes of testifying,” Wehling v. Sandoz Pharms.
Corp., 162 F.3d 1158 (Table), 1998 WL 546097, at *3 (4th Cir. Aug. 20, 1998) or “though
research they have conducted independent of the litigation,” Daubert v. Merrell Dow Pharms.,
Inc., 43 F.3d 1311, 1317 (9th Cir. 1995) (on remand). This is because, at bottom, the “objective
of [the Daubert gatekeeping requirement] . . . is to make certain that an expert, whether basing
testimony upon professional studies or personal experience, employs in the courtroom the same
level of intellectual rigor that characterizes the practice of an expert in the relevant field.” Kumho
Tire Co., 526 U.S. at 152.
The reliability inquiry requires the district court to heed “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). Indeed,
“[a]s with all other admissible evidence, expert testimony is subject to being tested by
‘[v]igorous cross-examination, presentation of contrary evidence, and careful instruction on the
burden of proof.’” Westberry, 178 F.3d at 261 (quoting Daubert, 509 U.S. at 596)). 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 (internal quotation marks omitted). Thus, “given
the potential persuasiveness of expert testimony, proffered evidence that has a greater potential
to mislead than to enlighten should be excluded.” Westberry, 178 F.3d at 261. For this reason,
the “proponent of the testimony” bears the burden of proving it is reliable. Cooper v. Smith &
Nephew, Inc., 259 F.3d 194, 199 (4th Cir. 2001). This reliability standard does not require proof
“that the opinion is objectively correct, but only that the witness has sufficient expertise[.]” TBL
Collectibles, Inc. v. Owners Ins. Co., 385 F. Supp. 3d 1170, 1179 (D. Colo. 2018).
Second, in addition to being reliable, the testimony must be relevant, which, “of course,
is evidence that helps ‘the trier of fact to understand the evidence or to determine a fact in
issue.’” Nease, 848 F.3d at 229 (quoting Daubert, 509 U.S. at 591). The district court’s decision
on the admissibility of expert testimony is reviewed for abuse of discretion. United States v.
Campbell, 963 F.3d 309, 313 (4th Cir. 2020).
Relators offer Sakaran as an expert witness on “the processes available for healthcare
providers and other market participants to disclose fraud and abuse (‘F&A’) concerns to the
government, including without limitation requests for fraud alerts and whether there are temporal
limits on any such activities.” (Dkt. No. 325-9 at 3.) Their desire for this expert opinion arises
from the parties’ argument over the significance of Defendant’s 2013 and 2014 anonymous
requests to HHS-OIG for a special fraud alert on HDL’s conduct.
Relators contend that
Defendant made these special fraud alert requests anonymously and through outside counsel to
point the finger at its co-conspirator, HDL, in order to obfuscate its own participation in the fraud
by providing blood draws on behalf of HDL. Defendant contends that the fact that it made
special fraud alert requests belies any such inference and instead supports that it was acting as a
concerned whistleblower of HDL’s conduct. From this dispute arises the parties’ interest in
litigating, through dueling expert opinions, the topic of how healthcare providers can report fraud
on the Government.
Defendant argues that Sekaran’s testimony is “inadmissible” because he “improperly
infringes upon the province of the Court to determine the meaning of relevant law” and
“improperly speculates about LabCorp’s state of mind.” (Dkt. No. 325 at 5.) The Court rejects
this argument, except as to one aspect of Sekaran’s testimony, for the following reasons.
Sekaran Does Not Draw a Legal Conclusion or Testify on the Meaning of the Law.
Defendant argues that, in opining on the topic of processes available for healthcare
providers and other market participants to disclose fraud, Sekaran impermissibly interprets the
statutes and regulations that govern that process. It is well settled that it is the duty of the district
court, not a party’s expert, to state the meaning of the law. United States v. Barile, 286 F.3d 749,
760 (4th Cir. 2002.) “Opinion testimony that states a legal standard or draws a legal conclusion
by applying law to facts is generally inadmissible.” United States v. McIver, 470 F.3d 550, 56162 (4th Cir. 2006). “An opinion is not objectionable simply because it embraces an ultimate
issue to be decided by the trier of fact, [but] such an opinion may be excluded if it is not helpful
to the trier of fact under Rule 702.” Kopf v. Skyrm, 993 F.2d 374, 377-78 (4th Cir. 1993).
“Expert testimony that merely states a legal conclusion is less likely to assist the jury in its
determination.” Barile, 286 F.3d at 760.
“The role of the district court, therefore, is to
distinguish opinion testimony that embraces an ultimate issue of fact from opinion testimony that
states a legal conclusion.” Id. “The best way to determine whether opinion testimony contains
legal conclusions, is to determine whether the terms used by the witness have a separate, distinct
and specialized meaning in the law different from that present in the vernacular.” Id. (internal
quotation marks omitted).
Defendant takes particular issue with three instances of Sekaran’s testimony, which the
Court considers in turn.
First, Sekaran testified in his deposition that the portion of the
regulation governing “Solicitation of New Safe Harbors and Special Fraud Alerts” (published in
December 2012), which states To ensure consideration, public comments must be delivered to
the address provided below by no later than 5 p.m. on February 26th, 2013, means submission
within the 60-day window “probably increases the chances of consideration, but it is not
required” for consideration. In other words, Sekaran opines, although the statute provides that
submissions will be ensured consideration if made inside the 60-day window, “I think
[submitting] it within this window is helpful because it increases the likelihood that you’ll get
substantive consideration, but it’s not a guarantee and it’s also not required.” To ensure
consideration, Sekaran opines, is the OIG’s “expression of preference” that it receive
submissions within the 60-day window, but it may also give consideration to submissions
received outside the 60-day window. (Dkt. No. 325-1 at 50.)
The question is whether this opinion is an impermissible legal conclusion or if it is drawn
from something inside Sekaran’s qualified expertise, such as his relevant experience. A review
of the context of Sekaran’s testimony makes clear that he was testifying as to OIG’s practice
when fielding received submissions, based on his experience working there from 1997 to 2002,
and not opining on the meaning of the statute itself. For instance, Sekaran testified that his
opinion was formed “based on my experience [at OIG]” and on his experience that OIG
reviewers “want to manage their workload” over the course of the year “based on the volume of
material that they receive in response to these solicitations and the simple question of resources
at the OIG.” Inferring that their yearly workload could not practically be condensed into a 60day window, Sekaran testified he is “sure that [submissions are] all processed and there’s intake
of everything.” This opinion is further supported, as he testified, by the fact that the statute also
provides “special fraud alerts may be requested, quote, at any time.” Additionally, Sekaran
testified that his opinion was based on his understanding of consideration to be OIG’s internal
practice of “substantive engagement with the [ ] content [ ] of the request and proposals” and not
the phrase’s definition as intended by the legislature or as a legal term of art. (Dkt. No. 325-1 at
50-51.) See, e.g., Fagnant v. Johnson, No. 4:11-cv-00302-RBH, 2013 WL 3354580, at *4
(D.S.C. July 3, 2013) (cautioning expert to “avoid the use of legal terms of art in conveying his
opinions at trial” because “[s]uch characterizations will be excluded”).
Second, Defendant challenges when Sekaran opines in his report: “Even if LabCorp
‘missed the 2012 deadline’ for submitting comments in response to HHS-OIG’s 2012 annual
solicitation (which was February 27, 2012), it was not required to ‘wait until 2013’ to submit its
request for a Special Fraud Alert. LabCorp could have submitted a request to HHS-OIG for a
Special Fraud Alert ‘at any time.’ There was no magic window.” (Dkt. No. 325-9 ¶ 60.) As
above, Sekaran’s use of the phrase, “at any time,” is a quotation from Section 205 of the Health
Insurance Portability and Accountability Act of 1996, which provides: “Any person may present,
at any time, a request to the Inspector General for a notice which informs the public of practices
which the Inspector General considers to be suspect or of particular concern under the Medicare
program under title XVIII or a State health care program, as defined in section 1128(h) (in this
subsection referred to as a ‘special fraud alert’).” (Id. ¶ 28.) Significantly, Sekaran here opines
simply that Defendant could have submitted a special fraud request at any time—he does not
draw any opinion or conclusion from the statute as to whether the request would be considered or
to what extent it would be effective to alert to HDL’s fraud. Simply noting that the statute
provides that a special fraud alert request can be made “at any time,” and that this provision
would apply to Defendant, is not an impermissible legal conclusion that would confuse, rather
than aid, the jury. See, e.g., Doe v. Coastal Carolina Univ., 4:18-cv-0268-SAL, 2021 WL
1651057, at *2 (D.S.C. Mar. 8, 2021) (holding that expert may mention statutory guidance and
note that it informs standards and best practices, but “any statement that [defendant] failed to
comply with [ ] guidance or the [statute] would amount to a legal conclusion”).
Last, Defendant challenges when Sekaran opines that (1) “LabCorp could have, at any
time, contacted HHS-OIG or any of the numerous other federal or state agencies I identify above
to report the concerns it expressed in its February 2013 or February 214 requests”; that (2) “[i]n
my experience, HHS-OIG and the numerous other federal or state agencies I identify above
would have welcomed such a report from LabCorp, at any time”; and that (3) “LabCorp could
have sought an advisory opinion to receive guidance from the OIG on the payment of process
handling fees.” (Dkt. Nos. 325-9 ¶¶ 29-35, 61-62; 325-1 at 37.) Again, Sekaran is not here
drawing a conclusion or opining that LabCorp should have made these submissions or that
making them would have been more or less effective than the 2013 and 2014 special fraud alert
requests it did make; rather, he is opining that, in his relevant experience, the options to make
these submissions were also available, as a general matter. That opinion does not have “a greater
potential to mislead than to enlighten” the jury. Westberry, 178 F.3d at 261.
Sekaran Does Not Speculate as to Defendant’s State of Mind, Except for One
Instance of Offering a Potentially Confusing Opinion on Defendant’s Motivation.
Defendant argues that Sekaran impermissibly speculates as to its state of mind on several
instances. Expert testimony cannot be based on “belief or speculation.” Nease, 848 F.3d at 229.
The “question of intent is a classic jury question and not one for the experts.” In re Rezulin
Prods. Liab. Litig., 309 F. Supp. 2d 531, 547 (S.D.N.Y. 2004). A “defendant’s knowledge, state
of mind, or other matters related to corporate conduct and ethics are not appropriate subjects of
expert testimony because opinions on these matters will not assist the jury.” Tyree v. Boston
Scientific Corp., 54 F. Supp. 3d 501, 553 (S.D. W.Va. 2014); see also In re C.R. Bard, Inc., 948
F. Supp. 2d 589, 607 (S.D. W.Va. June 2013) (“To the extent that Dr. Altenhofen might opine on
Bard’s knowledge, motive, or intent based on corporate documents, such opinions are not
properly the subject of expert testimony because these are lay matters.”).
Here, Defendant argues that Sekaran speculates as to its state of mind when he notes that
the 2013 special fraud alert request “omits any reference to LabCorp’s own role in actually
drawing the blood for HDL tests,” and then opines that, “[i]n my experience, by submitting its
requests in this manner, LabCorp minimized the likelihood that HHS-OIG would scrutinize
LabCorp’s own conduct in drawing blood for HDL tests.” (Dkt. No. 325-9 ¶ 63.) This is not an
opinion on Defendant’s state of mind because it is devoid of any belief regarding what
Defendant intended or was motivated to do. Rather, this is an opinion as to the effect on OIG—
whether or not Defendant intended it—of Defendant anonymously submitting a special fraud
alert that also did not state Defendant was working with HDL. Defendant also takes issue with
Sekaran’s opinion that “it is self-evident” that, as his report provides, “by electing to submit the
February 2013 and February 2014 [requests] anonymously, LabCorp avoided having to be
publicly associated with these requests and avoided having its own conduct and motivation
scrutinized by HHS OIG and others in the health care industry.” (Dkt. No. 325-1 at 55.) Again,
Sekaran here is not offering any opinion on Defendant’s state of mind; he is merely offering his
opinion, based on his relevant experience, on the result of Defendant’s act. This distinction is
further highlighted by the following exchange during Sekaran’s deposition:
So, is it your view that LabCorp sought the fraud alert to bring concerns
regarding HDL to the government?
Are you asking me about their motives, or - -
I’m asking you, do you have an opinion as to why LabCorp sought a
special fraud alert?
I do have an opinion. My report doesn’t go into what their motivations
were for doing it. But on its face, their special fraud alert requests
discusses the HDL practice of providing compensation to referring
physicians, and so on its face they wanted to bring that to the
Okay. Any other opinions as it relates to LabCorp?
No, no other opinions.
(Id. at 10.) Similarly, Sekaran was later asked and answered:
So, as I understand you, you are attributing intent to Mr. King’s seeking of
the special fraud alert; is that correct?
No, I’m responding to your premise [. . .]
So, I just want to understand your position. You think LabCorp sought a
special fraud alert because LabCorp thought OIG would not issue
guidance; is that correct?
(Id. at 46.)
I think that’s a stronger statement. And again, I’d be willing to stand by,
and again we’re leagues beyond my expert report at this point. Now I’m
giving you my opinions about the case. But I think that’s an overly strong
Sekaran has, but clearly declines to offer as an expert, an opinion on Defendant’s
motive for anonymously submitting special fraud alerts that omitted reference to its work with
HDL. Instead, Sekaran cabins his opinion to the easily observable fact that Defendant wanted to
communicate the information that it did communicate. While such testimony on what Defendant
“wanted” to bring to the Government’s attention risks creeping into impermissible speculation on
its state of mind, in this context it is a common-sense and generalizable observation that does not
risk confusing the jury.
To be sure, Sekaran later testifies: “I do think another motivation [for the anonymous
special fraud alert requests] was to get some credit, should it be needed later on, for having
brought it to the government’s attention, but not too much credit, right, not enough to disclose
themselves and their request. They didn’t want to go too far.” (Id. at 61.) If this opinion were
offered in Sekaran’s capacity as an expert witness, it would be squarely inadmissible. But it was
not; Sekaran immediately clarified that he was not offering it as an expert opinion by stating:
“That’s my opinion. It’s not in my expert report. It’s far outside my expert report’s scope.
You’ve asked me for my opinion after reading all these documents and thinking about this for
some weeks, and that’s what I believe.” (Id.) Nevertheless, in an abundance of caution to avoid
any confusion to the jury, the Court grants Defendant’s motion to exclude this particular
testimony from Sekaran on Defendant’s motivation.
For the foregoing reasons, Defendant’s motion to exclude the testimony of Relators’
expert witness Raja Sekaran (Dkt. No. 325) is GRANTED IN PART and DENIED IN PART.
Defendant’s motion is denied, except it is partially granted only as to the specifically discussed
opinion on Defendant’s “motivation.”
AND IT IS SO ORDERED.
s/ Richard Mark Gergel
Richard Mark Gergel
United States District Judge
June 3, 2021
Charleston, South Carolina
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