In October 2019, Plaintiffs Anthony Azzinaro and Kathryn Lindsay were severely injured when their recreational vehicle (RV) caught fire after a blowout of the front passenger-side tire. The RV fire occurred while they were driving on a freeway in Cochise County, Arizona. Azzinaro and Lindsay filed a lawsuit against Shyft Group Inc. and Shyft Group USA Inc., the companies that designed and manufactured the chassis of their RV.
The Plaintiffs alleged that the fuel fill line on the RV was “unprotected,” and when the tire blew out, it knocked the fuel fill line loose from the fuel tank. This caused gasoline to leak out rapidly and ignite, resulting in the fire that injured Azzinaro and Lindsay. Their complaint included two claims against the Defendants: (1) strict product liability for a design defect regarding the unprotected fuel line, and (2) negligence in designing the chassis including the placement of the fuel fill line.
The case was filed in Arizona state court but removed to federal court based on diversity jurisdiction. During discovery, the Defendants retained Henry Miller as an expert witness on the reasonableness of the Plaintiffs’ claimed medical expenses. Miller produced a report opining that the full “hospital charges” billed for Azzinaro’s and Lindsay’s medical treatment were not a reasonable measure of the value of those services.
Dr. Miller’s opinion emphasized that the charges listed by hospitals for their services were not indicative of the reasonable or actual value of those services. He supported this view by pointing out that hospitals generally did not anticipate receiving the full amount of their listed charges from patients who did not have health insurance coverage and Valleywise Medical Center was no exception.
The Plaintiffs filed a motion to preclude Miller’s testimony on grounds that it violated Arizona’s collateral source rule and was irrelevant and unreliable. The collateral source rule prohibits reducing a tortfeasor’s liability based on compensation received by the Plaintiff from independent sources such as insurance. The Plaintiffs argued Miller’s opinions about lower negotiated rates improperly relied on the existence of their insurance coverage. The Plaintiff also filed a motion to preclude certain testimony of Defendant’s expert, James J. Keough, Jr. on issues such as the design of a recreational vehicle (RV), issues concerning fuel spillage, and the history of prior repairs. The Defendants, in turn, filed a motion seeking to prevent certain testimony from the Plaintiffs’ expert, Mark V. Sutherland determining the cause and origin of an RV fire at the center of the case.
Product Defects and Healthcare Finance Expert Witness
Henry Miller has over 50 years of experience as a healthcare consultant and researcher specializing in healthcare finance, public policy, regulatory analysis, and strategic planning. He has a PhD in Accounting and Economics from the University of Illinois and an MBA from the City College of New York. Miller has conducted studies on healthcare costs and health insurance for the Medicare program, over 40 health insurers, and several state Medicaid programs. Currently, Miller is the Managing Director of Health Analytics at Berkeley Research Group.
Miller has designed hospital, physician, and pharmaceutical payment systems for 7 state Medicaid programs and over 30 health plans. He has provided expert testimony to Congress, state legislatures, and in court cases regarding reasonable medical costs, provider payments, network management, and other healthcare finance topics.
Miller has directed evaluations of federal health programs for HHS agencies including the Health Resources and Services Administration, National Center for Health Statistics, and Agency for Healthcare Research and Quality. He has worked extensively with Blue Cross Blue Shield plans and advised over 50 health plans on issues like network management, reimbursement approaches, Medicare Advantage, and strategic planning.
Miller served on the Medicare committee overseeing development of the physician fee schedule. He assisted CMS on projects related to the Medicare hospital outpatient prospective payment system and inpatient DRG system. Miller also directed studies on improving access to care for disadvantaged populations and evaluating health data systems for the Maryland Health Care Commission.
In summary, Miller has decades of experience researching, analyzing, and advising on complex healthcare finance and policy issues for government, health plans, and providers. His qualifications as an expert are firmly established based on his education, research, public testimony, and consulting work at the federal and state level.
James Keough possesses extensive expertise in the field of specialty vehicle engineering, design, development, analysis, and testing. His specialization encompasses a wide range of specialty vehicles, including recreational vehicles (such as Class A, Class B, Class C, fifth wheels, travel trailers, toy haulers, and truck campers), as well as ambulances, terminal trucks, buses, and street sweepers. With a remarkable 29 years of experience in this domain, including 17 years in engineering management, Keough has a track record of leadership in developing RV chassis and terminal truck designs, emphasizing critical aspects like weight distribution, structural analysis, compliance with regulations, and rigorous testing. He has successfully implemented advanced techniques like finite element analysis and accelerated durability testing across five different specialty vehicle manufacturers. Keough also boasts expertise in the development of slide-out systems, spanning cable, hydraulic, and gear-driven mechanisms, including full-body slide systems. Additionally, his experience extends to ensuring compliance with the Federal Motor Vehicle Safety Standards (FMVSS) and testing for specialty vehicle applications. He has worked on legal matters related to the Magnuson-Moss Warranty Act and the Song-Beverly Act, particularly in the context of California Lemon Law cases, encompassing both automotive and specialty vehicle applications, including Texas and Florida Lemon Law matters. Keough has also contributed his knowledge and skills to cases involving Patent and Trade Dress matters.
Mark Sutherland is a licensed Professional Engineer in both Texas and Oklahoma, with a degree in electrical engineering from the University of Texas at Austin. He holds certifications as a Certified Fire and Explosion Investigator, Certified Vehicle Fire Investigator, and Certified Fire Investigator Instructor. He obtained his requisite certification in 2002 through the National Association of Fire Investigators and the National Fire Protection Association. Sutherland serves as the president of Sans Peur Inc. d/b/a Expert Forensic Engineers, an engineering and technical services firm located in Brownwood, Texas. His extensive background encompasses electrical engineering, including design, development, marketing, and troubleshooting, dating back to 1983. Since 2002, he has specialized in forensic engineering, particularly in the fields of fire and explosion investigation, electrical faults, and failures, having conducted over 1,400 investigations.
Discussions by the Court
The Court first examined the collateral source rule. This rule prohibits reducing a Defendant’s liability based on compensation the Plaintiff receives from independent sources like insurance. Both parties agreed that reasonable medical expenses should be based on the fair market value of the services, defined as the price a willing buyer and seller would agree to.
The Plaintiffs contended Miller’s opinions about discounts and negotiated rates violated the collateral source rule. However, the Court found the negotiated rates were highly relevant to determining fair market value. Although the collateral source rule prevented the jury from considering the Plaintiffs’ specific insurance coverage and write-offs, it did not make negotiated rates irrelevant.
The Court could not conclude that evidence of negotiated rates was inadmissible. The negotiated rate was the price the provider agreed to accept. This was relevant to the reasonableness analysis. No authority said the collateral source rule required excluding rate evidence.
The Court would allow Miller’s testimony about negotiated rates. But it would instruct the jury not to consider the Plaintiffs’ insurance coverage or write-offs. The Defendants were liable for the full reasonable value of medical services, not just the Plaintiffs’ out-of-pocket costs.
Next, the Court examined the relevance and reliability of Miller’s specific opinions. It found his opinions about hospital accounting principles and unregulated charges were relevant to determining fair market value. The link between these factors and the price a hospital would accept was clear.
Dr. Miller’s testimony concerning GAAP (Generally Accepted Accounting Principles) and the accounting methods hospitals used to anticipate payments for healthcare services, along with his assertion that hospital charges were unregulated and not necessarily tied to the hospital’s actual costs, held relevance in the fact-finder’s task of determining the fair market value of medical expenses. This encompassed the reasonable price a hospital would agree to accept for its medical services. By shedding light on these aspects, Dr. Miller helped establish a clear connection between these factors and the price that a hospital would consider acceptable.
The court also rejected the plaintiffs’ argument that Miller’s testimony about charges being unrelated to costs was unfairly prejudicial. The connection between costs and acceptable price was apparent. The court would instruct the jury on the proper legal standard.
However, the Court agreed with the Plaintiffs that Miller’s comparison of Valleywise’s rates to two other hospitals for unrelated conditions was problematic. This limited sample was not sufficiently relevant and reliable. So the Court precluded Miller’s opinions in that specific section of his report.
In conclusion, the Court denied most of the Plaintiffs’ motion to preclude Miller’s testimony. His opinions about negotiated rates and industry practices would help the jury evaluate reasonable medical expenses. But the Court precluded the rate comparison analysis and would instruct against considering specifics of the Plaintiffs’ insurance and write-offs.
The Plaintiffs filed a motion to preclude certain testimony of the Defendant’s expert, James J. Keough, Jr. The Plaintiffs argued Keough’s conclusions regarding the RV design, fuel spillage, and prior repairs were not reliable under Rule 702.
The Court first examined whether Keough’s reports showed he relied on sufficient facts and data. The Court found the reports identified numerous materials Keough reviewed, including engineering drawings, industry standards, case materials, prior insurance claims, and his multiple inspections. Keough also described his extensive experience in RV design. Read together, the reports adequately described the facts, data, and experience underlying Keough’s opinions.
Next, the Court addressed whether Keough’s methodology was reliable. The Court found that even where not explicitly stated, Keough’s methodology of relying on the facts, data, and his experience was apparent and sufficiently reliable. The Court noted that at trial, the Plaintiffs could challenge the weight of Keough’s opinions, but his methodology satisfied Rule 702.
The Court also rejected the Plaintiffs’ argument that Keough’s testimony was irrelevant or unduly prejudicial under Rule 403. The Court found Keough’s opinions about the fuel tank design and safety were clearly relevant to determining the fuel spill cause. His views on modifications made to the tires and structure of the Subject RV after its manufacture-some resulting from prior damage to the Subject RV-were relevant and admissible to potentially explain the accident sequence or resulting damage.
Additionally, the Court stated that evidence of Fleetwood’s role as RV manufacturer was relevant to comparative fault issues. The Plaintiffs did not seek to exclude evidence regarding Fleetwood. Thus, the Court found Keough’s testimony would not be unfairly prejudicial overall.
In conclusion, the Court denied the motion to preclude Keough’s testimony. His proposed opinions were supported by sufficient facts, data, and experience. He applied a reliable methodology based on his technical expertise. While the Plaintiffs could contest the weight and conclusions of Keough’s testimony at trial, it was admissible under the standards set forth in Daubert and Rule 702.
Therefore, the Court rejected the Plaintiffs’ core argument that Keough’s opinions lacked an adequate foundation and methodology. It found his testimony regarding the RV design, fuel spillage, and prior repairs would assist the fact-finder, with the veracity of his conclusions subject to challenge by the Plaintiffs. The Court emphasized that vigorous cross-examination, rather than exclusion, was the appropriate method to address shaky but admissible expert testimony.
The Defendants filed a motion to preclude certain testimony of the Plaintiffs’ expert, Mark Sutherland, regarding the cause and origin of the RV fire. The Defendants argued Sutherland’s testimony lacked reliability under Rule 702 by failing to use proper methodology and rely on adequate testing or data.
First, the Court examined the Defendants’ argument that Sutherland should be limited to testifying about fire cause and origin, not “accident reconstruction.” The Court found Sutherland had to consider accident facts and evidence to reliably determine how the fire started. Examining fire cause and origin in a vacuum would undermine credibility. The facts and data Sutherland cited were within his expertise to comprehend.
Next, the Court reviewed the Defendants’ challenge to reliability of Sutherland’s first fuel opinion. The Court noted Sutherland’s opinion went beyond the snippets quoted by Defendants and relied on multiple accident facts. The Court found Defendants could challenge Sutherland’s conclusions on cross-examination, but his first fuel opinion was sufficiently reliable.
The Court then addressed the Defendants’ argument that Sutherland failed to properly test hypotheses for the ignition source under NFPA 921 standards. The Court reviewed how Sutherland identified and eliminated other possible sources based on the facts, settling on sparks from the blown tire. Sutherland thereby followed NFPA 921 methodology.
Overall, the Court was not convinced Sutherland used an improper methodology or lacked a reliable basis for his opinions. The Court emphasized that disagreements over an expert’s conclusions do not render the testimony inadmissible. Vigorous cross-examination was the appropriate method to challenge shaky but admissible expert opinions.
In conclusion, the Court denied the motion to preclude Sutherland’s testimony. His experience regarding vehicle fires qualified him as an expert. The facts and data underlying his opinions were adequate. And his methodology reliably applied his expertise to the case evidence. The Defendants could contest Sutherland’s conclusions, but his testimony met Rule 702 standards.
Therefore, the Court rejected the core argument that Sutherland’s opinions were methodologically unreliable. It found his cause and origin testimony was properly grounded in the facts and his technical knowledge. Mere disagreement with an expert’s conclusions does not warrant exclusion under Daubert.
Held
The Court precluded one small portion of Miller’s proposed expert testimony but otherwise denied the Plaintiffs’ motion. Miller would be allowed to testify that normal negotiated rates between hospitals and insurers, rather than full undiscounted charges, are the best evidence of reasonable medical expenses. This was directly relevant to the jury’s evaluation of damages. However, the jury could not make any inference about the specifics of the Plaintiffs’ medical coverage or net out-of-pocket costs resulting from insurance adjustments.
The Court held that the opinions presented by Keough were indeed relevant, particularly with regard to the design and safety of the fuel tank location, as this directly pertained to determining the cause of a fuel spill in an accident. Additionally, Keough’s opinions regarding modifications made to the RV’s tires and structure after its manufacture, especially those related to prior damage, were deemed admissible because they may provided valuable information in describing the accident or potentially contributing to it or the resulting damage. The Court denied the Plaintiff’s motion to preclude the testimony of James J. Keough, Jr.
The Court denied the Defendant’s motion to limit the testimony of Mark V. Sutherland since the Court had not been convinced by the Defendants that Sutherland employed an improper methodology, which warranted the exclusion of his testimony as unreliable under Rule 702. The Court aligned with the Plaintiffs in the belief that mere disagreement by the Defendants, or their own expert, with Sutherland’s conclusions does not render those conclusions inadmissible. Instead, the Defendants were permitted to cross-examine Sutherland’s opinions.
The Court has not arrived on an outcome for this case since the remaining issues involved in this case still await resolution.
Key Takeaways
This case demonstrates how Courts apply reliability and relevance standards to determine admissibility of expert opinions under Daubert and Rule 702. The Court allowed most of the defense expert’s proposed testimony because it would aid the jury in evaluating reasonable medical expenses. Testimony about factors influencing negotiated rates between hospitals and insurers met the rules’ relevance test. The expert’s long industry experience analyzing hospital billing provided a reliable methodology foundation.
However, the Court precluded one portion of the proposed testimony comparing the Plaintiff’s hospital’s rates to others. This limited sample lacked sufficient relevance to the case facts. And the arbitrary, narrow methodology failed to meet reliability standards. This illustrates how even qualified experts cannot introduce opinions connecting loosely to the facts or lacking a sound methodology.
Overall, the Court emphasized tailoring the testimony to the needs of the case while excluding unreliable or irrelevant portions. Expert opinions must assist the trier of fact rather than confuse or distract. This case also highlights the need for careful jury instructions explaining the proper and improper uses of expert testimony when exclusions are limited. Qualified, relevant expert opinions can be presented, but within defined legal parameters.
The Court further held that the testimony does not warrant exclusion normally if the methodology the testimony is premised on is fundamentally sound but however the opposing party is free to contest the veracity and weight of the testimony through cross examination.
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