United States of America v. BlueWave Healthcare Consultants Inc
9:14-cv-00230
D.S.C.Jul 12, 2017Background
- Government intervened in FCA/AKS suit against BlueWave Healthcare Consultants and individuals, alleging kickbacks and improper P&H (processing & handling) payments to induce lab referrals to HDL and Singulex (2010–2014).
- Dispute centers on whether P&H fees paid to physician practices were fair market value (FMV) or unlawful inducements tied to referrals.
- Plaintiffs (U.S.) offered Kathy McNamara as FMV expert, concluding physician billed charges are not reliable indicators of FMV.
- Defendants proffered Curtis Udell as an FMV expert who used a "charge-based" methodology relying on physician bill line-item charges and CPT-related charge data.
- Court excluded Udell: found charge-based methodology unreliable and unsupported by sufficient facts because billed charges are not reflective of arm’s-length transaction prices or expected/actual payments.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Admissibility of expert opinion that P&H fees equaled FMV (methodology reliability) | Udell's charge-based methodology is unreliable: billed charges do not reflect arm's-length transaction prices or actual payments; expert opinion not based on sufficient facts | Charge-based method is permissible; no statutory rule requires FMV be based on transactions rather than charges; HHS guidance allows using a price list in some cases | Excluded Udell: charge-based methodology unreliable and insufficiently grounded in actual transaction data; testimony inadmissible under Daubert/Fed. R. Evid. 702 |
| Whether HHS guidance endorses charge-based FMV analyses | HHS guidance does not endorse using arbitrary charge lists divorced from market transactions; a price list only suffices where it reflects arm’s-length transactions | Defendants: HHS/Medicare statement that sometimes consulting a price list can be sufficient supports Ul dell's approach | Court: HHS statement taken in context does not endorse using unadjusted physician charges here; price lists only acceptable if they reflect real arm’s-length prices — not the present facts |
Key Cases Cited
- Daubert v. Merrell Dow Pharm., 509 U.S. 579 (1993) (gatekeeping standards for expert reliability under Rule 702)
- United States v. Hassan, 742 F.3d 104 (4th Cir. 2014) (Daubert factors and reliability inquiry)
- EEOC v. Freeman, 778 F.3d 463 (4th Cir. 2015) (expert testimony must be based on sufficient facts or data)
- Cooper v. Smith & Nephew, Inc., 259 F.3d 194 (4th Cir. 2001) (proponent bears burden to prove admissibility by preponderance)
- Oracle Corp. v. SAP AG, 765 F.3d 1081 (9th Cir. 2014) (FMV requires evidence of actual transactions, not hypothetical sticker prices)