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Maryland Supreme Court to Decide Scope of Judicial Discretion in Admitting Expert Testimony

March 9, 2023 By Lisa H. Carrera

The Maryland Supreme Court is set to review the scope of judicial discretion in consideration of the newly adopted Daubert-Rochkind standard, which places emphasis on the methodology used by the expert. In contrast, Maryland’s previous standard for admitting expert testimony allowed the admission of expert testimony only if it had a “general acceptance” in the relevant scientific community.

The case for which the Maryland Supreme Court will review the scope of judicial discretion when admitting expert testimony is Katz, Abosch, Windesheim, Gershman & Freedman PA v. Parkway Neuroscience & Spine Institute LLC. This case involves a dispute between the medical practice of Parkway Neuroscience & Spine Institute (PNSI), and its previous accounting firm, Katz, Abosch, Windesheim, Gershman & Freedman PA, over alleged financial mismanagement.

PNSI, seeking lost profits damages, contended that the accounting firm provided bad advice regarding the distribution of more than $400,000 received through a Medicare and Medicaid incentive program and establishing a compensation model for doctors. PNSI claimed that it was driven into debt when it had to repay the incentive program funds, and the compensation model failed to consider the income disparity of the doctors, leading many of them to leave the practice.

At the trial level, PNSI retained accounting expert, Meghan Cardell, to testify regarding the cause of the practice’s damages and lost profits. Ms. Cardell testified that she performed a commonly accepted “before-and-after” methodology and chose 2015 as the dividing year. She explained that 2015 was used because it was the year of the exodus of doctors from the practice. The trial judge, however, excluded Ms. Cardell’s testimony stating that the choice of 2015 was speculative and further that her opinions utilized too many subjective decisions and assumptions to test her calculations accurately. The exclusion, however, follows the judge’s acknowledgment of the acceptability of the “before-and-after” method of calculating lost profits. A Motion for Summary Judgment was ultimately granted in favor of the accounting firm based on the absence of expert testimony on behalf of PNSI.

The Intermediate Appellate Court reversed the trial judge’s decision, stating that the trial court abused his discretion. Maryland Court of Appeals went on to state that judges should not second-guess an expert’s choice of data when the underlying methodology is sound, finding that the reasons the trial judge provided for exclusion of Ms. Cardell’s testimony failed to address her methodology used. The Maryland Supreme Court will now consider if the Maryland Court of Appeals erred in reversing the decision. The case is expected to be decided by August 31, 2023.