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United States ex rel. Garbe v. Kmart Corp.

United States District Court, S.D. Illinois

July 21, 2017

UNITED STATES OF AMERICA, et al. ex rel. JAMES GARBE, Plaintiffs,


          NANCY J. ROSENSTENGEL United States District Judge.

         This matter comes before the Court on the motions to exclude expert testimony filed by Relator James Garbe and Defendant Kmart Corporation. Defendant Kmart has moved to exclude the expert opinion of Dr. Joel Hay, a pharmaceutical economist hired by Relator to analyze Kmart's reimbursement data and calculate the damages purportedly sustained by the Government as a result of Kmart's alleged conduct (Doc. 323). Relator has moved to exclude the report and testimony of Kmart's expert witness Dorothy DeAngelis, who was retained by Kmart to rebut the damages theory proffered by Relator in his pleadings, as well as to rebut the testimony of Relator's experts (Doc. 322). After holding a hearing on these motions, as well as a thorough review of the parties' briefs and the record in this case, the Court denies both motions.

         Legal Standard

         “A district court's decision to exclude expert testimony is governed by Federal Rules of Evidence 702 and 703, as construed by the Supreme Court in Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993).” Brown v. Burlington Northern Santa Fe Ry. Co., 765 F.3d 765, 771 (7th Cir. 2014); see also Lewis v. Citgo Petroleum Corp., 561 F.3d 698, 705 (7th Cir. 2009). The Daubert standard applies to all expert testimony, whether based on scientific competence or other specialized or technical expertise. Smith v. Ford Motor Co., 215 F.3d 713, 719 (7th Cir. 2000) (citing Kumho Tire Co., Ltd. v. Carmichael, 526 U.S.137, 141 (1999)).

         Federal Rule of Evidence 702 provides:

If scientific, technical or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, or training or education may testify thereto in the form of an opinion or otherwise.

         “In short, the rule requires that the trial judge ensure that any and all expert testimony or evidence admitted ‘is not only relevant, but reliable.'” Manpower, Inc. v. Ins. Co. of Pa., 732 F.3d 796, 806 (7th Cir. 2013) (quoting Daubert, 509 U.S. at 589). In determining whether expert testimony is both relevant and reliable, courts in the Seventh Circuit perform a three-step analysis: “the witness must be qualified ‘as an expert by knowledge, skill, experience, training, or education, ' Fed.R.Evid. 702; the expert's reasoning or methodology underlying the testimony must be scientifically reliable, Daubert, 509 U.S. at 592-93, 113 S.Ct. 2786; and the testimony must assist the trier of fact to understand the evidence or to determine a fact in issue.” Ervin v. Johnson & Johnson, Inc., 492 F.3d 901, 904 (7th Cir. 2007) (citing Fed.R.Evid. 702).

         “[W]here such testimony's factual basis, data, principles, methods, or their application are called sufficiently into question . . . the trial judge must determine whether the testimony has ‘a reliable basis in the knowledge and experience of [the relevant] discipline.'” Kumho, 526 U.S. at 149 (quoting Daubert, 509 U.S. at 592). “A Daubert inquiry is not designed to have the district judge take the place of the jury to decide ultimate issues of credibility and accuracy.” Lapsley v. Xtek, Inc., 689 F.3d 802, 805 (7th Cir. 2012). “If the proposed expert testimony meets the Daubert threshold of relevance and reliability, the accuracy of the actual evidence is to be tested before the jury with the familiar tools of ‘vigorous cross-examination, presentation of contrary evidence, and careful instruction on the burden of proof.'” Id. (quoting Daubert, 509 U.S. at 596). The district court possesses “great latitude in determining not only how to measure the reliability of the proposed expert testimony but also whether the testimony is, in fact, reliable.” United States v. Pansier, 576 F.3d 726, 737 (7th Cir. 2009) (citing Jenkins v. Bartlett, 487 F.3d 482, 489 (7th Cir. 2007)).


         I. Kmart's Motion to Exclude Relator's Expert Dr. Joel Hay

         Dr. Hay submitted his expert report on July 14, 2014, and issued revised reports on November 30, 2014 and July 11, 2017 (Docs. 324-1, 324-3, 422). Kmart argues Dr. Hay's opinions are inadmissible because his damages calculation methodology is unreliable and irrelevant, and thus it will not help the trier of fact in reaching a verdict on the issues in this case. Kmart also asserts Dr. Hay's methodology is fatally flawed because it is based on an incorrect understanding of Medicare Part D's payment structure. Kmart claims this mistake is indicative of Dr. Hay's lack of expertise regarding Medicare Part D, which renders him unqualified to serve as an expert.

         A. Dr. Hay's Qualifications

         Under Daubert and the Federal Rules of Evidence, the Court must determine whether Dr. Hay is qualified as an expert by his knowledge, skill, education, or training. Daubert, 509 U.S. at 596; Fed.R.Evid. 702. “Whether a witness is qualified as an expert can only be determined by comparing the area in which the witness has superior knowledge, skill, experience, or education with the subject matter of the witness's testimony.” Gayton v. McCoy, 593 F.3d 610, 616 (7th Cir. 2010) (quoting Carroll v. Otis Elevator Co., 896 F.2d 210, 212 (7th Cir. 1990)). “The question we must ask is not whether an expert witness is qualified in general, but whether his ‘qualifications provide a foundation for [him] to answer a specific question.'” Id. at 617 (quoting Berry v. City of Detroit, 25 F.3d 1342, 1351 (6th Cir. 1994)).

         Kmart acknowledges Dr. Hay holds a Ph.D. in Economics from Yale University and is a tenured Full Professor and Founding Chair of Pharmaceutical Economics and Policy in the School of Pharmacy at the University of Southern California. Yet, Kmart contends, Dr. Hay's experience in the field of pharmaceutical economics does not extend to data analysis and submission of Medicare Part D claims. For example, he has not published any articles on Medicare Part D and has done no research regarding the program. While he once served as a consultant for CMS, this experience was not related to Medicare Part D. Furthermore, during his deposition, Dr. Hay demonstrated only a cursory familiarity with the Medicare Part D payment structure and appeared unfamiliar with ...

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