City of Huntington, West Virginia v. AmerisourceBergen Drug Corporation et al
Filing
1529
MEMORANDUM OPINION AND ORDER granting in part and denying in part Defendants' 1385 RENEWED MOTION to Exclude the Opinions of James E. Rafalski. Signed by Senior Judge David A. Faber on 6/27/2022. (cc: counsel of record who have registered to receive an electronic NEF) (jsa)
Case 3:17-cv-01362 Document 1529 Filed 06/27/22 Page 1 of 24 PageID #: 79428
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF WEST VIRGINIA
THE CITY OF HUNTINGTON,
Plaintiff,
v.
Civil Action No. 3:17-01362
AMERISOURCEBERGEN DRUG
CORPORATION, et al.,
Defendants.
v.
Civil Action No. 3:17-01665
CABELL COUNTY COMMISSION,
Plaintiff,
v.
AMERISOURCEBERGEN DRUG
CORPORATION, et al.,
Defendants.
MEMORANDUM OPINION AND ORDER
Pending before the court is defendants’ renewed motion to
exclude the opinions of James E. Rafalski.
(ECF No. 1385.)
For
the reasons that follow, the court will grant the motion in
part.
The court will exclude the causation opinions but not the
opinions regarding potential flagging methods, the results
thereof, and whether defendants’ suspicious order monitoring
systems were effective.
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I.
Background
James Rafalski (“Rafalski”) worked as an investigator for
the Drug Enforcement Agency (“DEA”) for thirteen years.
When he
joined the DEA in 2004, he brought with him twenty-six years of
law enforcement experience.
Judge Polster has described
Rafalski’s role at the DEA as follows:
Diversion Investigators are responsible for conducting
regulatory, state, civil, administrative, and criminal
investigations. From 2011 to 2017, Rafalski was
primarily responsible for conducting administrative,
civil, and regulatory investigations of DEA
registrants. In this capacity, he investigated the
criminal conduct of individual physicians regarding
improper opioid prescriptions and conducted regulatory
investigations involving, inter alia, Distributors’
compliance with DEA requirements regarding suspicious
order monitoring systems (“SOMS”).
For example, in 2006, Rafalski conducted an
accountability audit, record-keeping review, and
security investigation of a Walgreens in Ohio to
ensure compliance with controlled substances
regulations and record keeping. This investigation
resulted in the DEA issuing a letter of admonition for
the maintenance of an inadequate SOMS.
From 2010 to 2013, Rafalski conducted an
administrative investigation of The Harvard Drug Group
to identify unusual patterns of distribution of
oxycodone to Florida pain clinics. His work included
the review of company records and policies, as well as
the DEA’s ARCOS data. This investigation resulted in
the DEA issuing an order to show cause for, inter
alia, developing a work-around to avoid triggering the
company’s SOMS.
Also, from 2010 to 2013, Rafalski conducted an
administrative investigation of Masters
Pharmaceutical, reviewing company files regarding
customer due diligence, including questionnaires, onsite investigation reports, and SOMS information.
2
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This investigation resulted in the DEA revoking the
company’s registration to manufacture and/or
distribute controlled substances.
From 2010 to 2017, Rafalski conducted an
administrative investigation of Mallinckrodt in which
he reviewed chargeback data that revealed some
pharmacies and/or practitioners were utilizing
multiple Distributors to purchase the same product in
large quantities. As a result of this investigation,
the DEA and Mallinckrodt entered into a three-year
Memorandum of Agreement.
In re Nat’l Prescription Opiate Litig., No. 1:17-MD-2804, 2019
WL 3934490, at *1–2 (N.D. Ohio Aug. 20, 2019) (citations
omitted).
II.
Legal Standard
Federal Rule of Evidence 702 provides:
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:
(a) 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;
(b) the testimony is based on sufficient facts or
data;
(c) the testimony is the product of reliable
principles and methods; and
(d) the expert has reliably applied the principles and
methods to the facts of the case.
“Essentially, the witness must be qualified as an expert, the
testimony must be reliable, and the testimony must assist the
3
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trier of fact.”
In re Fosamax Prod. Liab. Litig., 645 F. Supp.
2d 164, 172 (S.D.N.Y. 2009).
Rule 702 requires courts to stop proffered expert opinions
at the gate if they lack reliable foundation or relevance “to
the task at hand.”
959 (4th Cir. 2020).
McKiver v. Murphy-Brown, LLC, 980 F.3d 937,
Because “the adversary system” awaits such
opinion evidence on the other side of the gate, the gatekeeping
function is a limited one.
See In re Lipitor (Atorvastatin
Calcium) Mktg., Sales Practices & Prod. Liab. Litig. 892 F.3d
624, 631 (4th Cir. 2018).
Beyond the gate are credibility
determinations, which are reserved for the trier of fact; before
the gate are reliability and relevancy determinations, which are
the province of the gatekeeper.
Sardis v. Overhead Door Corp.,
10 F.4th 268, 282 (4th Cir. 2021) (“[C]redibility is entirely
distinct from reliability and relevancy, which are preconditions
to the admissibility of expert testimony.”) (emphasis in
original).
Factors that may guide the court in the fulfillment of its
gatekeeping role include
(1) whether the particular scientific theory can be
(and has been) tested; (2) whether the theory 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 technique
has achieved general acceptance in the relevant
scientific or expert community.
4
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United States v. Crisp, 324 F.3d 261, 265-66 (4th Cir. 2003)
(citations and internal quotation marks omitted).
illustrative, not definitive or exhaustive.
This list is
Id.
In Kumho Tire Co. v. Carmichael, the Supreme Court held
that the gatekeeping function extends beyond the scientific
realm “to the testimony of engineers and other experts,” but the
Court made clear that the Daubert analysis should suit the
proffered opinion.
526 U.S. 137, 141 (1999).
That is, although
“a trial court may consider one or more of the more specific
factors that Daubert mentioned when doing so will help determine
that testimony's reliability,” it need not tick through
Daubert’s factors because they “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
testimony.”
Id. at 150 (emphasis in original); see also In re
Mirena IUD Prod. Liab. Litig., 169 F. Supp. 3d 396, 480
(S.D.N.Y. 2016) (“[T]he four-factor mold set forth by Daubert
that governs scientific expert opinions,” does not necessarily
apply to non-scientific expert opinions.).
short, are not “holy writ.”
The factors, in
See Kumho, 526 U.S. at 159 (Scalia,
J., concurring).
The Fourth Circuit has also reiterated that “trial courts
are typically given ‘broad latitude’ to determine which of these
factors (or some other unspecified factors) are ‘reasonable
5
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measures of reliability in a particular case.’”
Sardis, 10
F.4th 268, 281 (emphasis added) (quoting Nease v. Ford Motor
Co., 848 F.3d 219, 229 (4th Cir. 2017)).
In other words, it is
neither mandatory nor advisable to shoehorn every reliability
analysis into the four “guideposts” set forth in Daubert.
Id.
The reliability of the methodology, not the correctness of
the conclusion, is the focus of the Daubert inquiry.
See Pugh
v. Louisville Ladder, Inc., 361 F. App'x 448, 452 (4th Cir.
2010).
[D]istrict courts must ensure that an expert’s opinion
is based on scientific, technical, or other
specialized knowledge and not on belief or
speculation. And to the extent an expert makes
inferences based on the facts presented to him, the
court must ensure that those inferences were derived
using scientific or other valid methods.
Sardis, 10 F.4th at 281 (emphasis in original) (citation
omitted).
Helpfulness to the trier of fact is the “touchstone” of
Rule 702.
Kopf v. Skyrm, 993 F.2d 374, 377 (4th Cir. 1993).
The party proffering the expert’s opinion has the burden of
production on the question of admissibility.
Maryland Cas. Co.
v. Therm-O-Disc, Inc., 137 F.3d 780, 783 (4th Cir. 1998).
III. Analysis
Rafalski formulated six methods that could potentially be
used to flag suspicious orders, referring to them as Methods A
through F.
These methods identify orders meeting certain
6
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criteria. 1
Dr. Craig McCann (“McCann”), a data expert,
retrospectively calculated the percentage of orders that met
these criteria.
Rafalski relied on McCann’s calculations to
assert the total percentage of orders that Rafalski believes
should have been flagged and, assuming due diligence was not
done to explain why the orders were innocuous despite being
flagged, should have been reported to the DEA as suspicious and
never left defendants’ warehouses.
At trial, Rafalski read these results into the record.
Rafalski offered opinions that because defendants shipped these
orders without conducting due diligence and failed to report
them to the DEA, defendants’ systems for identifying, blocking,
and reporting suspicious orders were deficient, and defendants
did not maintain effective controls against diversion.
The methods do not purport to establish how a distributor would
then conduct due diligence once an order is flagged or what
would be necessary to dispel the suspicion arising from the
order having been flagged. In other words, all the methods
purport to do is flag orders, not provide a comprehensive
roadmap that distributors could (or should) employ in
determining whether the orders ultimately must be blocked. That
said, Rafalski’s opinions regarding the volume of suspicious
orders that defendants supposedly shipped requires an assessment
of their performance of due diligence, which he finds
insufficient. Based on the insufficient documentation of due
diligence that Rafalski discerns from the discovery materials,
he infers that sufficient due diligence never happened. Thus,
he employs an assumption, both in flagging orders and in
tallying up suspicious orders distributed, that due diligence
never dispelled the initial (flagged) suspicion of any order.
1
7
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As explained below, defendants’ Daubert challenge to
Rafalski’s testimony up to this point is misplaced.
Defendants’
criticisms of the flagging criteria (Methods A through F), the
application of the criteria to the data (through McCann), and
Rafalski’s evaluation of defendants’ suspicious order monitoring
systems (referred to in the singular or plural as “SOMS”), very
much go to the weight of his opinions, not their admissibility.
Not so for Rafalski’s causation opinions, which are
disconnected from a reliable methodology.
causation opinions include those that:
Rafalski’s challenged
(1) systemic failures by
defendants to maintain effective controls against diversion were
a substantial factor in causing diversion; and (2) all of the
orders that defendants knew or should have known were suspicious
were more likely than not to be diverted.
Accordingly, the
court must strike those opinions.
a. Flagging Methods, Results Thereof, and SOMS Critique
Defendants’ Daubert challenge to Rafalski’s flagging
methods and the results thereof is misplaced, as is their
Daubert challenge to Rafalski’s opinion about whether defendants
maintained adequate controls against diversion and ran a system
that was effective at identifying, blocking, and reporting
suspicious orders.
8
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1. Flagging Methods Themselves
To the extent defendants bring a Daubert challenge to
Rafalski’s presentation of the methods themselves as possible
ways to flag orders, it is not really a challenge to the
methodology (how Rafalski identified possible flagging methods),
but to the opinion (the list of possible flagging methods).
Rafalski’s presentation of Methods A through F merely identifies
possible ways of completing part of a task:
flagging orders
that merit a harder look prior to fulfillment.
To identify possible methods, Rafalski relied on his
experience and review of discovery materials and at least
attempted to base his methods on systems that he observed while
at the DEA or while reviewing the discovery materials in this
case.
In providing his list of possible flagging methods,
Rafalski is not trying to arrive at some scientific or technical
truth.
He is merely saying that, based on his DEA experience
and review of discovery in this case, Methods A through F are
some of the potential (not mandatory) means that defendants
could have used to identify orders that possibly should not have
been shipped.
Defendants’ demand for more rigorous methodology
for establishing the list of methods itself is unfounded. 2
This is not at all to say that Rafalski’s methods are
particularly good ones or that the results of applying the
methods were persuasive indicators of the level of suspicious
orders placed with defendants. It is also not to say that the
2
9
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2. Results of the Methods
Whether Rafalski’s opinions constituting the results of his
flagging methodologies are the product of reliable methodology
is a related but distinct question.
Defendants’ challenge to
the results (the application of Methods A through F to the
shipment data), however, tends to ignore that “there are many
algorithms that a Distributor could use to identify opioid
orders as suspicious.”
2019 WL 3934490, at *6.
In re Nat’l Prescription Opiate Litig.,
Rafalski freely acknowledged that there
is no “one particular golden rule” on how to flag orders and
that his methods are only a few among a “huge number” of
different possible methods.
(Tr. 5/26, at 82-84.)
The
reliability analysis is heavily informed by the background
principle that there are innumerable ways to set flagging
criteria.
In this context, then, reliability means that the
methods must meet the low bar of being among the innumerable
permissible possibilities.
The accuracy of the methods in identifying orders that
should not be shipped (and only those orders) is a separate
question that has little to do with Daubert because a flagging
method can be overinclusive (or underinclusive) and still be a
permissible way to flag suspicious orders.
Because defendants
overlay of a no-due-diligence assumption was at all justified
based upon the evidence. Those are not Daubert issues.
10
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have failed to show that Methods A through F fall outside the
vast realm of available flagging methods, the court does not
discern an admissibility problem.
The Daubert challenge
ultimately makes the results out to be more than they are,
skipping ahead to Rafalski’s (inadmissible) opinions regarding
the level of actual diversion in the City of Huntington and
Cabell County and the connection between orders that he believes
were not permissible to ship and the opioid epidemic in the City
of Huntington and Cabell County.
Furthermore, it is worth noting that to the extent the
results incorporate a no-due-diligence assumption (or some
variation thereof), those results are bound up within a dispute
of fact:
Did defendants conduct due diligence?
Rafalski’s
expertise bears on this dispute, but so does the rest of the
relevant record.
That is, whether many of the flagging results
provide an even remotely accurate count of suspicious orders
(both flagged and shipped) depends on a dispute for which there
is conflicting evidence.
The attempt to resolve this factual dispute in the Daubert
context leads to confusion.
For instance, defendants argue that
Rafalski’s methods are unreliable because they ignore the
crucial fact that prescribing rates increased over the years.
Presumably, however, that would be a due diligence consideration
11
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in Rafalski’s methods once an order is flagged, not before. 3
It
is true that the no-due-diligence assumption leads to setting
aside very good explanations for orders that may be flagged and
to a vastly overinflated number if the assumption is incorrect.
But the assumption is not so severely unfounded as to cause the
methods to run afoul of Daubert and make the results thereof
inadmissible.
See Masters Pharm., Inc. v. DEA, 861 F.3d 206,
218 (D.C. Cir. 2017) (noting that absence of records is
sometimes evidence that activity did not occur). 4
Defendants insist on the application of Daubert’s (nonmandatory) factors to Rafalski’s methods and their results,
faulting Judge Polster for not applying those factors, and
concluding that Judge Polster’s opinion regarding the
It may well also be an important factor in setting thresholds
(may justify a higher threshold), but the point here is that
Rafalski does not appear to have ignored the prescribing rates
as much as consider it part of a (subsequent) due diligence
inquiry that he believes did not take place. Defendants’
Daubert argument does not appear to be that Rafalski’s
thresholds were too low (and thus, unreliable) because they
failed to consider prescribing increases. In any event, that is
a weight argument.
3
The permissible inference regarding the absence of a record is
to be applied when the absence is “where an entry would
naturally have been made if a transaction had occurred.”
Masters, 861 F.3d at 218. Because federal law does not require
permanent retention of due diligence records (or even the
creation of them), the application of this permissible inference
is questionable for the finder of fact here. But as an expert
witness, the scope of Rafalski’s permissible inferences is
greater and appears to encompass his no-due-diligence inference.
4
12
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reliability of Rafalski’s methods and their results “is neither
controlling nor persuasive as applied here.”
2 n.1.)
The court disagrees.
(ECF No. 1398, at
Additionally, since the briefing
here, Judge Polster has issued another Daubert ruling with
respect to Rafalski, which the court also finds persuasive,
including its assertion that “[p]articularly with respect to
non-scientific experts, like Rafalski, ‘the relevant reliability
concerns may focus upon personal knowledge or experience.’”
In
re Nat’l Prescription Opiate Litig., No. 1:17-MD-2804, 2021 WL
4060359, at *5 (N.D. Ohio Sept. 7, 2021) (quoting First
Tennessee Bank Nat. Ass'n v. Barreto, 268 F.3d 319, 335 (6th
Cir. 2001)).
The flagging methods attempt to capture what is suspicious,
a quality that inherently evades precision.
This is not a
scientific or engineering inquiry for which application of the
traditional Daubert factors would be suitable.
The court agrees
that “it is precisely Rafalski’s specialized knowledge and DEA
experience that form the basis for the reliability of his
opinions” regarding the flagging methods.
Id.
Furthermore, defendants’ complaint about what they consider
“a 400% error rate” among the different methods is not well
taken.
(ECF No. 1386, at 6.)
Again, Rafalski was not trying to
arrive at a scientific or engineering truth.
The divergence in
the results reflects the vagueness of the duty to identify
13
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suspicious orders and the lack of guidance in how flagging
systems should operate, not a faulty methodology on Rafalski’s
part.
Had Rafalski presented only one method, the criticism
doubtless would be that there is no one method.
True, the
methods present vastly different levels of flagging.
In other
contexts, that certainly may present a Daubert problem.
In this
one, it goes to weight.
It is also true that, by expressing a preference for Method
A, Rafalski’s opinions regarding Method A start to approach
something objectionable under Daubert.
But Rafalski’s belief in
the accuracy of Method A appears to derive from his belief that
defendants’ efforts to conduct due diligence were slim to none
and that one suspicious order immerses the customer account in
suspicion until there is due diligence.
While the record
contains evidence of consistent due diligence, that does not
render Rafalski’s opinion about the lack of due diligence or his
incorporation of a no-due-diligence assumption inadmissible.
Defendants label the methodologies as “created for
litigation.”
(Id. at 12.)
In a sense, this is true in that
Rafalski conceded that he did not use them as a DEA investigator
and that he developed his list of alternative flagging methods
for this case.
(Tr. 5/26, at 222.)
label is a stretch.
But defendants’ overall
It ignores that Rafalski clarified as
follows:
14
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I didn’t create these. I tried to use methodologies
that were similar to the methodologies that were -that I -- that I discovered or found while doing this
case. So, it wasn’t something that I created.
Although they’re not exactly the same, they’re, you
know, the best that we could do to recreate those
methodologies used by the defendants.
(Tr. 5/26, at 223.) 5
Judge Polster has rightly rejected the argument that
“Rafalski’s SOMS opinions cannot possibly be reliable unless he
followed the exact same methods and procedures as he would in
conducting a DEA field investigation.”
In re Nat’l Prescription
Opiate Litig., 2021 WL 4060359, at *5.
Defendants’ invented-
for-litigation argument is essentially the same argument.
Moreover, “an expert’s formulation of his or her opinion for the
purposes of litigation does not, by itself, justify that
expert’s exclusion.”
Tyree v. Bos. Sci. Corp., 54 F. Supp. 3d
501, 518 (S.D.W. Va. 2014), as amended (Oct. 29, 2014).
The
provenance of Methods A through F is an issue of weight, not
admissibility.
5
Defense counsel’s next question ignored the clarification:
Have you used these style -- have you taken these
stylized illustrations that were created for
litigation and tried to publish them so they could be
peer-reviewed and available for criticism and use if
they were actually valuable?
(Tr. 5/26, at 223 (emphasis added).) But the witness had the
right to clarify his testimony despite counsel’s rejection of
it.
15
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In supplemental briefing on their renewed motion,
defendants also argue that the results of Rafalski’s flagging
methodologies are inadmissible because plaintiffs failed to call
McCann, who ran the numbers, back to the witness stand to
sponsor his calculations.
This was despite repeated assurances
on the record that plaintiffs would recall McCann.
Plaintiffs
respond that they understood the court to have ruled that McCann
need not be recalled because Federal Rule of Evidence 703 allows
an expert to base his testimony on matters he has observed or
been made aware of (such as McCann’s calculations). 6
Under Rule 703, the court deemed Rafalski’s testimony
admissible without McCann’s independent sponsorship of his
calculations.
The court sticks with that ruling and rejects
defendants’ argument that Rafalski could not testify to the
results of the calculations that he asked McCann to run.
That
In response to the objection that Rafalski could not testify to
the results of McCann applying the methods to the shipment data,
the court ruled as follows:
6
I’m going to cut this short and rely on Rule 703,
which the first sentence says an expert may base an
opinion on facts or data in the case that the expert
has been made aware of or personally observed. He's
been aware of this data that comes from Dr. McCann,
apparently, or is consistent with what Dr. McCann said
and I think that since it’s the basis of an expert
opinion, it’s permissible, and I’m going to overrule
the objection and let him go ahead.
(Tr. 5/26, at 50-53.)
16
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said, the court’s ruling does not get plaintiffs around the
problem that their failure to recall McCann contradicted their
repeated representations that they would do so.
This failure
was, at best, curious.
On the other hand, plaintiffs’ construction of the court’s
bench ruling as an absolute free pass on recalling McCann was
not patently unreasonable.
More importantly, perhaps,
defendants did not press the court in the context of trial for a
ruling on the need to recall McCann, choosing instead to make
the failure to recall McCann part of their Daubert challenge to
Rafalski’s testimony. 7
3. Diversion-control Failures
Rafalski’s opinions that defendants failed to design
effective systems to prevent diversion and failed to maintain
effective controls against diversion are arguably legal
conclusions that are unhelpful.
On the other hand, the opinions
do not explicitly reference the law and can be perceived as
opinions that defendants failed to fulfill certain tasks as a
matter of fact, not as a matter of law.
Defendants easily could have stepped
context and brought the issue squarely
ruling on whether plaintiffs needed to
representations and recall McCann as a
fairness (not as a matter of Daubert).
7
17
In any event, the trier
outside the Daubert
before the court for a
honor their
matter of fundamental
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of fact here (the court) understands that Rafalski’s opinions,
even if legal ones, are not controlling.
These opinions are based on the results of Rafalski’s
flagging methods, which he contends show (together with his
conclusion that due diligence never happened), that varying
levels of suspicious orders were shipped.
One important point
is that the analysis here undertaken departs significantly from
that undertaken in connection with Masters. 8
In Masters, the distributor’s conduct was judged against
the failures evident when applying its own SOMS.
214-16.
861 F.3d at
The court noted that Masters Pharmaceutical’s SOMS
flagged orders that could be considered suspicious “[a]s a
matter of common sense and ordinary language,” but the court did
not purport to mandate that system for other distributors.
at 216-17.
Id.
Here, the analysis does not judge defendants’
During direct examination, Rafalski’s analysis was repeatedly
referred to as an “investigation,” and Rafalski characterized it
as follows:
8
I think you’ve asked me essentially, Your Honor, to do
the same thing I did when I was working with the DEA.
And that’s to examine those same types of records and
documents that are up on the screen in regards to the
three defendants, AmerisourceBergen, Cardinal, and
McKesson, and come to the same factual findings on
whether these three companies maintained effective
controls to prevent the diversion of controlled
substances . . . .”
(Tr. 5/26, at 29-30.)
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conduct against its own SOMS.
This is obvious for Methods A and
B, which there is no evidence that defendants ever used.
So,
even if Method A is analogous to what was used in Masters,
applying the Masters SOMS here is not analogous to what was done
in Masters itself (especially with the overlay of a no-duediligence assumption). 9
As for Methods C through F, although Rafalski testified
that he attempted to base those on defendants’ systems, he did
not come close to replicating those systems exactly and did not
establish that those flagging criteria were in place for the
entire relevant time period.
It is undisputed that, unlike in
Masters, the analysis here was not a review of a distributor’s
compliance with its own SOMS.
As stated above, however, the court agrees with Judge
Polster that whether Rafalski’s analysis matches what the DEA
would have done is not an admissibility issue.
See In re Nat’l
Prescription Opiate Litig., 2021 WL 4060359, at *5.
Rafalski
compared the results of his flagging methods, including the one
he believes is appropriately aggressive at flagging orders
Additionally, the record here is far different than the one in
Masters, which established that Masters (1) failed to clear with
due diligence or report to the DEA orders that its own SOMS
flagged (to the tune of hundreds of orders); (2) deleted or
reduced flagged orders to get around its SOMS; and (3) shipped
orders when customer explanations confirmed the suspicion that
the orders were being diverted. 861 F.3d at at 215.
9
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(Method A), against the shipments that defendants completed.
Based on the large (sometimes unbelievably large) gap between
what was shipped and what Rafalski believes should have been
shipped, he finds the systems and the overall effectiveness of
controls deficient.
Again, the linchpin here (at least for Method A) 10 is
Rafalski’s conclusion that defendants systematically failed to
conduct due diligence, which is largely a factual dispute.
Rafalski’s analysis seems to have been that because a number of
different flagging angles indicate suspicious orders, and
because there was chronic insufficient due diligence prior to
shipping those orders, there was a failure to maintain effective
controls.
There is a factual dispute about defendants’ exercise
of due diligence, and the Daubert context is not the right one
for resolving it.
Defendants further point out that Rafalski did not explain
why their own SOMS, as operated, were deficient and instead
merely testified that running other, hypothetical systems
suggested the shipment of suspicious orders.
Defendants also
In fixing the threshold for all time, Method B also applies a
no-due-diligence assumption of sorts because the reason the
threshold cannot increase is apparently that no due diligence is
ever done to justify a threshold increase. Plaintiffs state
that Raflaski’s opinion that defendants did not conduct due
diligence and his opinion that subsequent orders cannot be
shipped until due diligence occurs “apply across all of Mr.
Rafalski’s methodologies.” (ECF No. 1396, at 10 n.1.)
10
20
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point out that the no-due-diligence assumption conflicts with
extensive evidence to the contrary and that Rafalski did not
reconcile his opinions with that evidence.
These points carry
weight, but not in the Daubert context. 11
b. Causation Opinions
Defendants further challenge Rafalski’s causation opinions,
which are as follows:
1. Defendants’ systemic failures [to maintain effective
controls against diversion and to run adequate SOMS]
were a substantial factor in the diversion of
controlled substances into the illicit market; and
2. All orders that defendants knew or should have known
were suspicious were likely (more likely than not) to
be diverted into the illicit market in the City of
Huntington and Cabell County.
These opinions are inadmissible under Rule 702 and Daubert for
lack of a reliable methodology. 12
The first causation opinion takes what Rafalski perceives
as shortcomings in defendants’ SOMS and due diligence and makes
the unexplained leap of identifying such shortcomings as a
factual cause of diversion.
Plaintiffs suggest that this
causation opinion naturally “flows” from the opinion that there
were deficiencies with defendants’ SOMS and due diligence.
(ECF
Rafalski’s opinion that defendants’ purported failures to
design and operate effective SOMS and to maintain effective
controls against diversion were “systemic” is also admissible.
11
The court need not address whether Rafalski is qualified to
provide these opinions.
12
21
Case 3:17-cv-01362 Document 1529 Filed 06/27/22 Page 22 of 24 PageID #: 79449
No. 1396, at 2-3.)
If the flow is so natural, however, there
would be no need for expert testimony on causation (and such
testimony would accordingly be unhelpful).
The reality is that
establishing a causal link between purported deficiencies in
controlling against diversion and actual diversion requires
expert analysis not employed here.
The court agrees with defendants that this opinion appeared
out of thin air.
(See ECF No. 1386, at 20 (“Mr. Rafalski was
not even asked to explain how he arrived at this “substantial
factor” opinion.
Mr. Rafalski never discussed, much less
explained, the methodology he used to reach his opinion—nor did
he provide any demonstration that the methodology (if there was
one) is generally accepted and reliable.”).)
Rafalski did not
identify a pharmacy that was engaged in diversion and agreed
that distributions matched prescriptions.
He offered no
evidence to show that pharmacies were filling prescriptions not
issued pursuant to valid doctor-patient relationships, as in the
case of Internet pharmacies.
The opinion appears to be based on speculation.
It is
speculative to say that just because orders that were flagged or
that should have been flagged (even a large amount) were shipped
without due diligence, there was any diversion at all caused by
the lack of flagging or lack of due diligence.
All Rafalski
could really say on this record is that it appears that
22
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distributions resulted in diversion at some point, not that
defendants’ distributions were themselves diverted.
The second causation opinion attempts to transform orders
that were purportedly suspicious into orders that were more
likely than not to be diverted.
The court cannot discern the
presence of a reliable methodology for this opinion either.
Importantly, Rafalski did not attempt to determine the level of
diversion that actually occurred.
Equating suspicious orders
with those more likely than not to be diverted is an unreliable,
speculative way to estimate diversion.
See Masters Pharm.,
Inc., 80 Fed. Reg. 55,418, 55,480 (Drug Enf’t Admin. Sept. 15,
2015) (“[T]o conclude that an order is suspicious, the
information presented to the distributor is not required to
establish, to a statistical certainty, that a pharmacy was
likely diverting controlled substances.
Rather, the evidence
must only create a suspicion, a standard which is less than that
of probable cause.”).
In short, Rafalski did not apply a
discernible, reliable methodology to support an equation between
suspicion and actual diversion. 13
An overbroad understanding of diversion may be one source of
the disconnect here. As the court understands it, Rafalski’s
testimony was that diversion means that pills eventually “fall
into illicit hands.” (Tr. 5/26, at 76.) Under that extremely
broad understanding of diversion, it is perhaps more reasonable
to infer that because there is an opioid epidemic, which
necessitates pills falling into illicit hands, some of the pills
(perhaps many or even most—we do not know from the evidence)
13
23
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The court does not doubt the sincerity of Rafalski’s
beliefs regarding causation.
And his noteworthy experience on
the ground in federal public service likely informs those
beliefs.
As here, however, sincerely held beliefs informed by
extensive, honorable service do not necessarily pass Daubert
muster.
Because they are not based on a reliable methodology,
the causation opinions are inadmissible, and the court must
strike them.
IV.
Conclusion
For the reasons expressed above, defendants’ motion to
exclude (ECF No. 1385) is GRANTED in part and DENIED in part.
The Clerk is directed to send a copy of this Memorandum
Opinion and Order to those counsel of record who have registered
to receive an electronic NEF.
IT IS SO ORDERED this 27th day of June, 2022.
ENTER:
David A. Faber
Senior United States District Judge
that defendants shipped someday, somehow fell into the wrong
hands.
24
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