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United States v. Arrow-Med Ambulance, Inc.

United States District Court, E.D. Kentucky, Central Division, Lexington

April 20, 2018

UNITED STATES OF AMERICA, Plaintiff,
v.
ARROW-MED AMBULANCE, INC., et al., Defendants.

          MEMORANDUM OPINION & ORDER

          Joseph M. Hood Senior U.S. District Judge

         This matter is before the Court upon the United States' Daubert Motion to Exclude Expert Witness Testimony [DE 83], in which the United States moves to exclude testimony from Defendants' noticed expert witness, Larry Joe Russell, M.D., C.M.D, pursuant to Federal Rule of Evidence 702, Daubert v. Merrell-Dow Pharma, Inc., 509 U.S. 579 (1993), and Kuhmo Tire Co. v. Carmichael, 526 U.S. 137 (1999).

         The United States takes the position that his proposed testimony that it was “reasonable” for the Defendants to seek payment from Medicare or Medicaid for certain ambulance transports, and that there “was not sufficient reason for Arrow-Med to contradict the information” contained in Physician Certification Statements, is inadmissible for multiple reasons. Specifically, the United States argues that his proposed testimony (1) directly contradicts the federal regulation governing Medicare's coverage of non-emergency ambulance transports, and (2) is tantamount to an opinion on the Defendants' intent to commit health care fraud prohibited by Rule 704(b).

         I.

         On January 18, 2018, counsel for Defendant Arrow-Med Ambulance, Inc. and Jay Arrowood produced the report and curriculum vitae of Larry J. Russell, M.D., pursuant to Rule 16. See Exhibit 2. Dr. Russell is a professional expert witness, testifying in as many as a dozen lawsuits a year. Ex. 2 at 20-21. It is unclear how many of those cases, if any, involve ambulance transport. Dr. Russell's core opinion as to each of the claims at issue in Counts 2 through 15 of the Indictment is that “it was reasonable for Arrow-Med to seek payment from Medicare [or Medicaid] for the transport” because Arrow-Med possessed a PCS form signed by a physician. Ex. 2 at 5-10. Additionally, he opines “there was not sufficient reason for Arrow-Med to contradict the information in the Physician Certification Statements for Ambulance Transportation for each of the patients” at issue in the Indictment. Id. at 11. He also offers general opinions on dialysis treatment and the need for ambulance service to and from such treatment; on his interpretation of Medicare regulations; on the records and information Arrow-Med would have had access to; and the quality of the government's expert witness' opinion. Id. at 10-11 (“Additional Observations and Opinions”). The materials Dr. Russell used in forming his opinions are set out at page 2 of his report; this list does not specifically identify the medical records he reviewed.

         II.

         Federal Rule of Evidence 702 allows for the admission of relevant expert testimony helpful to the jury if a witness “qualified as an expert by knowledge, skill, experience, training or education” provides testimony that (1) is based on sufficient facts or data, (2) is the product of reliable principles and methods, and (3) reflects reliable application of those principles and methods to the facts of the case. Fed.R.Evid. 702. As an initial matter, whether an expert is qualified to testify is a “separate but related inquiry” wherein the proponent of the expert must establish those factors relating to the expert's “background that makes his knowledge ‘specialized, ' that is, beyond the scope of the ordinary juror.” See Zuzula v. ABB Power T & D Co., Inc., 267 F.Supp.2d 703, 713 (E.D. Mich. 2003). “The qualification . . . must match up with the subject matter about which the expert is to testify.” Elswick v. Nichols, 144 F.Supp.2d 758, 766 (E.D. Ky. 2001) (“before the expert is found qualified to offer an opinion about a particular issue, the court must also decide whether the actual qualifications of the expert enable him or her to assist the trier of fact with regard to each controverted issue about which the expert seeks to testify”) (quoting Moore's Federal Practice, Reference Manual on Scientific Evidence 58 (Matthew Bender ed., 1995)). The Court must determine whether the witness is properly qualified to opine on the subject at hand by looking to the witness's “knowledge, skill, experience, training, or education.” Fed.R.Evid. 702.

         The “knowledge” prerequisite in Rule 702 requires “more than subjective belief or unsupported speculation.” Tamraz v. Lincoln Elec. Co., 620 F.3d 665, 670 (6th Cir. 2010) (quoting Daubert, 509 U.S. at 590). In its inquiry, the Court should not look to “the qualifications of a witness in the abstract, but [to] whether those qualifications provide a foundation for a witness to answer a specific question.” Berry v. City of Detroit, 25 F.3d 1342, 1351 (6th Cir. 1994). Kumho emphasized that “nothing in either Daubert or the Federal Rules of Evidence requires a district court to admit opinion evidence that is connected to existing data only by the ipse dixit of the expert.” 526 U.S. at 157 (quotation and citation omitted).

         Next, the Supreme Court requires that expert testimony must be both relevant and reliable. See Daubert, 509 U.S. at 591-92. Expert testimony is relevant when it will assist the trier of fact to understand or determine a fact issue. Rule 702 requires the district court to perform a gatekeeping function to “ensure that any and all scientific testimony or evidence admitted is not only relevant, but reliable.” Daubert, 509 U.S. at 589. In Daubert, the Court identified a number of factors that may bear upon the reliability of an expert's testimony, including whether the expert's theory or technique can be or has been tested; whether the theory or technique has been subjected to peer review and publication; whether the theory or technique has a high known or potential error rate; and whether the theory or technique enjoys general acceptance. Id. at 593-94. “Proposed testimony must be supported by appropriate validation - i.e., ‘good grounds, ' based on what is known.” Elswick, 144 F.Supp.2d at 766 (quoting Daubert, 509 U.S. at 588).

         When the proffered expert testimony is not scientific in nature, the district court is to be guided by the ultimate purpose of Daubert and is not to be restricted to a rigid application of the factors outlined in that decision. See Kumho, 526 U.S. at 152. When such expert witness testimony is proffered, the court's task 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.” Id. To determine whether an expert is sufficiently reliable to testify, the court must assess “whether the reasoning or methodology underlying the testimony is scientifically valid and . . . whether that reasoning or methodology properly can be applied to the facts in issue.” See United States v. Langan, 263 F.3d 613, 621 (6th Cir. 2001) (quoting Daubert, 509 U.S. at 592-93).

         Finally, while the Defendants may solicit opinion testimony relevant to the question of a defendant's “specific intent to deceive or defraud, ” United States v. White, 492 F.3d 380, 394 (6th Cir. 2007), see also 18 U.S.C. § 1347 (requiring that violations of the statute be made “knowingly and willfully”), Rule 704 prohibits an expert witness from “stat[ing] an opinion about whether the defendant did or did not have a mental state or condition that constitutes an element of the crime charged or of a defense.” Fed.R.Evid. 704(b). Those decisions “are for the trier of fact alone.” Id. “Rule 704 prohibits testimony from which it necessarily follows, if the testimony is credited, that the defendant did or did not possess the requisite mens rea.” United States v. Watson, 260 F.3d 301, 309 (3d Cir. 2001) (internal quotations and citations omitted); see also Powell v. Tosh, 942 F.Supp.2d 678, 703 (W.D. Ky. 2013) (“A party's state of mind . . . is not within the knowledge of any expert.”) (internal quotations and citations omitted).

         III.

         Dr. Russell's proffered testimony is grounded in two central and related opinions. First, according to Dr. Russell, Arrow-Med's possession of PCS forms signed by a doctor made it reasonable for Arrow-Med to seek payment from Medicare or Medicaid for the ambulance transports at issue in the Indictment. See, e.g., Ex. 2 at 6 (“Because Dr. Agomaa certified that the ambulance transport of Mr. Noble was medically necessary, it is my opinion that it was reasonable for Arrow-Med to seek payment from Medicare for that transport.”). Second, Dr. Russell would testify that because Arrow-Med possessed the signed PCS forms, “there was not a sufficient reason for Arrow-Med to contradict the information contained in [the PCS forms] in any of its run sheets.” Id. at 6-7. These opinions are unreliable because they conflict with the controlling regulation, which states that the physician's certification does not establish medical necessity, and that the medical necessity criteria must be met independent of any piece of paper signed by a doctor. See 42 C.F.R. § 410.40(d)(3)(v); Medicare Benefit Policy Manual Ch. 10, § 10.2.1.

         The controlling regulation clearly states that “[t]he presence of the signed certification statement . . . does not alone demonstrate that the ambulance transport was medically necessary. All other program criteria must be met in order for payment to be made.” 42 C.F.R. § 410.40(d)(3)(v). Chapter 10 of the Medicare Benefit Policy Manual, on which Dr. Russell claims to have based his opinion, likewise instructs that the presence of a signed physician's order for ambulance transport does not prove that the transport was necessary. Medicare Benefit Policy Manual Ch. 10, § 10.2.1. The Sixth Circuit has rejected the same argument the Defendants are attempting to make through Dr. Russell, namely that a signed PCS is sufficient evidence of medical necessity and thus a reasonable basis for an ambulance provider to demand payment from Medicare, regardless of the falsifications the ambulance provider makes to its run sheets. See United States v. Medlock, 792 F.3d 700, 709 (6th Cir. 2015) (“. . . [I]f a CMN was all that was required to determine medical necessity, then the part of the regulation [42 C.F.R. § 410.40(d)(2)] that required run sheets ...


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