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United States ex rel Skibo v. Greer Laboratories, Inc.

United States District Court, W.D. North Carolina, Statesville Division

May 6, 2019

UNITED STATES EX REL. LIUBOV SKIBO, Plaintiffs,
v.
GREER LABORATORIES, INC., ET AL., Defendants.

          ORDER

          Max O. Cogburn, United States District Judge.

         THIS MATTER is before the court on Defendant Greer's Motion to Strike the Supplemental Expert Report of Christopher L. Haney, (Doc. No. 114).

         I. BACKGROUND

         This action, filed on August 2, 2013, is brought under the False Claims Act, 31 U.S.C. § 3729 et seq., alleging that Defendant Greer Laboratories, a business based in Lenoir, North Carolina, submitted false claims and/or caused false claims to be submitted to the federal and/or state governments with regard to allergenic extracts that were either billed directly to the federal government and/or paid by Medicare, Medicaid, TRICARE, and other government health care programs after being sold to medical providers. Specifically, Defendant Greer Laboratories is alleged to have manufactured and sold unapproved biological products and/or new drugs, misbranded drugs, and/or adulterated drugs that were ultimately paid for by Medicare, Medicaid, TRICARE, and other government health care program payors.

         The parties have engaged in discovery and both parties have filed expert reports. The Court restates the procedural history of this case relevant to Greer's motion to strike a supplemental expert report by Christopher L. Haney. On December 14, 2018, Relators served Mr. Haney's original Expert Report. On December 28, 2018, Relators served Mr. Haney's December 28 Report, which incorporated “additional information produced in discovery by Greer's customer Allergy Clinic of Tulsa” and “revised data and calculations for that customer.” (Relators' Ex. A at 3 ¶ 1). The December 28 Report also stated that “fact discovery is still underway” and “additional documentation and information have been requested by Counsel that may be relevant to my opinions . . . .” (Id. at ¶ 4). Mr. Haney also “reserve[d] the right to update, supplement or revise my opinions if and when additional information or data becomes available” and noted that “[a]ny additional information obtained in discovery could require supplementation or revision.” (Id. at ¶ 5). Mr. Haney further noted that “[i]f additional discovery is produced with sufficient customer purchase data to estimate the Paid Amount further in this period, it is anticipated that the Paid Amount will increase materially beyond what is reflected in this report.” (Id. at ¶ 77).

         On January 3, 2019, Relators filed a Motion for Limited Modification of the Pretrial Order and Case Management Plan for Leave to Take Four Additional Depositions for Use at Trial. (Doc. No. 83). In their motion, Relators asked that “the Court permit these four brief telephonic non-party fact depositions” because “Defendants have taken the position that Relators will be unable to prove damages” and “the importance of [that] issue to the case . . . .” (Id. at 5). Greer did not oppose Relator's Motion, and on January 7 the Court granted the motion. (Doc. Nos. 85-86). On January 8, 2019, Greer's counsel took Mr. Haney's deposition, at which he testified that “if the facts of the case change . . . the things that directly contribute to my damages methodology, I will certainly consider them. And they may or may not change my damages calculation.” (Doc. No. 116-3 at 169:11-16).

         On January 11, 2019, Relators received documents and correspondence from Tottori Allergy & Asthma Associates, containing new data regarding Tottori Allergy's reimbursements from Medicare, Medicaid, and Tricare for immunotherapy involving Greer's unlicensed custom mixes. (Relators' Ex. B). On January 14, 2019, Greer served the Expert Report of Crystal Pike (the “Pike Report”). The Pike Report cited a document designated only as “GRLI-00172646” (the “January 26 Excel spreadsheet”), which neither Relators nor Mr. Haney had received previously. Between January 14 and February 12, 2019, Relators took six depositions of Greer's customers, resulting in hundreds of pages of testimony regarding those customers' purchases of unlicensed custom mixes and receipt from government healthcare payors of millions of dollars of reimbursements for the preparation and injection of allergy immunotherapy involving Greer's unlicensed products. (Relators' Ex. C (Supp. Rpt.) at App'x C at 4-14 (excerpts of customer deposition testimony)). Greer's counsel and several members of Ms. Pike's staff attended each deposition.

         On January 22, 2019, Greer responded to Relators' First Set of Requests for Admission by admitting for the first time to Greer's yearly sales of custom mixes. (Relators' Ex. D). Also on January 22, 2019, Relators received more than 560 pages of business records from East Tennessee Ear, Nose & Throat Specialists, PC (“ET ENT”), which Relators produced to Greer on January 24, 2019. (Relators' Ex. E). On January 25, 2019, after searching for and not locating the January 26 Excel spreadsheet, Relators' counsel asked Greer's counsel to produce the spreadsheet, which they produced on January 26, 2019, revealing the document to be a 341-page Excel spreadsheet containing detailed customer-specific data regarding Greer's custom-mix sales for four customers. (Relators' Ex. F).

         On February 7, 2019, Relators received more than 670 pages from ET ENT, (Relators' Ex. G), which Relators produced to Greer the next day. (Relators' Ex. H, Feb. 8, 2019 Production Letter). On February 15, 2019, Greer served on Relators the “Supplemental Materials Considered” by Ms. Pike, which listed many of the same new information and materials that Relators now seek to incorporate into Mr. Haney's damages calculation. (Relators' Ex. I, Feb. 15 email attaching Ms. Pike's “Supplemental Materials Considered”). On February 19, 2019, Relators took Crystal Pike's deposition. Ms. Pike testified that none of the customer depositions or new materials that she supplemented on February 15 had changed any of her opinions. (Relators' Ex. J (Pike Tr.) at 79:22-80:12).

         On February 25, 2019, Relators also received the Declaration of Chris Baker, Practice Manager of ET ENT. (Relators' Ex. K; see also Relators' Ex. C (Supp. Rpt.) at App'x C at 14 n.51 (citing Ex. Relators' K)). On February 26, 2019, Relators filed their Motion to Compel Production of Custom-Mix Sales Data, Doc. No. 94, in which Relators sought to compel Greer to produce the same custom-mix sales data in the January 26 Excel spreadsheet (referenced in Ms. Pike's report and produced on January 26) but for all customers (not merely four). In that motion, Relators noted that “[i]f additional discovery is produced . . . it is anticipated that the Paid Amount [i.e., estimated damages] will increase materially beyond what is reflected in [Mr. Haney's December 28] report.” (Doc. No. 94 at 4 (quoting December 28 Report at ¶ 77)).

         On February 28, 2019, Relators served the Supplemental Report, which “incorporate[d] additional information which was produced or became known after the date of [the] original report, ” and which “more accurately reflects” Mr. Haney's “analysis and findings.” (Relators' Ex. C (Supp. Rpt.) at 3 ¶ 1). Specifically, the Supplemental Report incorporates “information produced in discovery by [Greer] quantifying limited amounts of its Custom-Mixed sales volume, as well as sworn testimony and additional information produced by certain of Greer's customers.” (Id.). Mr. Haney “revised [his] data and calculations based on this additional information, ” which “increased [his] estimated damages by approximately $4.5 million” from $52.9 million to $57.4 million, and decreased his estimated number of “allegedly false claims” from at least 601, 518 to at least 179, 000. (Compare Relators' Ex. C (Supp. Rpt.) at ¶¶ 1, 12 with Relators' Ex. A (Dec. 28 Rpt.) at ¶¶ 1, 12).

         When Relators served the Supplemental Report on February 28, Relators asked Greer's counsel to “please let us know as soon as possible if Defendants wish to hold a further deposition of Mr. Haney.” Greer did not respond, and on April 8, 2019, the magistrate judge denied the motion to compel. (Doc. No. 124).

         On March 7, 2019, Greer filed its Motion for Summary Judgment. (Doc. No. 95). On March 20, 2019, Greer asked Relators to tell them, by March 22, whether they would withdraw the Supplemental Report, which Relators declined to do. (Relators' Ex. L). On March 25, 2019, Greer filed the pending Motion to Strike the Supplemental Expert Report of Christopher L. Haney. On April 5, 2019, Relators filed their memorandum in opposition to the motion to strike. On April 12, 2019, Greer filed a Reply. Greer corrected the Reply on April 16, 2019.

         In the motion to strike, Greer argues that the Supplemental Report is not a “proper” “supplement” under Rule 26 of the Federal Rules of Civil Procedure because it does not merely “correct inadvertent errors or omissions in the original report” and instead is “replete with new opinions.” (Doc. No. 115 at 1, 9). In response, Relators argue that the Supplemental Report's sole purpose, consistent with Rule 26(e), is to incorporate new data and testimony that Relators received from Greer and its customers since December 28 into the same damages model, using the same methodology, that Mr. Haney established in his original report in order to update and ensure the accuracy of Mr. Haney's only opinion: “Opinion #1.” Relators argue, therefore, that the only changes to “Opinion # 1, ” which is otherwise a verbatim copy of Mr. Haney's previous “Opinion #1, ” include (1) a change from $601, 518 to $179, 000, in referring to reimbursements from the ...


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