Economics Expert Allowed to Opine on Medical Expenses and Lost Earning Capacity

The present lawsuit arises out of an automobile collision between Steve Frisby ("S. Frisby"), a truck driver employed by Lucky Brothers at the time of the incident, and Garcia. On March 28, 2023, Garcia was driving on Interstate Highway 10 in Jefferson County, Texas, when a tractor-trailer operated by S. Frisby allegedly failed to maintain its lane of travel. The tractor-trailer collided with Garcia's vehicle and pushed it into a concrete retaining wall. As a result of the incident, Garcia allegedly sustained "severe and disabling injuries to her body generally, including her head, brain, neck, back, central nervous system, spine and associated muscles, ligaments, nerves and/or discs, shoulder, arm, extremities and body generally resulting in a number of medical symptoms and/or adverse reactions reducing the quality of her life."

Defendants have designated Brian D. Piper, Ph.D., as an expert for purposes of opining on the reasonableness of Garcia's medical expenses and her lost earning capacity. Garcia challenged the admissibility of Piper's expert testimony on the grounds that he is unqualified and his testimony is based on an unreliable methodology and insufficient facts and data.

Economics Expert Witness

Brian Douglas Piper holds a B.A. in Economics, a B.S. in Mathematics, an M.A. in Economics, and a Ph.D. in Economics, all of which he obtained from the University of Oklahoma. Piper has spent the last eleven years providing expert testimony, analysis, and reports regarding loss of earning capacity, loss of support, loss of household services, reasonableness of charges for healthcare, payment disputes between medical providers and insurers, and more. Before becoming a professional expert, Piper was an assistant professor and an adjunct professor at Sam Houston State University and the University of Oklahoma, respectively. As a professor, he taught various economic courses for approximately three years. Piper has also authored two Continuing Legal Education Courses on the reasonable value of medical services.

Want to know more about the challenges Brian Pipe has faced? Get the full details with our Challenge Study report.

Discussion by the Court

A. Qualifications

Given Piper's extensive background and specialized knowledge in healthcare economics, the Court is of the opinion that Defendants have demonstrated that Piper is sufficiently qualified to testify regarding the reasonable cost of the medical services rendered to Garcia.

B. Reliable Methodology

Garcia's core contention, however, is that Piper's testimony is inadmissible because his methodology and the foundation upon which he bases his opinion are unreliable. Specifically, Garcia asserted that Piper's opinion is unreliable as it is based on "unrevealed personal knowledge and Medicare insurance-based databases."

As a preliminary matter, Piper clearly articulates the sources upon which he relies in evaluating the relevant subject matter. Specifically, Piper primarily relies on data from a database his consulting firm compiled for practitioners using the Carrier Standard Analytical File that is published by the Federal Center for Medicare and Medicaid ("CMS Carrier SAF Database"). In addition to the CMS Carrier SAF Database, Piper relies on numerous scholarly sources, which are cited throughout his report. Accordingly, Garcia's assertion that Piper relies on "unrevealed sources" is without merit.

Furthermore, Piper clearly articulates the methodology he used to evaluate Garcia's medical expenses. In his report, Piper conducts two distinct analyses. First, Piper determines the maximum reasonable charges for Garcia's medical care. In so doing, Piper states that he used the usual, customary, and reasonable ("UCR") method. According to Piper, "the UCR charge method calculates the maximum reasonable charge for a service in a medical market by comparing one provider's charge to the charges of other providers in the same medical market for the same service." Piper obtains the charges upon which he relies from the CMS Carrier SAF database, which reflects the amount billed for the relevant service to patients on Medicare or Medicaid. After viewing the comparison, Piper determines the maximum reasonable charges for most medical services by identifying the lesser of the billed charge or the UCR charge at the 80th percentile. According to Piper's report, this method uses the UCR billed, or list, price to determine the maximum value that could be considered reasonable for Garcia's medical charges.

In his report, Piper states that the 80th Percentile Method for calculating UCR is "industry standard and a regulatory standard for defining maximum reasonable charges." In support of this contention, Piper noteed that the 80th percentile and the 75th percentile thresholds are the thresholds most often used in state laws and by commercial insurers, and he provides a list of states and commercial insurance companies that use this methodology. Notably, the State of Texas, in § 1476.083 of the Texas Insurance Code, has adopted the exact method described by Piper to determine the reasonable amount to be charged for medical services when resolving Out-of-Network disputes.

Accordingly, the Court is of the opinion that Piper's calculation of the maximum reasonable charge for Garcia's medical expenses is based on reliable methodology.

Piper then conducted a secondary analysis to determine the lower end of the reasonable value of the medical services Garcia received and create a "range of reasonable value." In the secondary analysis, Piper uses the Medicare Fee Schedules to compile information regarding the Medicare Allowable Amount, which is the total payment the provider receives for the services rendered, including Medicare's responsibility and the patient's responsibility. Piper then used that amount to calculate the allowable amount for commercial insurance companies by multiplying the Medicare Allowable Amount by 200 percent. Because Piper's calculation of the range of reasonable value is based on verifiable databases and supported by scholarly research, the Court is of the opinion that it is more likely than not that his methodology for calculating the range of reasonable value is reliable.

C. Sufficient and Reliable Facts and Data

Garcia's third contention is that Piper's expert testimony should be limited because he relies on insufficient and unreliable facts and data. Specifically, Garcia maintains "Piper's testimony lacks a reliable foundation and lacks relevance, as such testimony would be filled with inadmissible references to insurance, medicare, and collateral sources." Garcia goes on to state that Piper is essentially using deceptive and incomplete data by relying on a database of Medicare Allowable Amounts. According to Garcia, " Piper violates the [American Medical Association's] rule that discounted payments under government and/or private plans and foundation and reliability are lacking." In attempting to construe the above sentence, Garcia appears to assert that Piper's opinion improperly relies on the reduced rates paid by Medicare for purposes of determining the UCR rate for Garcia's medical expenses.

Garcia, however, is incorrect. In his report, Piper stated that he "determines UCR charges based only on billed charges, unadjusted for any regulatory or negotiated discount," and that his "determination of maximum reasonable charges using the UCR method is not based on Medicare payment rates or the payment rates of commercial insurers." Piper further stated that he uses the data from the CMS Carrier SAF database on "charges . . . and not the data on the amount Medicare pays." The report also explains:

"Practitioners must charge all patients the same charge for the same service on the same date of service, regardless of the expected payment. Therefore, the charges to Medicare patients are the same as to all other patients. According to research by the Kaiser Family Foundation, only 1% of physicians nationwide have opted out of Medicare. Therefore, the CMS Carrier SAF is representative of physician charges."

Accordingly, Garcia's objection misses the mark, as Piper's primary analysis did not focus on the amounts paid for medical services. Rather, it focused solely on the amounts charged, which remain the same regardless of whether an individual has Medicare, Medicaid, or commercial insurance. Additionally, Piper substantiates the sufficiency of the data upon which he relies by highlighting that the database is reflective of the charges imposed by the 99% of physicians who have not opted out of Medicare.

The only instance in which Piper relies on the amount paid by Medicare is in his secondary analysis, wherein he uses the Medicare Allowable Amounts and the Allowable Amount for commercial insurance companies to calculate a range of reasonable value for Garcia's medical expenses—a practice that has been explicitly authorized by the Texas Supreme Court.

Furthermore, the Texas Supreme Court has implicitly recognized that the use of the Allowable Amounts for Medicare and commercial insurers does not improperly introduce evidence of a collateral source, as an expert's reliance on those rates does not require him to discuss any collateral source payments made on behalf of the individual. Rather, an expert's review of negotiated rates simply reflects the consideration of additional data regarding the actual value of the services rendered as the negotiated price remains "relatively static."

D. Miscellaneous Contentions

Lastly, Garcia advances a variety of contentions that are seemingly irrelevant, confusing, or simply redundant. First, as previously noted, Garcia states numerous times throughout her motion that Piper's expert opinion should be excluded because it is based upon Medicare and unrevealed sources. Piper, in addition to identifying and explaining why he relied on certain databases in the body of his report, meticulously details the data and sources upon which his opinions are based in the 49 footnotes contained in the report. When identifying the sources of the data upon which he relies, Piper cites the Carrier Standard Analytical File, the Texas Health Care Information Collection Public Use Data Files, the CMS DMEPOS Public Use File, Dartmouth Atlas of Healthcare, and the Consumer Price Index. Thus, Piper adequately identifies the data and sources upon which he relies. In fact, it appears that Garcia is attempting to advance an objection with respect to the quality of the sources upon which Piper relies. Nevertheless, such a contention is not clearly articulated and would be more appropriately addressed via cross-examination rather than exclusion. Accordingly, the Court found that Garcia's first contention is without merit.

Second, Garcia maintained that "Piper does not actually reveal that he considered any chargemaster prices of the providers." As discussed above, the chargemaster price, or list price, is the price initially billed by physicians. In his report, Piper states explicitly that he conducted multiple analyses to determine a "range of reasonable value" rather than a singular number. In his primary analysis, he states unequivocally that he considered only the amount billed, or the "list" price, in determining the UCR value of Garcia's medical services. Therefore, Garcia's contention is blatantly incorrect.

Third, Garcia averred that Piper does not have any specialized knowledge and simply relies on "what the Medicare source tells him, without showing his work-the ultimate in ipse dixit reasoning." Piper's report, however, does far more than simply relay information from a Medicare database. Specifically, his report conducts a detailed analysis of the list price charged by medical service providers, the price actually paid to medical service providers by Medicare, and the price generally paid to physicians by commercial insurance providers. In so doing, he details the information upon which he relies and his reasons for relying on it. Therefore, Garcia's third contention is also without merit.

Fourth, contrary to her assertion that Piper's testimony will introduce inadmissible references to insurance and other collateral sources, Garcia claims that Piper's testimony should be excluded because it "does not adequately consider what commercial insurers pay." As explained above, Piper specifically conducted an analysis based on the Allowable Amount for commercial insurers. Piper does so by using 200% of the Medicare Allowable Amounts because research by the Congressional Budget Office shows that the average allowable amounts for commercial insurers are between 100% to 200% of the Medicare Fee for Service Allowable Amounts. Piper identified his sources and outlined his methodology, which, when considered in their entirety, are sufficiently reliable for purposes of Rule 702. Therefore, the Court found Garcia's assertion to be unpersuasive and incorrect.

Held

The Court denied Garcia's motion to limit trial testimony of retained expert Brian Piper.

Key Takeaway

In the present case, it appears more likely than not that Piper's testimony is based on specialized knowledge, sufficient facts and data, a reliable methodology, and a reliable application of that methodology to the facts of the present case. Furthermore, the Court is of the opinion that it is more likely than not that Piper's testimony will be helpful to the jury in evaluating the reasonableness of Garcia's medical expenses. Additionally, any qualms Garcia may have with Piper—his qualifications, knowledge, methodology, or application—can be raised via cross-examination.

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