United States of America v. Healthcare Associates of Texas LLC

IN THE UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF TEXAS

DALLAS DIVISION

UNITED STATES OF AMERICA, §

ex rel. CHERYL TAYLOR, §

§

Plaintiff, §

§

v. § Civil Action No. 3:19-CV-02486-N

§

HEALTHCARE ASSOCIATES OF §

TEXAS, LLC, et al., §

§

Defendants. §

MEMORANDUM OPINION AND ORDER

This Order addresses eight motions to exclude expert testimony filed by the

Defendants (collectively, “HCAT”). HCAT moves to exclude the expert testimony of

Mark Anderson [408]; Dr. John Charalambopoulos [409]; Dr. Sunil Lalla [410]; Juliette

Morell [411]; Melissa Scott, Nicholas Ross, and Joseph Krock [412]; and Joshua Dennis

[413]. HCAT also moves to exclude expert testimony on the subjects of credentialling

[414] and corporate conduct [415]. Because the Court finds that Relator Cheryl Taylor has

shown that each of these experts meets the requirements of Rule 702, the Court denies

these motions.

I. ORIGINS OF THE DISPUTE

This case arises from claims under the False Claims Act, 31 U.S.C. § 3729, et seq.

(“FCA”), against Defendants Healthcare Associates of Texas, LLC, Healthcare Associates

of Irving, LLP, David Harbour, Jeff Vines, Kristian Daniels, Dr. Charles L. Powell, Dr.

David Deems, Dr. Walter Gaman, and Dr. Terrence Feehery. Taylor alleges that she

observed HCAT and its agents, the individual defendants, employ fraudulent Medicare

billing practices. The Court has discussed Taylor’s factual allegations at some length, see,

e.g., United States ex rel. Taylor v. Healthcare Assocs. of Tex., LLC, 2023 WL 3294141,

at *1 (N.D. Tex. 2023), and the Court will not recount them in great depth here. Defendants

now move to exclude the testimony of eight of Taylor’s expert witnesses.

II. LEGAL STANDARD FOR EXPERT TESTIMONY

Under Federal Rule of Evidence 702 a witness must be qualified as an expert by

“knowledge, skill, experience, training, or education.” FED. R. EVID. 702. A qualified

expert may testify if the expert’s specialized knowledge will help the trier of fact and (1)

“the testimony is based upon sufficient facts or data,” (2) “the testimony is the product of

reliable principles and methods,” and (3) “the expert’s opinion reflects a reliable

application of the principles and methods to the facts of the case.” Id. District courts must

determine that expert testimony “is not only relevant, but reliable,” and make “a

preliminary assessment of whether the reasoning or methodology underlying the testimony

is scientifically valid” and “can be applied to the facts in issue.” Daubert v. Merrell Dow

Pharms., Inc., 509 U.S. 579, 589, 592–93 (1993); see also Kumho Tire Co. v. Carmichael,

526 U.S. 137, 150–51 (1999) (holding Daubert principles apply to all types of experts).

The focus, however, “must be solely on principles and methodology, not on the conclusions

that they generate.” Daubert, 509 U.S. at 595.

District courts have broad discretion to determine the admissibility of expert

testimony. Sims v. Kia Motors of Am., Inc., 839 F.3d 393, 400 (5th Cir. 2016). But the

rejection of expert testimony is the exception, not the rule. In re DePuy Orthopaedics, Inc.

Pinnacle Hip Implant Prods. Liab. Litig., 2016 WL 9560113, at *3 (N.D. Tex. 2016). The

Daubert inquiry may not replace the adversarial system. Pipitone v. Biomatrix, Inc., 288

F.3d 239, 249–50 (5th Cir. 2002). “[V]igorous cross-examination, presentation of contrary

evidence, and careful instruction on the burden of proof are the traditional and appropriate

means of attacking shaky but admissible evidence.” Id. at 250 (quoting Daubert, 509 U.S.

at 596). Indeed, “while exercising its role as a gate-keeper, a trial court must take care not

to transform a Daubert hearing into a trial on the merits.” Id.

III. THE COURT DENIES THE MOTION TO EXCLUDE ANDERSON’S TESTIMONY

Taylor retained Mark Anderson to testify regarding the utility and significance of

electronic health record (“EHR”) systems within the healthcare field and specific features

and configurations of HCAT’s EHR systems. Anderson Report at Rel.’s Appx. 3.1

Specifically, his opinions include discussions of progress notes, audit logs, time stamps,

and co-signing and bulk signing features for the EHR systems that HCAT used —

Allscripts and eCW. Id. HCAT does not contest that Anderson is qualified to testify on

these subjects. But HCAT takes aim at multiple portions of his expert report, arguing that

various opinions are unreliable, irrelevant, based on insufficient evidence, or are improper

fact testimony. Because the Court finds that Anderson’s opinions satisfy the requirements

of Rule 702, the Court denies HCAT’s motion to exclude Anderson’s testimony.

1 Relator’s appendix spans nine docket entries, ECF Nos. 436–44. Page numbers cited in

Relator’s Appendix correspond to the J. APP. number on each appendix page.

A. Anderson’s Definitions of Key Terms are Reliable and Relevant

First, HCAT argues that Anderson’s definitions and explanations of key terms are

unreliable and irrelevant. Def.’s Mot. Exclude Anderson 6 [408]. It takes issue with the

basis for Anderson’s definitions, arguing that they come from nothing other than his own

say-so. Id. at 6–7. It also argues that his definitions are not relevant because he “fails to

reference a single piece of evidence.” Id. at 7. Taylor counters that experts may define

and explain the terms they will use, and that Anderson used these terms to develop the

context of the claims in this case. Rel.’s Resp. Anderson 13–16 [445]. Reviewing

Anderson’s report, the Court concludes that his definitions and explanations are reliable

and relevant.

Anderson’s definitions and explanations come from more than just his say-so.

Generally, experts are permitted to define jargon and technical terms. See United States v.

Haines, 803 F.3d 713, 728–29 (5th Cir. 2015) (permitting expert testimony on drug trade

jargon); United States v. Okoroji, 2018 WL 8756433, at *1 (N.D. Tex. 2018) (finding that

testimony about Medicare definitions and requirements falls within the province of an

expert). If experts could not define terms, very little expert testimony would end up being

helpful to the jury. Here, Anderson dedicates thirty-two paragraphs of his report to

defining and explaining terms and general features of EHR software. Anderson Report at

Rel.’s Appx. 9–24. This section of his report precedes his opinions about HCAT’s specific

software configurations. Id. at 24.

Here, these definitions outline some specific pieces of specialized knowledge that

Anderson used in arriving at his opinions. Anderson has over fifty years of experience in

healthcare and information technology. Anderson Report at Rel.’s Appx. 4. He has fifteen

years of experience as the CIO of a hospital. Id. at 7. He is not required to point to a

technical dictionary for every term he intends to use when formulating his opinions. He

may explain his specialized knowledge in a form that is consumable to the jury by way of

defining the jargon he uses. And he may utilize his experience in the healthcare field to do

so. To the extent HCAT believes Anderson’s definitions are incorrect, it may cross-

examine him and present its own experts to discuss the technology at issue. Accordingly,

Anderson’s definitions are reliable.

Further, his definitions are relevant to matters in the case. A core allegation at issue

in the case is whether HCAT billed Medicare for services that unqualified medical

assistants performed. Second Am. Compl. ¶¶ 181–188 [89]. Taylor also alleges that

HCAT manipulated its EHR records to cover this up. Id. ¶¶ 195–206. Understandably,

EHR records that include information about which providers have interacted with a

patient’s file are key pieces of evidence to support or refute this allegation. Explanation of

what EHR systems are, how they work, and the jargon associated with the systems are

relevant to the issues in the case and are helpful to the jury. Accordingly, Anderson is

permitted to testify regarding specialized terms used in developing his opinions.

B. Anderson’s Opinions on Timestamps are Proper

Second, HCAT argues that Anderson’s opinions on the Allscripts timestamp feature

are fact testimony and not proper expert opinion, are unreliable, and are based on

insufficient evidence. Defs.’ Mot. Exclude Anderson 8–12. Because experts may describe

the factual basis for their opinions, the Court finds that Anderson’s testimony on this topic

is proper. The Court also finds that his opinions on this topic are reliable and based on

sufficient evidence.

Experts may look at the facts of a case and apply their expertise, skill, and

knowledge to form an opinion. Where courts draw the line is when an expert seeks to

“summarize” the other, nonexpert evidence present in a case. Robroy Indus.–Tex., LLC v.

Thomas & Betts Corp., 2017 WL 1319553, at *9–10 (E.D. Tex. 2017) (collecting cases);

see also Factory Mut. Ins. Co. v. Alon USA L.P., 705 F.3d 518, 524 (5th Cir. 2013) (noting

that experts cannot act as “the mouthpiece of the witnesses on whose statements or opinions

the expert purports to base his opinion” (quoting Loeffel Steel Prods., Inc. v. Delta Brands,

Inc., 387 F. Supp. 2d 794, 808 (N.D. Ill. 2005))).

Anderson’s opinions do not impermissibly summarize facts in this way. Anderson

opines on the specifics of how Allscripts records the username of the provider that entered

information into a health record. Anderson Report at Rel.’s Appx. 24–25. He first

discusses how the system works generally: “When you log in to Allscripts, your username

is stamped on the tables of records and transactions you enter.” Id. at 24. Then, he reviews

an email chain where two people within HCAT disagree about how the system works. Id.

at 25. Finally, he opines on how, based on his experience with Allscripts, the system

actually functions. Id. In essence, he weighs in on the apparent disagreement within HCAT

on what the system does. His opinion, while referencing this confusion within HCAT, is

not testimony on who entered what information into which patient records at HCAT.

Instead, it is opinion testimony on how, in Anderson’s experience, the Allscripts software

works. It is not a regurgitation of otherwise admissible evidence but is an attempt by

Anderson to clarify what may end up being a dispute at trial about the technical

functionality of a piece of software. Accordingly, it is acceptable expert opinion, and not

improper fact testimony.

HCAT also argues that Anderson’s timestamp opinion is based on only one email,

and therefore based on insufficient evidence and is unreliable. Defs.’ Mot. Exclude

Anderson 11. Anderson does reference an internal HCAT email in his opinions. Anderson

Report at Rel.’s Appx. 25. However, that email is clearly not the only basis for his opinion.

Anderson has decades of experience with EHR and other healthcare information

management systems. Id. at 7. His opinion is based on this experience. He references the

email because he weighs in on an internal disagreement at HCAT about how the system

functions. Accordingly, his timestamp opinion is based on sufficient evidence and is

reliable.

C. Anderson’s Opinions on Bulk Signing, File Headers and Labs are Proper

Next, HCAT argues that Anderson’s opinions on bulk signing, file headers, and labs

should be excluded. The Court takes each of these arguments in turn.

On bulk signing, HCAT argues that these opinions are improper fact testimony.

Defs.’ Mot. Exclude Anderson 14. The Court disagrees. Anderson stated that Allscripts

and eCW have the ability to be configured with bulk signing capability. Id. at 25–26. He

then reviewed multiple HCAT documents to see how HCAT configured their systems. Id.

at 26. Finally, he opined that the way that HCAT configured and used its bulk signing and

co-signing functions did not align with his experience in how these functions should be

used in medical practices. Id. While he does make some factual statements about how

HCAT’s EHR systems worked, his statements are permissible. It would not be possible

for Anderson to opine that HCAT’s bulk signing protocols were inconsistent with his EHR

experience without stating how HCAT used its EHR system. His opinions on how HCAT

utilized its EHR systems are a far cry from simple regurgitation of other evidence. Instead,

they are based on his analysis of documents, and required Anderson to use his experience

to interpret them. Thus, this is proper expert opinion.

HCAT also argues that Anderson’s bulk signing opinions are based on insufficient

evidence and are unreliable. Defs.’ Mot. Exclude Anderson 13–19. It takes issue with the

fact that Anderson did not inspect HCAT’s software himself and instead relied on “fewer

than 20 emails” to determine how HCAT configured its software. Id. at 15–16. However,

Anderson testified that even if he could access HCAT’s systems today, that would not give

him any additional information as to how HCAT configured its systems in the relevant

time period for this dispute. Rel.’s Appx. 4771. His reliance on internal HCAT emails and

documents allowed him to examine the ways that HCAT used their EHR systems and

provided the factual basis for his opinions about bulk signing. His analysis of the

documents combined with his years of experience in the EHR field allowed him to generate

these opinions. Thus, they are based on sufficient evidence and are reliable.

On file headers, HCAT argues that Anderson’s opinions are again just summaries

of fact evidence. Defs.’ Mot. Exclude Anderson 21. But the meaning of file headers within

a specific piece of software is a form of specialized technical knowledge. While his

opinions might align with HCAT’s understanding of the software, he is not regurgitating

existing evidence. Instead, his opinions come from his experience with this software, and

will help the factfinder to interpret the EHR data presented at trial. Accordingly, his

opinions on file headers are permissible.

On labs, HCAT argues Anderson’s opinions are unreliable and based on

speculation. Id. at 19–21. The Court disagrees. In a similar process as he used in his other

opinions, Anderson discussed how EHR systems function with respect to handling labs,

and then analyzed multiple documents and emails from HCAT to determine how its system

was configured. Anderson Report at Rel.’s Appx. 28–30. He then concludes that, based

on his analysis and experience with EHR systems, it is technologically possible that HCAT

could have been sending labs to the wrong provider. Id. This procedure draws from his

experience in the field and is an appropriate method for him to reach the conclusion that

he did. Accordingly, this opinion is permissible.

Because Taylor has shown that Anderson’s opinions meet the requirements of Rule

702, the Court denies HCAT’s motion to exclude his testimony.

IV. THE COURT DENIES THE MOTION TO EXCLUDE

DR. CHARALAMBOPOULOS’S TESTIMONY

Taylor retained Dr. Charalambopoulos to testify about HCAT’s medical practices

and whether they are consistent with his understandings of the standard of care and with

Medicare requirements. Charalambopoulos Report at Rel.’s Appx. 98. HCAT moves to

exclude his testimony for a variety of reasons, including that he is not qualified, and that

his opinions are unreliable, irrelevant, based on insufficient evidence, and overly

prejudicial. Defs.’ Mot. Exclude Charalambopoulos 1–3 [409]. Because the Court finds

that his testimony meets the requirements of Rule 702 and Rule 403, the Court denies the

motion.

A. Dr. Charalambopoulos’s Opinions on Evidence-Based

Medicine and a Culture of Over-Testing are Proper

First, HCAT argues that Dr. Charalambopoulos’s opinions about evidence-based

medicine (“EBM”) and a “culture of over-testing” should be excluded as irrelevant, based

on speculation, and overly prejudicial. Defs.’ Mot. Exclude Charalambopoulos 5–11.

Because the Court finds that these opinions are relevant, probative of the issue of

knowledge, and based on sufficient evidence and experience, the Court concludes that

these opinions are proper.

Dr. Charalambopoulos opines that HCAT violated EBM principles in a number of

ways, including by expecting medical assistants to make clinical decisions without

sufficient oversight of a physician. Charalambopoulos Report at Rel.’s Appx. 106. He

also evaluated how HCAT ordered tests for patients through the Physical Exam Preparation

(“PEP”) department and concluded that HCAT ordered more tests than were medically

necessary. Id. at 112–20. From this, he concludes that HCAT’s practices “fostered a

culture of over-testing.” Id. at 120. HCAT attacks these opinions on the grounds that they

are irrelevant (because EBM is not the standard for whether Medicare will pay a claim)

and overly prejudicial.

Considering these opinions and the operative complaint, the Court finds that these

opinions are relevant. The complaint alleges that HCAT billed Medicare for services that

were performed by an unqualified medical assistant instead of a qualified provider. Second

Am. Compl. ¶¶171–94. One element of a False Claims Act claim is knowledge by the

defendant that the claim they submitted was false or fraudulent. See 31 U.S.C.

§ 3729(a)(1); United States ex rel. Longhi v. Lithium Power Techs., Inc., 575 F.3d 458,

466–68 (5th Cir. 2009). And the bar for relevance is low — Taylor only needs to show

that the proffered testimony relates to an issue in the case and is sufficiently tied to the facts

to be helpful. See Daubert, 509 U.S. at 591. Here, Dr. Charalambopoulos opines that

EBM standards expect a physician, not a medical assistant, to make clinical decisions on

behalf of a patient. Charalambopoulos Report at Rel.’s Appx. 105–07. If HCAT is

knowingly straying from EBM practices in this area, then it is more likely that HCAT knew

that the claims it submitted to Medicare were false. Thus, these opinions are relevant.

Further, they are not overly prejudicial under Rule 403. The standard for exclusion

under Rule 403 is that the probative value of the evidence be substantially outweighed by

the risk of unfair prejudice, confusion, delay, or cumulative evidence. FED. R. EVID. 403.

Here, this information is probative of HCAT’s knowledge. It helps establish whether

HCAT providers engaged in a common scheme or plan to submit claims that were

performed by unqualified medical assistants. Certainly, this evidence is harmful to

HCAT’s case. But that does not make the evidence unfairly prejudicial to the point that

this prejudice significantly outweighs the probative value. Thus, it should not be excluded

under Rule 403.

B. Dr. Charalambopoulos’s Opinions are Based on Sufficient Data

Second, HCAT argues that Dr. Charalambopoulos’s opinions are not based on

sufficient data. Defs.’ Mot. Exclude Charalambopoulos 11. Specifically, it claims that he

did not review any patient’s complete medical records before opining that treatment or

testing was “somehow improper.” Id. at 12. HCAT also takes issue with his reliance on

progress notes, arguing that these are an unreliable data source. Id. at 13–15. Reviewing

his report and the record, the Court concludes that his opinions are based on sufficient data

to meet the requirements of Rule 702.

Dr. Charalambopoulos opines, among other things, that “HCAT instructed medical

assistants to order medically unnecessary over-testing.” Charalambopoulos Report at

Rel.’s Appx. 112. In reaching this conclusion, Dr. Charalambopoulos primarily analyzed

internal HCAT policy and procedure documents that specified how the PEP department

should order tests. As an example, he found that the PEP department was instructed to

order bone density scans for women over 50 every two years. Id. at 113. He then discussed

the medical literature on bone density scans and opined that this rate of testing was

excessive. Id. at 114. In concluding that it was HCAT policy to order more tests than

medically necessary, there was no need for Dr. Charalambopoulos to review any single

patient’s full medical record. His opinion concerns not just whether a specific instance of

testing was necessary, but whether HCAT’s practices and procedures resulted in

unnecessary testing. It would be expected for other practitioners in the medical field to

review policy documents when determining whether an organization had a policy of

ordering too many tests. Accordingly, his opinions are based on sufficient evidence.

Dr. Charalambopoulos is also entitled to rely on progress notes in forming his

opinions. He relied on progress notes as part of his factual background looking at the PEP

department’s practices of having “providers sign[] for annual wellness visits performed

by PEP medical assistants even though the provider had not seen the patient.” Id. at 103;

Rel.’s Appx. 4800. HCAT argues that he cannot determine from progress notes alone who

rendered the service. Defs.’ Mot. Exclude Charalambopoulos 14. However, Dr.

Charalambopoulos considers that relying on progress notes is a “well-guarded practice” in

the medical field — that is, that this is the kind of information other practitioners would

rely on in making this kind of determination. See Rel.’s Appx. 4800. Additionally,

Taylor’s expert Mark Anderson does opine on how to interpret Allscripts progress notes

and timestamps. HCAT contests whether the timestamps were accurately reporting who

the provider was. Defs.’ Mot. Exclude Charalambopoulos 15. But this dispute over the

technology goes to weight of the evidence here, not admissibility. Because progress notes

are an appropriate form of evidence for an expert in this field to rely upon, Dr.

Charalambopoulos’s opinions here are based on sufficient evidence.

C. Dr. Charalambopoulos is Qualified to Give His

Opinions and Does Not Render Legal Conclusions

Next, HCAT argues that Dr. Charalambopoulos makes impermissible legal

conclusions and that he is not qualified to give such opinions. Id. at 18–19. However, the

Court concludes that Dr. Charalambopoulos does not make legal conclusions and is

qualified to give the opinions in his expert report.

An expert can be qualified on a subject by knowledge, skill, experience, training, or

education. FED. R. EVID. 702. The Fifth Circuit recognizes work experience as a basis for

expert qualification. See United States v. Brown, 871 F.3d 352, 357 (5th Cir. 2017)

(affirming qualification of Medicare billing expert based on work experience). Here, Dr.

Charalambopoulos (1) is a medical doctor, (2) is the vice-chief primary care physician of

a hospital, (3) is the medical director of a long-term care facility, (4) sat on a peer review

committee that investigated physician wrongdoing, and (5) trained on the standards of care

including HHS/CMS standards. This training, education, and experience qualifies him to

testify on subjects including medical standards of care, the functions of different medical

professionals, appropriate practices within a healthcare facility, and whether specific

practices are consistent with his experience working with Medicare. 2

Additionally, Dr. Charalambopoulos is permitted to cite to regulations as supporting

his opinions about acceptable medical practices. Generally, expert witnesses cannot render

legal conclusions. Snap-Drape, Inc. v. Comm’r, 98 F.3d 194, 198 (5th Cir. 1996).

However, an expert is permitted “explain a complicated area of the law and the facts related

to it” as long as he does not “conclude that a defendant violated the law.” United States v.

Okoroji, 2018 WL 8756434, at *1 (N.D. Tex. 2018). In this way, an expert can say, for

example, that “Medicare, according to its billing process, will not reimburse for claims that

violate . . . Medicare regulations.” Id. at *2. Similarly, an expert could opine as to whether

he believes certain practices and procedures are consistent with Medicare’s guidelines, so

long as the expert does not dispositively state what the law is and whether any action was

“illegal.” United States v. Crinel, 2016 WL 6441249, at *9 (E.D. La. 2016).

2 Relator withdrew Dr. Charalambopoulos’s opinion number nine, regarding sudomotor

function tests. Rel.’s Resp. Charalambopoulos 12 [446]. Because this opinion is

withdrawn, the Court does not rule on whether Dr. Charalambopoulos is qualified to testify

on sudomotor function tests.

Here, Dr. Charalambopoulos gives multiple opinions that touch on legal concepts.

However, they are a far cry from a conclusive statement that HCAT broke the law. Each

of his opinions is based on his experience in the medical field, and reflects what, in his

view, is the standard of care or is the usual practice for a medical provider. In making these

opinions, he is permitted to cite to Medicare rules or guidelines, or Texas law, to lend

support to his conclusion that something is or is not an appropriate practice.

For example, HCAT objects to Dr. Charalambopoulos’s opinion on “the difference

between medical assistants and physician’s assistants” because it relies on the Texas

Administrative Code. Defs.’ Mot. Exclude Charalambopoulos 18. However, his opinion

on this subject reads as if it stems from his experience in the medical field, not a direct

interpretation of Texas law. Indeed, he describes at length the types of work and different

responsibilities of these two medical roles, and appends a cite to the Texas Administrative

Code at the end for the proposition that physician’s assistants “in most states, including

Texas, can examine, diagnose, and treat patients.” Charalambopoulos Report at Rel.’s

Appx. 106. This is not a statement that HCAT broke the law. The other opinions that

HCAT objects to on this ground follow a similar pattern. See Defs.’ Mot Exclude

Charalambopoulos 18–19. Thus, his opinions are not improper legal conclusions. If any

party does seek to offer legal conclusion testimony at trial, it can be addressed by a timely

objection.

D. Dr. Charalambopoulos’s Opinions on Standing

Orders and Bulk Signing are Proper

Finally, HCAT argues that Dr. Charalambopoulos’s opinions on standing orders,

batch signing, and incident-to billing should be excluded because his conclusions are

contradicted by the applicable law. Defs.’ Mot. Exclude Charalambopoulos 21–25.

However, the Rule 702 inquiry is not based on the expert’s conclusions, but on his methods.

And here, his opinions come from his experience as a physician and his review of HCAT

patient notes. His methods were sufficient for Rule 702. To the extent HCAT believes his

conclusions are incorrect, it can bring contradictory evidence and make its own legal

arguments at trial.

Having reviewed Dr. Charalambopoulos’s opinions, the Court concludes they meet

the requirements of Rule 702. Accordingly, HCAT’s motion to exclude his opinions is

denied.

V. THE COURT DENIES THE MOTION TO EXCLUDE DR. LALLA’S TESTIMONY

Taylor retained Dr. Lalla to review medical records and billing practices from

HCAT and offer opinions on whether Medicare, through its Medicare Administrative

Contractor (“MAC”), would have paid claims that violated certain Medicare rules. Lalla

Report at Rel.’s Appx. 1926. HCAT moves to exclude his testimony on the grounds that

he is not qualified, and his opinions are unreliable and irrelevant. Defs.’ Mot. Exclude

Lalla 1–3 [410]. Because the Court finds that Dr. Lalla’s opinions meet the requirements

of Rule 702, the Court denies the motion to exclude his testimony.

A. Dr. Lalla is Qualified

Dr. Lalla has significant experience that is relevant to the dispute at hand. For five

years, Dr. Lalla served as the medical director of Novitas — the specific MAC responsible

for adjudicating claims submitted by Texas providers for Medicare reimbursement. Lalla

Report at Rel.’s Appx. 1922. Currently, he is the medical director of another MAC. Rel.’s

Appx. 4529. He is also a medical doctor who practiced as a surgeon for twenty years and

who submitted claims to Medicare during his practice. Id. at 4529, 5080. During his time

at Novitas, he developed specific medical policies that Novitas used to made decisions in

processing Medicare claims. Lalla Report at Rel.’s Appx. 1922. This level of relevant

work experience combined with training and education render Dr. Lalla qualified to testify

on the subjects that he outlines in his expert report. But HCAT still takes issue with two

specific areas of testimony.

First, HCAT argues that Dr. Lalla not qualified to testify regarding primary care

documentation via Allscripts. HCAT specifically points out that Dr. Lalla’s clinical

practice was as a surgeon, not a primary care physician, and that he does not have any

experience with Allscripts. Defs.’ Mot. Exclude Lalla 4–5. However, these facts do not

render him unqualified. First, regardless of whether he submitted claims to Medicare as a

primary care provider, his experience as medical director of the MAC that handles

Medicare claims from Texas renders him competent to testify as to whether Medicare

would pay certain primary care claims. Additionally, he does not opine on the functionality

of Allscripts. Instead, he reviews the documentation of claims that were created in

Allscripts to see if Novitas would have paid them. To do so, he relies on a different expert

to explain the technical functions of Allscripts. See Lalla Report at Rel.’s Appx. 2010.

Because he is not testifying as to the technical functionality of Allscripts, his lack of

personal experience with the software is immaterial.

Second, HCAT argues that Dr. Lalla is not qualified to testify regarding Texas scope

of practice regulations. However, Dr. Lalla does not opine on any nuances of Texas scope

of practice rules. As one example, he opines that Novitas would not have paid for Annual

Wellness Visits performed entirely by medical assistants. See Lalla Report at Rel.’s Appx.

1949, 1956 (“Certain components of the AWV . . . must be performed by a physician or

mid-level for Novitas to pay for those services.”). In making this opinion, he cites to the

Texas Occupational Code twice, only for the propositions that (1) Texas requires a license

to practice medicine, and (2) that diagnosing or treating a disease qualifies as practicing

medicine. Id. at 1949. Dr. Lalla’s experience as the medical director for the MAC

adjudicating Texas Medicare claims qualifies him to opine on whether it would have paid

a claim by an unlicensed medical assistant.

Accordingly, the Court finds that Dr. Lalla is qualified to render the opinions he

produced in his expert report.

B. Dr. Lalla’s Opinions are Reliable and Are

Not Improper State of Mind Testimony

Next, HCAT argues that Dr. Lalla’s opinions are unreliable because he “used no

methodology” in selecting and analyzing claims. Defs.’ Mot. Exclude Lalla 7. It further

argues that his opinions on PEP practices are unreliable because he improperly testifies as

to motive.3 Reviewing the record, the Court concludes that Dr. Lalla’s opinions are

reliable.

Dr. Lalla’s expert opinions look at HCAT’s alleged practices and whether Medicare,

through Novitas, would pay claims based on those practices. To do this, Dr. Lalla “scrolled

through” the produced claims dataset to find examples of different categories of claims.

Rel.’s Appx. 5099. Then, with exemplars in hand, he could render his opinions on whether

different types of claims would have been paid. Scrolling through the universe of claims

is certainly not a statistically sound method. But that is irrelevant here, as Dr. Lalla does

not extrapolate from his examples or attempt to quantify the number of false claims at

issue. Every claim he utilizes in his report is illustrative of certain healthcare practices that

he believes would result in a nonpayable Medicare claim. If he were attempting to use a

sample of claims to quantify the total number of false claims in the entire population, then

he would have needed to use a statistically sound methodology. But for his purposes,

simply finding example claims and then applying his expertise to determine whether

Medicare would have paid claims of that type is a sufficiently reliable methodology.

HCAT also argues that his methods were internally inconsistent because Dr. Lalla

sometimes looked at multiple progress notes for one claim, while at other times he only

looked at one progress note. Defs.’ Mot. Exclude Lalla 9–10. Taylor, in response, argues

3 HCAT also attempts to argue that Dr. Lalla’s opinions about standing orders are

unreliable because they go beyond his expertise and ignore black-letter law. Defs.’ Mot.

Exclude Lalla 13–14. The Court found above that Dr. Lalla is qualified to testify as to his

opinions in his expert report. And the Court views that HCAT’s “black letter law”

challenge is an attack on Dr. Lalla’s conclusions, not his methods, and therefore goes to

the weight of the evidence and not its admissibility.

that for certain claim types, multiple notes were needed to determine the propriety of the

claim while for others, only reviewing one note was sufficient. Rel.’s Resp. Lalla 21–22

[447]. And in deposition, Dr. Lalla stated that for certain types of claims, the progress note

“stands alone” and must illustrate its compliance with Medicare rules. Rel’s Appx. 5103.

To the extent that HCAT believes Dr. Lalla should have reviewed more information, it can

make that argument to the factfinder. Here, his methods are sufficient to satisfy the

requirements of Rule 702.

Beyond reliability, HCAT argues that Dr. Lalla gives improper testimony as to

HCAT’s “motive or intent.” Defs.’ Mot. Exclude Lalla 12–13. Generally, an expert

witness’s “conclusory assertions regarding a defendant’s state of mind are not helpful or

admissible.” Marlin v. Moody Nat’l Bank, N.A., 248 F. App’x 534, 541 (5th Cir. 2007)

(per curiam) (citing Salas v. Carpenter, 980 F.2d 299, 305 (5th Cir. 1992)).

Dr. Lalla’s statements, however, are not such conclusory assertions. HCAT objects

to multiple of Dr. Lalla’s statements in his “factual basis” section that ascribe a motive to

HCAT. Defs.’ Mot. Exclude Lalla 12–13. Specifically, Dr. Lalla states:

One motive Dr. Powell and others at HCAT expressed for

establishing PEP was ensuring HCAT performed Annual

Wellness Visits (“AWV”) for Medicare patients . . . . Another

motive expressed in the case record was for the PEP

department was [sic] to capture HCC codes for Medicare

patients. Dr. Powell referred to this process as “mining” HCC

diagnoses from the PEP patients. . . . Another motive expressed

was for the PEP department to provide, in effect, annual

physical examinations to Medicare patients even though

Medicare does not pay for those examinations.

Lalla Report at Rel.’s Appx. 1935–36 (citations omitted). In stating this factual basis, Dr.

Lalla cites to multiple exhibits which he believes states these motives as fact. Id.; Rel.’s

Resp. Lalla 22–23. To the extent that these documents do state these motives as fact, Dr.

Lalla can refer to them as a basis for his opinions. Cf. In re Payment Card Interchange

Fee and Merchant Discount Antitrust Litig., 2022 WL 15044626, at *31 (E.D.N.Y. 2022)

(stating “the Court finds that [expert] cites to a source stating as a fact that the party or

nonparty had that state of mind and therefore does not offer a claim about state of mind as

his expert opinion, but rather references this fact . . . as the basis for his ultimate opinion.”

(cleaned up) (quoting Bd. of Trs. of AFTRA Ret. Fund v. JPMorgan Chase Bank, N.A.,

2011 WL 6288415, at *8 (E.D.N.Y. 2011))).

Further, Dr. Lalla’s actual opinions do not purport to offer improper testimony as to

HCAT’s intent. HCAT takes issue with a specific opinion where Dr. Lalla states that

“HCAT billed for diagnostic tests ordered and performed by PEP Staff before the provider

visit and without the sufficient intent from the provider.” Lalla Report at Rel.’s Appx.

1954 (emphasis added). However, looking at the context for this opinion, it is clear that he

is not actually opining on the physician’s intent. Instead, he is rendering opinion on

whether the progress notes he reviewed had sufficient documentation of the provider’s

intent. See id. at 1951–54. Accordingly, his opinions on this point do not present improper

testimony to HCAT’s motives or intent.

C. Dr. Lalla’s Opinions on ABI and Sudomotor Tests are Relevant

Finally, the Court concludes that Dr. Lalla’s opinions on ankle-brachial index

(“ABI”) tests and sudomotor tests are relevant. HCAT argues that Dr. Lalla’s opinions on

these subjects are only relevant to Taylor’s proposed Third Amended Complaint, which

Court denied leave to file. Defs.’ Mot. Exclude Lalla 15–16. However, the operative

complaint does allege that the PEP department billed for ABI and sudomotor tests that

should not have been covered by Medicare. See Second Am. Compl. ¶¶ 181–93. To the

extent that Dr. Lalla opines on improper ABI and sudomotor tests conducted within the

PEP department, his opinions are relevant. Should Taylor attempt to introduce otherwise

irrelevant testimony at trial, it can be addressed by a timely objection.

Thus, because Dr. Lalla is qualified and because his opinions are reliable and

relevant, the Court denies the motion to exclude his testimony.

VI. THE COURT DENIES THE MOTION TO EXCLUDE MORELL’S TESTIMONY

Taylor seeks to have Juliette Morell testify as a nonretained expert on the subjects

of (1) Medicare coding and billing best practices and compliance, (2) Medicare claims

auditing, and (3) medical chart review as it relates to Medicare billing. Morell Disclosure

at Rel.’s Appx. 7382. Taylor also seeks to have Morell testify as a fact witness based on

her employment with HCAT. Id. HCAT, in turn, seeks to have Morell’s expert testimony

excluded on the grounds that she is not qualified and her testimony is composed of

impermissible legal conclusions, not based on personal knowledge, irrelevant, unreliable,

and overly prejudicial. Defs.’ Mot. Exclude Morell 2–3 [411]. Based on the record, the

Court concludes that Morell’s testimony meets the requirements of Rule 702 and Rule 403.

A. Morell is Qualified

The Court finds that Morell is qualified to testify as an expert on Medicare coding

and billing best practices, claims auditing, and chart review. Morell has more than twenty

years of experience with healthcare compliance. Rel.’s Resp. Morell 1 [449]. She

described herself as “highly knowledgeable” on the subject of medical coding as of 2018.

Rel.’s Appx. 5166. She has testified as an expert regarding compliance with Medicare

regulations in three other cases. Id. At the time of her employment with HCAT she was a

certified professional coder. Id. at 5166–67. She was also certified as a professional

medical auditor. Id. at 5167. She has held herself out as a nationally recognized expert in

revenue cycle compliance. Id. She has eighteen years of consulting experience in the field

of medical coding. Id. at 4537. Based on this experience and specialized knowledge,

Morell is qualified to testify as an expert on Medicare coding, billing, claims auditing, and

chart review.

B. Morell’s Testimony is Based on Personal Knowledge

As a nonretained expert, Morell is permitted to rely on information that she received

within the scope of her employment. Nonretained expert witnesses “are typically limited

to testifying about their opinions formed as a result of their knowledge of the case gained

through direct observation.” Ferrara Land Mgmt. Miss., LLC v. Landmark Am. Ins. Co.,

2021 WL 4819461, at *2 (S.D. Miss. 2021). These witnesses “must testify from the

personal knowledge they gained on the job,” which “may limit their testimony.”

Indianapolis Airport Auth. v. Travelers Prop. Cas. Co. of Am., 849 F.3d 355, 371 (7th Cir.

2017); accord Timpson ex rel. Timpson v. Anderson Cnty. Disabilities & Special Needs

Bd., 31 F.4th 238, 253 (4th Cir. 2022). “These experts still ‘may be asked questions that

implicate their expertise,’ however, ‘they cannot be asked to opine about broader issues

beyond their own personal involvement.’” Jesus Church of Victoria Tex., Inc. v. Church

Mut. Ins. Co., 627 F. Supp. 3d 715, 723 (S.D. Tex. 2022) (quoting Ferrara Land Mgmt.,

2021 WL 4819461, at *2).

Courts permit nonretained experts to rely on information they would be expected to

rely on as experts in their field. See, e.g., Thomas v. T.K. Stanley, Inc., 2014 WL 12910539,

at *2 (E.D. Tex. 2014) (permitting nonretained expert physicians to rely on “blood work,

x-rays, and MRIs, and reports from specialists”); cf. Hegwood v. Ross Stores, Inc., 2007

WL 4570550, at *5 n.2 (N.D. Tex. 2007) (noting that “Rule 703 provides that experts may

consider non-admissible evidence in forming opinions if of a type reasonably relied up on

by experts in the particular field”). However, a nonretained expert may not offer opinions

that were produced specifically in preparation for trial. Jesus Church of Victoria, 627 F.

Supp. 3d at 724.

Based on the record, the Court concludes that Morell has sufficient personal

knowledge. HCAT levies a number of arguments about Morell’s personal knowledge,

many stemming from her reliance on information from other HCAT employees or records.

See Defs. Mot. Exclude Morell 11–16. But Morell served as HCAT’s Coding Manager.

Rel.’s Resp. Morell 1. In this role she was asked to create revenue cycle management and

coding policies and procedures. Rel.’s Appx. 5178. It is reasonable for an expert in a like

position to receive information from other employees to verify whether coding and billing

policies are functioning. As an example, HCAT takes issue with Morell’s understanding

of credentials within HCAT’s physical medicine department because it “always had been

based exclusively on what another employee told her, not what she personally knows.”

Defs.’ Mot. Exclude Morell 12. But if the credentialing of physical medicine providers

was relevant to how HCAT billed for those services, then she was permitted to ask another

knowledgeable HCAT employee about those credentials. She need not personally

investigate the credentialling status of those providers when another HCAT employee had

such knowledge. Thus, Morell has personal knowledge to testify to matters of coding,

billing, and related issues where she received information during her employment at

HCAT.

HCAT further takes issue with some of Morell’s deposition testimony, arguing that

she renders opinions based on “documents at deposition that she has never seen.” Id. at

11. Of course, a nonretained expert cannot render abstract opinions only created for trial.

Morell’s testimony must be confined to applying her expertise to the facts she encountered

on the ground at HCAT. See Jesus Church of Victoria, 627 F. Supp. 3d at 724. If Taylor

attempts to offer opinion testimony through Morell that is unrelated to her experience at

HCAT, then such testimony can be addressed at trial with a timely objection.

C. Morell’s Testimony is Relevant, Reliable, and Not Overly Prejudicial

Next, HCAT argues that four of Morell’s disclosed opinions are not relevant to the

operative complaint. Defs.’ Mot. Exclude Morell 17. Specifically, it points to her opinions

on CPT codes 95923 (sudomotor test) and 93923 (ABI), signature stamps, tilt table tests,

and improper E&M level codes. Id. However, the Court finds that this testimony is

relevant to the operative Second Amended Complaint.

On sudomotor and ABI codes, the complaint alleges that the PEP department

submitted claims to Medicare for these services that should not have been covered. See

Second Am. Compl. ¶¶ 181–93. Thus, to the extent that Morell’s testimony will address

the billing of sudomotor and ABI tests from the PEP department, her testimony is relevant.

On the use of signature stamps, the complaint alleges that procedures were being

billed as if rendered by a physician who did not actually render the service. See Am.

Compl. ¶¶ 121–161. The use of signature stamps could plainly aid in this alleged activity.

Thus, this testimony is relevant.

On the use of a tilt table within HCAT’s physical medicine department, the

complaint contains allegations about improper incident-to billing at HCAT’s physical

medicine department. Am Compl. ¶¶ 150–161. Testimony about billing for tilt table

services without possessing a tilt table is relevant at least to the issue of knowledge of false

billing within the physical medicine department.

Finally, on the use of improper or inflated E&M codes, the complaint alleges that

the PEP department was billing for services and office visits that it should not have been

under the Medicare AWV framework. Second Am. Compl. ¶¶ 162–214. Without the full

context of trial, the Court views that testimony about inflating E&M codes by billing for

services or amounts of time not actually spent with the patient is likely relevant. To the

extent that Taylor intends to introduce truly irrelevant testimony, it can be handled via

appropriate objection at trial.

The Court also concludes that Morell’s testimony is reliable. As a nonretained

expert, any opinions she renders must stem from the application of her specialized

knowledge to the facts she encountered while employed at HCAT. Based on her expert

disclosure, she intends to opine on a variety of Medicare rule violations she claims to have

encountered while at HCAT. See Morell Disclosure at Rel.’s Appx. 7383–85. The

application of her own experience, training, and knowledge in the field of medical coding

and billing to the facts that she encountered at HCAT is a sufficiently reliable means to

opine about the propriety of HCAT’s coding and billing practices. HCATs arguments

about the sources she relies on or her lack of understanding of Medicare requirements go

primarily to the weight of her testimony. She is qualified based on her experience and

training and is permitted to apply that experience and training to the set of facts that she

encountered while working for HCAT.

Additionally, her testimony is not overly prejudicial such that it should be excluded

under Rule 403. As noted above, her testimony is relevant to the allegations in the

operative complaint. At minimum, it is probative of HCAT’s knowledge that it may be

submitting false claims to Medicare. See 31 U.S.C. § 3729(a). Further, the Court does not

find that her testimony is overly cumulative. HCAT argues that it is so because Taylor’s

other experts intend to opine on similar subjects. Defs.’ Mot. Exclude Morell 24.

However, as a nonretained expert, Morell will be able to testify both as a fact witness and

as an expert, applying her experience and specialized knowledge to those facts she

encountered while employed at HCAT. This is different than if Taylor had simply retained

a second expert to render the exact same opinions as a different retained expert. Here the

testimony comes from a different perspective and is not overly cumulative.4 Accordingly,

the Court declines to exclude it under Rule 403.

D. Objections to Legal Conclusion Testimony are Better Addressed at Trial

The Court is of the opinion that objections to any legal conclusion testimony are

better addressed with the context provided at trial. HCAT argues that many of Morell’s

opinions, as framed in her expert disclosure, are impermissible legal conclusions. Defs.

Mot. Exclude Morell 5. Certainly, an expert witness cannot “state dispositively what the

law is, and that certain actions are ‘illegal.’” Crinel, 2016 WL 6441249, at *9. However,

an expert is permitted to “explain a complicated area of the law and the facts related to it”

so long as she does not “conclude that a defendant violated the law.” Okoroji, 2018 WL

8756434, at *1.

Here, Morell is a nonretained expert and therefore was not required to submit a

written report under FED. R. CIV. P. 26(a)(2). Without such a report, the Court does not

have a precise formulation of Morell’s opinions to review. The parties are cautioned that

expert opinion testimony consisting of legal conclusions will not be admitted. However,

the Court believes that objections to such testimony are better handled with the context

available at trial. Accordingly, the Court declines to rule on this issue at this stage and will

address it at trial via appropriate objection.

4 HCAT also argues that issues with Morell’s memory could render her testimony

confusing to the jury. These potential memory issues and confusion risk are best addressed

at trial.

Because the Court finds that Morell is qualified as an expert and her testimony is

reliable, relevant and based on sufficient personal knowledge, HCAT’s motion to exclude

her testimony is denied. 5

VII. THE COURT DENIES THE MOTION TO EXCLUDE

TESTIMONY OF SCOTT, ROSS, AND KROCK

Taylor retained Scott, Ross, and Krock (“Stout Witnesses”), who are employees of

Stout Risius Ross, LLC, to analyze the voluminous medical records produced by HCAT

and to quantify the number and dollar amount of false claims submitted to Medicare. Rel.’s

Resp. Scott 4–5 [452]. This analysis began with two raw datasets — Novitas claims data

and HCAT medical records. Id. at 12. Scott and Ross began by writing a computer

program to process the raw medical records in order to identify progress notes and to

extract specific data from them. Id. at 12. Ross also processed the Novitas claims data in

order to remove resubmitted claims and claims that are not relevant to Taylor’s allegations.

Id. at 12–13. Then, these two sets of processed records were joined together, and Scott

filtered the data using specific criteria to identify and count false claims. Id. at 13. After

completing the analysis, Krock performed a statistical validation study to confirm the

validity of Scott’s results. Id. at 15.

5 HCAT also moves for the Court to exclude any lay opinions rendered by Morell. Because

the Court finds Morell is qualified as an expert, the Court declines to rule on the issue of

lay opinion.

HCAT argues that each of these experts’ opinions should be excluded for a variety

of reasons including unreliability, lack of qualifications, and irrelevance.6 Defs.’ Mot.

Exclude Scott 1–2 [412]. However, upon review of the record, the Court concludes that

each expert has satisfied the requirements of Rule 702 and should not be excluded.

A. Scott, Ross, and Krock are Qualified

Reviewing Scott’s credentials and experience, the Court concludes that she is

qualified as an expert in medical coding, billing, and regulatory compliance. Scott has

significant experience in these fields. She is certified in healthcare compliance and is a

certified professional coder. Rel.’s Appx. 4706. Since 2016 she has held leadership

positions in multiple healthcare consulting firms. Id. at 4706–07. Additionally, she has

nearly ten years of experience working in healthcare revenue cycle departments. Id. at

4707–09. She has experience as a billing and compliance analyst at Kaiser Permanente.

Id. at 4709. She has trained healthcare auditors to investigate fraudulent billing practices

and has authored a publication chapter about medical coding and reimbursement. Id. at

4707, 4709. Based on this experience and her certifications in the field, the Court

concludes that Scott is qualified to testify as an expert on healthcare coding, billing, and

regulatory compliance.

Ross, as part of Scott’s team, worked to implement Scott’s criteria into computer

code to enable analysis of the claims and progress note data. See Rel.’s Appx. 7364–77.

6 HCAT also argues that Scott gives improper legal conclusions. As stated above, the Court

is of the opinion that objections to legal conclusions are best addressed at trial.

Accordingly, they are not addressed here.

His expert testimony in this matter is confined to the methodology used by the Stout

Witnesses to quantify false claims. Rel.’s Resp. Scott 7–8. To this end, Ross has

experience with data analytics supporting expert reports in multiple healthcare litigation

matters. Rel.’s Appx. 7379. He also has data analysis experience with other matters

including insurance and bankruptcy disputes. Id. at 7379–80. He has a bachelor’s degree

in finance and information systems. Id. at 7378. Based on this experience and education,

the Court concludes that he is qualified as an expert in the area of data analytics.

Krock’s role on the team was to design a statistical validation study to determine

how reliable Scott’s analysis was. Rel.’s Resp. Scott 5. Krock has a Ph.D. in economics

and has extensive training in statistical methods. Krock Report at Defs.’ Appx. 1004 [406].

He leads the Economic Consulting Practice at Stout and has testified as a damages expert

in many different types of cases. Id. He has experience working as a consultant within the

healthcare industry and provides statistical analysis and guidance to related to public and

private healthcare payment disputes. Id. The Court finds that this education and

experience qualifies Krock to testify to the statistical validity and resulting damages

calculation for Scott’s analysis.

B. Scott, Ross, and Krock’s Opinions are Reliable

As described above, the Stout Witnesses counted the number of false claims in the

provided HCAT and Novitas datasets through the use of computer analysis. To perform

this analysis, Scott began by identifying categories of potentially false claims and stating

the Medicare rules that she used to generate her filtering criteria. See, e.g., Scott Rep. at

Rel.’s Appx. 4569. Then, Scott and Ross would translate the Medicare requirements into

data filters, execute a computer program to identify and return records of claims matching

that filter, and then count up the number of false claims returned. See, e.g., id. at 4582–85;

Rel.’s Appx. 5275 (noting Ross’s statement that Scott would “instruct me on the criteria . . .

and I would apply the criteria”). In total, Scott and Ross evaluated and quantified 30 groups

of claims that Scott identified as false. See Rel.’s Appx. 7822 (native Excel files listing

each identified claim in each group). This method allowed Scott and Ross to directly count

the number of claims that met Scott’s criteria for falsity. It was not based on extrapolation

from representative sample, but instead was a numeric count of progress notes and claims

records that, in Scott’s opinion, are inconsistent with Medicare requirements.

Then, after Scott and Ross’s analysis was complete, Krock designed and performed

a statistical validation study. He performed statistical sampling of each of Scott’s claim

groups that found more than fifty total claims (nineteen groups). Krock Report at Defs.’

Appx. 1008. Six of Scott’s groups returned fewer than fifty claims, so Krock and Scott

manually validated every claim in those groups. Id. Then, for the last five groups, Scott

determined that these groups were per se false based on the Medicare rules and Krock did

not statistically validate them. Id. Krock designed his study to use a one-tailed criteria

with a 90% confidence interval. Id. at 1010. His validation study returned a result of 100%

accuracy — every single claim that was randomly selected to be part of his representative

sample was found to meet Scott’s criteria. Id. at 1013.

Looking at this process overall, the Court concludes that it is sufficiently reliable.

A team of three qualified experts brought their skills together to directly count the number

of HCAT’s claims that meet the falsity criteria used by Scott. Then, they performed a

statistical validation, to identify a possible error rate in this count, and found a 100%

success rate. The methodology utilized by the Stout Witnesses is sufficiently reliable to

satisfy the requirements of Rule 702.

HCAT attacks this method’s reliability on a number of grounds, but the Court does

not find these arguments persuasive. First, it argues that Scott and Ross treated two sets of

claims data differently, and thereby used an unreliable method. Defs.’ Mot. Exclude Scott

14–15. However, it appears that the change in script methodology was designed only to

reduce the processing time of the script. Rel.’s Appx. 5372. Scott testified that the

difference in the result outputs between the two scripts was not material. Id. at 5372–73.

Additionally, the validation study did not find any claims that did not meet the expected

results. Accordingly, this efficiency change in the script does not render the methodology

unreliable.

Second, HCAT argues that the method is unreliable because it only looked at

“cherrypicked” claims data. Defs.’ Mot. Exclude Scott 16. However, the data used was

based on the categories of claims identified in then–Magistrate Judge Ramirez’s discovery

order. See Order, November 23, 2022 [157]. All of HCAT’s Medicare claims data was

produced to a third-party analyst, Joshua Dennis, who filtered the data to match with the

specified categories of claims. This filtering created the limited set of claims data relevant

to this dispute. The Stout Witnesses are entitled to base their analysis on this relevant

dataset.

Third, HCAT argues that Scott did not correctly apply incident-to billing

requirements in generating her data filters. Defs. Mot. Exclude Scott 18–21. However,

this does not make her analysis unreliable. She is qualified as an expert in medical billing

and coding and has significant experience in the area. As such, she is entitled to apply that

experience and knowledge to the facts of the case. To the extent HCAT disagrees with her

applications of the rules to the facts of this case, it may present those arguments at trial. It

does not appear to the Court that any such errors (if there are errors at all) are so pervasive

as to render her opinion unreliable.

Fourth, HCAT argues that Ross’s opinions are unreliable because he treated the two

datasets differently and that his produced script did not work correctly. Id. at 30–37. On

the treatment of the two datasets, the Court already determined that this did not render

Scott’s opinion unreliable. It also does not render Ross’s opinion unreliable. As for the

code not working, Taylor disputes that it was broken. Rel.’s Resp. Scott 38. She asserts

that HCAT did not follow the method identified in Ross’s declaration that allows the script

to operate. Id. at 39. Additionally, Ross and Scott produced the entire set of claims that

they identified as violating Scott’s falsity criteria. See Rel.’s Appx. 7822. Accordingly,

HCAT could still verify the output as needed. His opinion, then, is reliable.

Sixth, HCAT argues that Krock’s opinions are unreliable because he opines on some

claim categories that he did not randomly sample and because he is not qualified to opine

on Medicare regulations. Defs.’ Mot. Exclude Scott 39–42. These arguments miss the

point. Krock elected not to randomly sample two groups of claims: (1) those where the

category of claims had fewer than fifty results, and (2) those categories that Scott

determined were per se false. Krock Report at Defs.’ Appx. 1008. For the groups with

fewer than fifty records, he manually reviewed every record for validity. Id. No random

sampling was required because he confirmed the validity of each record directly. For the

per se false categories, he relied on Scott’s determination that, based on the Medicare rules,

every claim matching those filters must be false. Id. If the factfinder accepts Scott’s

position on those categories, then statistical sampling for validity is not required. On

Krock’s qualifications, he need not be an expert in Medicare regulations because his

opinions only discuss a statistical validation of Scott’s work. Of course, Scott needs to be

an expert on healthcare coding and billing to render her opinions. And she is. But Krock’s

expertise only needs to encompass statistical methods and damages calculations — subjects

for which the Court has already concluded Krock is qualified.

Accordingly, the Court finds that Scott, Ross, and Krock’s opinions are sufficiently

reliable to meet the requirements of Rule 702.

C. Scott’s Opinions are Relevant

HCAT targets three specific opinions by Scott, arguing that they fall outside the

scope of the operative complaint. It argues that Scott Opinion 2 discussed the Stark law,

which is not pleaded in the complaint, and that Scott Opinions 6 (sudomotor tests) and 7

(ABI tests) include claims that were only relevant to the nonoperative Third Amended

Complaint. Defs. Mot. Exclude Scott 22. The Court disagrees.

On the Stark law, Scott includes her discussion of the Stark law as part of her

background to her opinion. Scott Report at Rel.’s Appx. 4586–87. She brings it up because

she believes HCAT relied on the Stark law when establishing its policies about which

providers should bill which services. Id. at 4590–91. However, her actual opinion is that

HCAT “falsely represented the physician that rendered services.” Id. at 4586. The SAC

does allege that HCAT falsely billed claims under the name of a founding physician who

did not actually render the services. Second Am. Compl. ¶¶ 121–61. Thus, this opinion is

relevant, regardless of her discussion of the Stark law.

On sudomotor tests and ABI tests, the complaint alleges that these types of tests

were falsely billed from the PEP department. See Second Am. Compl. ¶¶ 181–93. Scott’s

opinion does not appear on its face to be limited to the PEP department, but Taylor asserts

that Scott’s rebuttal report removes claims for sudomotor tests and ABI tests that did not

originate from the PEP department. Rel.’s Resp. Scott 33. Thus, to the extent Scott opines

on sudomotor and ABI tests from the PEP department, her testimony is relevant. Should

Taylor attempt to introduce truly irrelevant testimony at trial, it can be addressed by

appropriate objection.

D. The Court Declines to Impose an Exclusion Sanction for Untimely Discovery

Finally, HCAT seeks to have Scott, Ross, and Krock’s expert reports excluded as a

discovery sanction for failure to meet deadlines. HCAT claims that (1) Taylor did not

timely produce supporting data for Scott’s report, (2) Taylor did not timely designate Ross

as an expert, and (3) Taylor did not timely produce supporting data for Krock’s report.

Defs.’ Mot. Exclude Scott 44–48. Because the Court finds that any untimeliness on

Taylor’s part was harmless, the Court declines to impose an exclusion sanction.

Federal Rule of Civil Procedure 26(a)(2) requires parties to disclose the identity of

expert witnesses and to provide a written report prepared by the witness. FED. R. CIV. P.

26(a)(2). Among other things, the written report must include “the facts or data considered

by the witness in forming” his opinions and “any exhibits that will be used to summarize

or support them.” Id. These disclosures and reports must generally be full and final. See

Reliance Ins. Co. v. La. Land & Expl. Co., 110 F.3d 253, 256–57 (5th Cir. 1997) (affirming

refusal to allow expert to add an opinion on a new issue after expiration of the deadline);

Beller ex rel. Beller v. United States, 221 F.R.D. 689, 695 (D.N.M. 2003) (noting that

permitting supplemental expert reports “would surely circumvent the full disclosure

requirement implicit in Rule 26”).

Under Rule 37(c), 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.” FED. R. CIV. P. 37(c). In considering whether a violation is

harmless, the Court considers:

(1) the explanation, if any, for the party’s failure to comply

with the discovery order; (2) the prejudice to the opposing

party of allowing the witnesses to testify; (3) the possibility of

curing such prejudice by granting a continuance; and (4) the

importance of the witnesses’ testimony.

Barrett v. Atl. Richfield Co., 95 F.3d 375, 380 (5th Cir. 1996). “The Court has broad

discretion in deciding whether a violation of Rule 26(a) is substantially justified or

harmless.” Reyes v. City of Farmers Branch, 2008 WL 4791498, at *3 (N.D. Tex. 2008).

Taylor’s three-day-late production of supporting materials for Scott’s opinion was

harmless. Special Master Order No. 16 [377] set Taylor’s expert disclosure deadline at

June 7, 2024. Taylor designated Scott as an expert and produced her report on that date.

Defs.’ Appx. 609. However, there was an apparent technical issue and supporting

appendices did not get uploaded until the issue was caught and addressed on June 9. See

id. at 265–66. Similarly, the declaration of Ross that Scott relied upon also appeared to not

be uploaded on time and was submitted to HCAT on June 10. Id. at 269. These delays of

two and three days did not materially prejudice HCAT. HCAT deposed Scott on July 17,

more than one month after receiving her supporting material. Id. at 1818. Accordingly,

this delay was harmless.

Taylor’s late designation of Ross as an expert was harmless. Initially, Taylor did

not intend to call Ross to testify at trial. Rel.’s Resp. Scott 44. As discussed above, Ross’s

function on the Stout team was to perform the technical implementation of Scott’s analysis.

In line with this role, Scott references Ross’s work in her report. In support of this, Taylor

produced Ross’s declaration on June 10. Defs.’ Appx. 269. HCAT, unsatisfied, sought to

depose Ross after receiving this material. Joint Status Report 9 [392]. Taylor voluntarily

produced Ross for deposition on July 12 and designated him as an expert the same day. Id.

While this was more than one month after Taylor’s June 7 deadline, HCAT was fully aware

of Ross’s function on the Stout team. Ross’s expert opinion is generally confined to the

methodology employed by Scott to effectuate her data analysis. Rel.’s Resp. Scott 7–8.

And in addition to deposing him on this subject, HCAT has produced its own experts

rebutting Ross’s methodology. E.g., Russo Report at Appx. Supp. Rel.’s Mot. Exclude

Gosfield 526 [456]. Accordingly, HCAT was not prejudiced by this late disclosure.

Taylor’s late production of Krock’s supporting materials was harmless. Taylor

designated Krock as an expert and produced his report on June 7. Defs.’ Appx. 609–10.

In response, HCAT requested native files for Krock’s appendices as well as the “seed”

information for the statistics program he used. Id. at 619–22. Taylor produced these items

on June 10. Id. As with Scott, this three-day-late production is harmless, as it occurred

well before Krock’s July 10 deposition. Id. at 1704. Following Ross’s deposition, HCAT

believed that Ross provided materials to Krock that he relied on in his opinions. See id. at

629. From the information present in the appendix, it is unclear whether or not any such

materials existed, and if they did, what prejudicial effect they could have on HCAT. In its

motion, HCAT does not articulate any prejudice other than the fact that it had to ask for

this material. Accordingly, any late production of this material is harmless.

Because the Court finds that Scott, Ross, and Krock are qualified, their opinions are

reliable and relevant, and their reports should not be excluded as a sanction, the Court

denies the motion to exclude their testimony.

VIII. THE COURT DENIES THE MOTION TO EXCLUDE DENNIS’S TESTIMONY

Dennis’s involvement in this case began when Taylor selected him, pursuant to a

Special Master order, to act as a third-party vendor to filter Novitas claims data. A

discovery dispute arose when Taylor sought all of HCAT’s claims data from Novitas, the

MAC to which HCAT submitted its Medicare claims for processing. See Rel.’s Mot.

Compel 1 [241]. In response, the Special Master ordered Taylor to choose a third-party

vendor to receive the Novitas data, filter the data to eliminate irrelevant claims, and produce

to Taylor the relevant claims. Special Master Order No. 3, at 1–2 [321]. Josh Dennis was

the individual who performed this filtering. Dennis Report at Rel.’s Appx. 1070.

Subsequently, Taylor designated Dennis as an expert to testify about this filtering process.

See id. Now, HCAT argues that this designation violates Special Master Order No. 3 and

thereby renders his opinions unreliable. Because the Court finds Dennis’s designation does

not violate Special Master Order No. 3 and his opinions are reliable, the Court denies the

motion to exclude him.

Taylor’s designation of Dennis as an expert did not violate Special Master Order

No. 3. This order stated, in relevant part:

Novitas shall produce to a third-party vendor (which Relator

will identify) all Defendants’ Medicare claims in its possession

from 2015–2021. The third party shall filter the Novitas claims

responsive to Relator’s amended subpoena to Novitas by using

Relator’s search filters submitted in connection with Joint

Submission ECF 280.

Special Master Order No. 3, at 1–2 (citation omitted). HCAT argues that this order required

the third party to be an “independent, neutral” third party, and that Dennis’s report should

be excluded because it violates this requirement. Defs.’ Mot. Exclude Dennis 89, 11 [413].

However, neither the word “independent” nor the word “neutral” appears anywhere in the

order. Additionally, Dennis specifically testified that Taylor and her counsel never had

access to the raw Novitas data before Dennis filtered it. Rel.’s Appx. 4954, 4985.

Accordingly, Taylor and Dennis did not violate Special Master Order No. 3 by designating

Dennis as an expert to testify on his filtering methodology.

Additionally, HCAT claims that Dennis’s testimony cannot be reliable because he

“surreptitiously acted as an expert for Relator” while also acting as this third-party vendor.

Defs.’ Mot. Exclude Dennis 9. The Court does not find this argument persuasive. HCAT

asserts that because Taylor’s counsel made privilege objections during Dennis’s

deposition, that HCAT cannot know “the full extent of what searching and analysis Mr.

Dennis did.” Id. at 10. However, contrary to this assertion, Taylor’s counsel instructed

Dennis “not to go into communications with counsel except for any communications

regarding information that you relied upon or assumptions that were provided to you.”

Rel.’s Appx. 4917 (emphasis added). It is not clear to the Court that any information

relevant to Dennis’s methodology or reliability was not available to HCAT. This is

especially true when considering that Dennis’s entire opinion is just an explanation of the

specific data fields and filtering criteria he used to create the Novitas dataset produced to

both parties. See Dennis Report at Rel.’s Appx. 1071–76. And Dennis has fifteen years

of experience performing complex data analysis, and frequently uses Structured Query

Language (“SQL”) and other data analysis tools. Id. at 1068. His explanation of his

methodology stems from this experience and is reliable.

Because Dennis’s expert opinions do not violate Special Master Order No. 3 and

are reliable, the Court denies the motion to exclude his testimony.

IX. THE COURT DENIES THE MOTIONS TO EXCLUDE EXPERT

OPINIONS ON CREDENTIALLING AND CORPORATE CONDUCT

In addition to filing motions to exclude each of Taylor’s experts, HCAT also filed

motions to exclude specific subject matter testimony from the same experts. Specifically,

it filed a motion to exclude expert testimony on credentialling, targeting opinions by Dr.

Lalla, Scott, and Ross, and a motion to exclude expert testimony on corporate conduct

targeting opinions by Dr. Charalambopoulos, Scott, Anderson, and Dr. Lalla. Defs.’ Mot.

Exclude Credentialling 1 [414]; Defs.’ Mot. Exclude Conduct 1 [415].

The Court has already concluded that the testimony of each of these experts satisfies

the requirements of Rule 702 and should not be excluded. The additional subject-matter

arguments raised in these motions do not change the Court’s analysis. Each expert’s

qualifications and methodologies apply across each of his or her opinions, including those

on credentialling and corporate conduct.

One argument of note in the corporate conduct motion is that HCAT objects to

expert testimony where the expert opines on HCAT’s state of mind. HCAT is correct that

an expert cannot directly opine on a defendant’s state of mind. United States ex rel.

Ruscher v. Omnicare, Inc., 2015 WL 5178074, at *11 (S.D. Tex. 2015); see also In re Air

Crash Disaster at New Orleans, 795 F.2d 1230, 1233 (5th Cir. 1986) (noting that “the trial

judge ought to insist that a proffered expert bring to the jury more than the lawyers can

offer in argument”). However, an expert is permitted to testify that certain practices or

behaviors are consistent with a certain state of mind. U.S. Commodity Futures Trading

Comm’n v. Wilson, 2016 WL 7229056, at *8 (S.D.N.Y. 2016); cf. United States v. Dotson,

817 F.2d 1127, 1132 (5th Cir. 1987) (permitting, in a criminal case, expert testimony that

certain facts were consistent with an intent to evade taxes), vacated in part on other

grounds by 821 F.2d 1034 (5th Cir. 1987). The parties are cautioned that direct statements

of state of mind are not proper expert testimony. The Court will address any such

statements through objections at trial.

Because the Court has found that each of Taylor’s above experts satisfy the

requirements of Rule 702, the Court denies these subject-matter motions to exclude.

CONCLUSION

Because the Court finds that the opinions of Anderson, Dr. Charalambopoulos, Dr.

Lalla, Morell, Scott, Ross, Krock, and Dennis meet the requirements of Rule 702, the Court

denies HCAT’s motions to exclude their testimony.

Signed October 15, 2024.

David C. Godbey

Chief United States District e

MEMORANDUM OPINION AND ORDER — PAGE 43