United States v. Supervalu Inc.
United States District Court, C.D. Illinois, Springfield Division
November 22, 2019
UNITED STATES OF AMERICA, and THE STATES OF CALIFORNIA, DELAWARE, ILLINOIS, INDIANA, MASSACHUSETTS, MINNESOTA, MONTANA, NEVADA, NEW JERSEY, NORTH CAROLINA, RHODE ISLAND, VIRGINIA, ex rel. TRACY SCHUTTE and MICHAEL YARBERRY, Plaintiffs and Relators,
v.
SUPERVALU, INC., SUPERVALU HOLDINGS, INC., FF ACQUISITIONS, LLC, FOODARAMA, LLC, SHOPPERS FOOD WAREHOUSE CORP., SUPERVALU PHARMACIES, INC., ALBERTSON'S LLC, JEWEL OSCO SOUTHWEST LLC, NEW ALBERTSON'S INC., AMERICAN DRUG STORES, LLC, ACME MARKETS, INC., SHAW'S SUPERMARKET, INC., STAR MARKET COMPANY. INC., JEWEL FOOD STORES, INC., and AB ACQUISITION LLC, Defendants.
OPINION
RICHARD MILLS, U.S. DISTRICT JUDGE.
The
Relators move in limine to exclude portions of the proffered
expert testimony of Defendants' experts Leslie Norwalk,
James Kevin Gorospe, Michael Jacobs and Jed Smith.
The
Relators seek the exclusion of these opinions on the basis
that they fail to satisfy the standards of admissibility set
by the Federal Rules of Evidence and Daubert v. Merrell
Dow Pharms., Inc., 509 U.S. 579 (1993). They contend
some of the proffered testimony constitutes inadmissible
legal opinions; opinions on the intent of government agencies
and Congress; opinions on the meaning of statutes and
regulations; opinions that exceed the expert's area of
expertise; and opinions that weigh the evidence and tell the
jury what result to reach.
The
Defendants allege the expert testimony satisfies the Federal
Rules of Evidence and Daubert and will assist the
jury in understanding and evaluating evidence in this complex
case involving esoteric areas of government healthcare
program operations and prescription drug price reporting
underlying the Relators' claims.
I.
Leslie
Norwalk is a Washington, D.C. attorney who worked for the
Centers for Medicare and Medicaid Services (CMS) for six
years. The Relators claim that Norwalk's 47-page report
reads like a legal memorandum for the Defendants. They
contend Norwalk's report consists of legal opinions;
improper attempts to testify to the intent of Congress or the
intent of Government agencies like HHS and CMS on Medicare
Part D matters; interpretations of the meanings and intent
behind statutes and regulations; and interpretations of the
intent of Medicare contractors. The Relators assert Norwalk
also attacks the Seventh Circuit's decision in United
States ex rel. v. Garbe Corp., 824 F.3d 632 (7th Cir.
2016).
Kevin
Gorospe is a pharmacist who has worked for California as a
clinical staff pharmacist, a senior pharmaceutical
consultant, and then as Chief of Pharmacy Policy for
California Medicaid. Gorospe is the Defendants' Medicaid
expert who they have tasked to “review the Medicaid
schemes for the 24 states in which Defendants operated
pharmacies during the 2006-2016 time period.” The
Relators say he lacks experience working with or for
Illinois, Washington or Utah Medicaid and is thus not
qualified to opine on those Medicaid programs. They also
allege Gorospe's report offers legal opinions on the
effect of a State Medicaid Plan's alleged modification of
its usual and customary definitions; whether these are
“material” changes that require approval of CMS;
and representing that such changes can be challenged by
providers. The Relators further note that Gorospe's
opinions regarding Medicaid practices and standards for any
States other than California, Illinois, Utah and Washington
are irrelevant, given that those are the only four States for
which Relators continue to pursue Medicaid claims.
Michael
S. Jacobs is a pharmacist consultant who has worked for a
Pharmacy Benefit Manager (PBM) in the past. He has evaluated
Prescription Drug Plans and has been involved in negotiating
PBM - payor relationships. From 2014 to 2017, Jacobs worked
for Walmart negotiating and contracting with Medicare Part D
plan sponsors and PBMs. Jacobs has been retained by the
Defendants to opine on his understanding of how the PBM
industry and pharmacy retail industry defines usual and
customary; how Government Healthcare Programs (GHPs) operate
with PBMs; “whether Defendants committed fraud”
by not reporting price matches as their usual and customary
price; and the Relators' expert reports. The Relators
claim that much of Jacobs's report consists of
inadmissible legal opinions. Additionally, his statement
regarding whether the Defendants committed fraud essentially
goes to the ultimate issue.
Jed
Smith is an electronic data analyst with Navigant Consulting,
Inc., who specializes in calculating damages in healthcare
disputes for pharmacies, PBMs, payors and providers. Smith
described his area of expertise as “damage calculations
and the analysis of data in the healthcare industry.”
The scope of his engagement is “to review and analyze
Mr. Dew's [Relators' large data analyst] expert
report and supporting materials regarding his calculation of
alleged overpayments.” The Relators say several of
Smith's opinions go beyond the scope of his engagement
and exceed his area of expertise. Portions of his report are
critical of the Defendants' expert, Dr. Schafermeyer, on
his use of the Medicare Part D term “prevailing
charge.” The Relators claim Smith also proffers legal
opinions. Moreover, he adopts and incorporates opinions of
other Defense experts that may be inadmissible.
Additionally,
Smith proffers opinions on several state Medicaid
programs-Oregon, Idaho, Delaware and Maryland--that have been
dismissed.
II.
Under
Federal Rule of Evidence 104(a), the Court acts as the
gatekeeper in determining whether testimony is admissible.
Rule 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 ...