Katz, Abosch, etc., P.A. v. Parkway Neuroscience

Katz, Abosch, Windesheim, Gershman & Freedman, P.A., et al. v. Parkway Neuroscience and Spine Institute, LLC, No. 30, September Term, 2022. Opinion by Biran, J. EXPERT WITNESSES – ADMISSIBILITY OF EXPERT TESTIMONY – MARYLAND RULE 5-702 – LIMITED REMAND – Respondent filed a lawsuit against Petitioners alleging accountant malpractice and related claims. In the course of discovery, Respondent designated an expert to provide an opinion concerning Respondent’s lost profits resulting from Petitioners’ alleged torts. Petitioners moved to exclude the testimony of the proffered expert under Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993), and Rochkind v. Stevenson, 471 Md. 1 (2020).

After conducting a Daubert- Rochkind hearing, the circuit court granted Petitioners’ motion to exclude the proffered expert testimony. The Supreme Court of Maryland held that much of the trial court’s consideration of the Daubert-Rochkind factors was appropriate, including the trial court’s assessment of how the expert’s choice of data, assumptions, and other inputs affected the reliability of her methodology. However, the trial court erred when it considered the expert’s “normalizing adjustments” that recategorized certain expenses from one year to another, as reflecting on the reliability of the expert’s methodology. The Court ordered a limited remand to the circuit court under Maryland Rule 8-604(d)(1) so that the trial court may decide to admit or exclude the expert’s testimony without consideration of the normalizing adjustments as reflecting on the reliability of the expert’s methodology.

Circuit Court for Howard County Case No.: C-13-CV-18-000181 Argued: May 4, 2023 IN THE SUPREME COURT OF MARYLAND* No. 30 September Term, 2022 KATZ, ABOSCH, WINDESHEIM, GERSHMAN & FREEDMAN, P.A., ET AL. v. PARKWAY NEUROSCIENCE AND SPINE INSTITUTE, LLC Fader, C.J. Watts Hotten Booth Biran Gould Eaves, JJ. Opinion by Biran, J. Booth, J., concurs. Pursuant to the Maryland Uniform Electronic Legal Gould, J., concurs in part and dissents in part. Materials Act (§§ 10-1601 et seq. of the State Watts, J., dissents.

Government Article) this document is authentic. 2024.04.26 11:44:29 Filed: August 30, 2023 -04'00' Gregory Hilton, Clerk * At the November 8, 2022 general election, the voters of Maryland ratified a constitutional amendment changing the name of the Court of Appeals of Maryland to the Supreme Court of Maryland. The name change took effect on December 14, 2022. When this Court adopted the Daubert1 expert testimony admissibility standard in Rochkind v. Stevenson, 471 Md. 1 (2020), we embraced a regime that prizes the reliability of an expert’s methodology over its general acceptance. We empowered trial judges to protect juries from junk science while also broadening the range of possibly admissible opinions beyond just those dominant among practitioners.

We asked judges to engage with the science without playing amateur scientist, and we promised the deference appropriate to courts administering a flexible approach to analyzing the admissibility of expert testimony. This case requires us to reflect on that flexibility and deference. Parkway Neuroscience and Spine Institute, LLC (“PNSI”, the Respondent here) is a medical and surgical practice that began to expand in 2011 and needed accounting help. In 2013, PNSI retained accounting firm Katz, Abosch, Windesheim, Gershman & Freedman, P.A. and, specifically, Mark Rapson, who specialized in medical practice accounting (we shall refer to the firm and Mr. Rapson, the Petitioners here, collectively as “KatzAbosch”).

Within a few years after retaining KatzAbosch, PNSI began to disintegrate; members of the practice began leaving in 2015, and by the middle of 2016, only two members remained of the nine who had been in place at the end of 2014. PNSI terminated KatzAbosch’s services in 2015. PNSI alleges that malpractice by KatzAbosch caused the mass exodus of its members. In 2018, PNSI sued KatzAbosch in the Circuit Court for Howard County to recover damages for lost profits.

To establish those damages, PNSI designated certified 1 See Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993). public accountant Meghan Cardell as an expert witness. She used the widely accepted “before-and-after” method to calculate PNSI’s lost profits, choosing 2015 as a “baseline” period against which she would compare the actual profits in subsequent years through 2019, and adding up the differences to arrive at an estimate of what profits PNSI missed out on due to KatzAbosch’s alleged harmful conduct. A few weeks before the June 2021 Daubert-Rochkind hearing, Ms. Cardell issued updated calculations reflecting some “normalizing adjustments” she had made; although PNSI’s accounting records had not changed since her initial analysis, Ms. Cardell reviewed PNSI’s financial information again and noticed some payments that had been categorized in the wrong years. She reallocated those payments to the years she believed to be correct and updated her calculations.

Those two issues – Ms. Cardell’s choice of 2015 as the “before” in her “before-and- after” analysis and her June 2021 normalizing updates – rose to the top of the trial court’s mind in the Daubert-Rochkind hearing. The trial court noted speculative and insufficiently substantiated judgment calls that Ms. Cardell had made in arriving at the 2015 benchmark. Among other things, the trial court wondered why Ms. Cardell had chosen 2015 (a profitable year) rather than, say, an average that included the several (unprofitable) years prior to the alleged harm event. The trial court also was concerned about Ms. Cardell’s inability to articulate industry standards relating to the concept of “economic impact” and to the proper treatment of owner draws.

In addition to these points, the trial court commented several times about Ms. Cardell’s June 2021 normalizing adjustments, which negatively affected its opinion of Ms. Cardell’s reliability. Essentially, the court did not understand why it had taken Ms. Cardell 2 so long to notice the errors. The court discussed these adjustments when considering the Daubert factors relating to a methodology’s error rate and to whether the field of expertise claimed by the expert is known to reach reliable results for the type of opinion the expert would give. Based on its application of the Daubert-Rochkind factors, the trial court excluded Ms. Cardell’s testimony, leading to summary judgment in favor of KatzAbosch because PNSI could not prove damages.

PNSI appealed, and the Appellate Court of Maryland2 held that the circuit court abused its discretion in finding Ms. Cardell’s methodology unreliable. As to the 2015 baseline choice, the Appellate Court agreed with PNSI that the choice was a question of data (and thus a factual question for the jury) rather than of methodology. With respect to the normalizing adjustments, the Appellate Court said that Daubert’s “error rate” factor must be understood as the rate of unknown errors in the methodology employed, not as an “error correction rate,” or else courts would create incentives against experts disclosing and explaining errors they made. The intermediate appellate court reversed the trial court’s exclusion of Ms. Cardell’s expert testimony and remanded for consistent proceedings.

KatzAbosch petitioned this Court for further review. As we explain more fully below, the choice or calculation of the inputs to a methodology can be a part of the methodology itself, and we reject an unduly rigid dividing 2 At the November 8, 2022 general election, the voters of Maryland ratified a constitutional amendment changing the name of the Court of Special Appeals of Maryland to the Appellate Court of Maryland. The name change took effect on December 14, 2022. 3 line between “data” and “methodology” that binds courts to admit methodologically questionable analyses cloaked as data. To the extent the trial court considered how Ms. Cardell’s choice of data, assumptions, and other inputs affected the reliability of her methodology, the trial court’s Daubert-Rochkind analysis was proper.

However, the trial court erred in its consideration of the normalizing adjustments as reflecting on the reliability of Ms. Cardell’s methodology, as opposed to the credibility (or reliability) of Ms. Cardell herself. After a careful review of the record, we determine that the fair and prudent course of action at this point is to remand the case to the circuit court to decide whether to admit or exclude Ms. Cardell’s testimony without consideration of the June 2021 normalizing adjustments as reflecting on the reliability of Ms. Cardell’s methodology. I Background A. Facts During the period relevant to this case, PNSI was a Western Maryland and Pennsylvania mixed medical practice that diagnosed, managed, and treated disorders of the brain, spine, and peripheral nervous system. It employed neurosurgeons, interventional and non-interventional pain physicians, neurologists, physicians’ assistants, and support staff.

The practice had operated since 1998. Beginning in 2011, PNSI expanded, hiring more physicians and support staff. These efforts caused PNSI to spend more on salaries and build-out expenses without offsetting revenue. At the end of 2014, the practice had nine member-owners, all physicians. 4 1.

The Engagement of KatzAbosch None of these members, however, were accounting or finance experts. In early 2013, PNSI’s long-time accountant advised PNSI that the practice had outgrown his firm’s services and recommended that the practice retain a new accounting firm to help guide PNSI through its growth and expansion process. So PNSI began searching for a firm that specialized in medical practice accounting and finance. In October 2013, PNSI retained KatzAbosch to provide tax, accounting, and financial advice and services, as well as to provide “expert business and financial guidance and direction to help PNSI continue to grow its practice.” The engagement included analyzing PNSI’s general ledger and financial statements, making recommendations concerning PNSI’s financial affairs, and designing and administering a new member compensation model.

Mr. Rapson (chair of KatzAbosch’s Medical Services Group) was responsible for the account. PNSI’s 2012 Operating Agreement provided the compensation terms for its member-physicians. First, each member was to maintain a capital account on the books of the practice, with a minimum balance that PNSI’s Board of Managers (the “Board”) would determine annually. Second, members were to be paid a monthly “draw” (determined by the Board) at the start of each year – in essence a form of salary.

Third, revenue received by the practice for hospital and trauma calls would be distributed to the member who had taken the call, with PNSI functioning as a pass-through entity. These pass-through payments, along with the monthly draws, comprised “guaranteed payments” to the members. Finally, each quarter, the Board would distribute any excess cash flow (“distributions”) in proportion to each member’s ownership stake. 5 In early 2014, KatzAbosch designed and proposed a new compensation model, and PNSI adopted it. According to PNSI, KatzAbosch’s model did not reserve funds for known build-out-related expenses concerning one of PNSI’s locations that would be coming due later that year as well as other significant expenses.

PNSI alleges that, despite these expenses coming due, KatzAbosch directed PNSI to make almost $1 million in quarterly distributions to members between July and October 2014. 2. Termination of KatzAbosch and the Departure of Most of PNSI’s Members PNSI alleges that, as a result of KatzAbosch’s erroneous advice, PNSI almost ran out of money by the end of 2014. According to PNSI, the practice had to use over $660,000 from its line of credit in the fourth quarter of 2014 alone. In January 2015, KatzAbosch disclosed to PNSI its precarious financial situation.

While PNSI had had almost $1 million in cash on hand at the start of 2014, it had less than $40,000 by the start of 2015. PNSI terminated KatzAbosch’s services in the spring of 2015. The practice then began to come apart. PNSI alleges that members – who had personally guaranteed loans the practice had taken – were increasingly distressed about the financial condition of the practice and their personal liability.

Starting in mid-2015, members began to withdraw from the practice, taking with them patients and the associated revenue streams. By mid-2016, only two members – Dr. Brian Holmes and Dr. Neil O’Malley – remained of the nine who had been in place at the end of 2014. KatzAbosch claims that Dr. Holmes and Dr. O’Malley received more compensation from the practice after they were the only two members remaining (thereby depressing estimates of PNSI’s 6 profits post-exodus), although PNSI explains this as the result of those two doctors taking more trauma calls and thus receiving more in guaranteed payments. B. The Lawsuit In 2018, PNSI sued KatzAbosch in the Circuit Court for Howard County, alleging claims for accountant malpractice, negligent misrepresentation, breach of contract, and unjust enrichment.

PNSI initially sought damages for lost profits, settlement amounts paid to a departing member, written-off amounts owed by two departing members, fees paid to KatzAbosch, and prejudgment interest, all totaling $9,456,035. The bulk of the claimed damages was the alleged lost profits. 1. Meghan Cardell, PNSI’s Damages Expert In July 2019, PNSI designated Meghan Cardell as an expert witness expected to testify that “PNSI suffered and will continue to suffer significant financial losses resulting from the mass exodus of members and staff, loss of patients, replacement of long-time established physicians with newer-practicing physicians, and litigation with withdrawing members, as identified in the Calculation of Damages[.]” Ms. Cardell is a certified public accountant and a certified fraud examiner. At the time of her designation by PNSI as an expert in this case, Ms. Cardell was Director for Disputes and Investigations at the Washington, D.C. accounting firm Alvarez & Marsal, where she had worked since 2014.

Before that, she was a senior associate in forensics at Veris Consulting from 2011 to 2014. Ms. Cardell used the “before-and-after” methodology of calculating PNSI’s lost profits. Under this approach, the expert compares profits before and after a damaging event, 7 the former being the “benchmark” or “base” period and the latter being the “loss” period. Ms. Cardell initially calculated PNSI’s damages in May 2019, as follows: Damages (less prejudgment interest) (Calculated in May 2019) Total lost profits $8,520,744 Dr. DeMarco Settlement $89,421 Dr. Sullivan Amount Owed $84,836 KatzAbosch Fees $182,010 Total: $8,877,012[3] Prejudgment interest Lost profits $503,999 DeMarco & Sullivan $20,185 KatzAbosch Fees $54,839 Total prejudgment interest: $579,023 Total Damages $9,456,035 The lost profits total included figures for 2016 through 2025.

Ms. Cardell selected 2015 as the base year. She then used actual figures to calculate the lost profits for 2016, 2017, and 2018; she used the trend line from those three years to project lost profits through 2025, discounting the figures by 20% in 2019-22 and 50% in 2023-25 to reflect a trend of declining annual lost profits as the practice would gain doctors, patients, and income in the future. On July 26, 2019, KatzAbosch moved to strike PNSI’s claim and to exclude Ms. Cardell’s testimony. At a hearing in June 2020, the trial court (the Honorable Richard S. Bernhardt, specially assigned) denied KatzAbosch’s motion, but expressed concern about admitting Ms. Cardell’s calculations at trial if she continued to project lost profits for 2020 3 This total amount is one dollar greater than the sum of the four amounts that precede it.

It is not clear whether this discrepancy was due to a rounding error or some other issue. 8 through 2025 related to the 2015-16 departure of physicians, despite the changed landscape created by the COVID-19 pandemic. On May 5, 2021, KatzAbosch renewed its motion to strike PNSI’s lost profit claims and to exclude Ms. Cardell’s testimony under this Court’s recently adopted Daubert- Rochkind standard for expert testimony, disputing the factual basis of Ms. Cardell’s Calculation of Damages report. Ms. Cardell updated her Calculation of Damages on May 17, 2021. PNSI no longer sought damages for 2020 or beyond, and Ms. Cardell’s new calculations omitted those years.

The updated calculations featured a revised damages calculation of $7,335,447: Damages (less prejudgment interest) – Updated May 17, 2021 (dropping 2020 and onward; concerning only 2016-19 pre-pandemic; using finalized actual 2019 figures) Total lost profits $8,520,744 $5,789,521 Dr. DeMarco Settlement $89,421 Dr. Sullivan Amount Owed $84,836 KatzAbosch Fees $182,010 Total: $8,877,012 $6,145,789 Prejudgment interest Lost profits $503,999 $1,078,968 DeMarco & Sullivan $20,185 $37,630 KatzAbosch Fees $54,839 $73,060 Total prejudgment interest: $579,023 $1,189,658 Total Damages $9,456,035 $7,335,447 9 On May 27, 2021, the trial court scheduled a full-day, in-person evidentiary hearing on KatzAbosch’s renewed motion for June 30, 2021. On June 11, 2021, Ms. Cardell updated her calculations again: Damages (less prejudgment interest) – Updated June 11, 2021 Total lost profits $8,520,744 $5,789,521 $4,956,080 Dr. DeMarco Settlement $89,421 Dr. Sullivan Amount Owed $84,836 KatzAbosch Fees $182,010 Total: $8,877,012 $6,145,789 $5,312,348 Prejudgment interest Lost profits $503,999 $1,078,968 $890,837 DeMarco & Sullivan $20,185 $37,630 $38,346 KatzAbosch Fees $54,839 $73,060 $73,808 Total prejudgment interest: $579,023 $1,189,658 $1,002,991 Total Damages $9,456,035 $7,335,447 $6,315,339 Notably, the June 2021 updates eliminated the loss from 2016 (meaning Ms. Cardell had now found that year to be profitable) and showed lost profits only from 2017-19. These changes reflected “normalizing adjustments” discussed in detail below. 2. The Daubert-Rochkind Hearing The trial court conducted a Daubert-Rochkind hearing on June 30, 2021.

The crux of PNSI’s argument was that KatzAbosch’s concerns with Ms. Cardell dealt less with her methodology and more with the assumptions she had made, and those assumptions went to weight rather than admissibility. The court declined either to accept or to reject Ms. Cardell’s qualifications as an expert, although it eventually said her experience (or lack thereof) with “niche” medical practices bore somewhat on the reliability of her testimony, independent of the question of her qualification as an expert witness. 10 a. Issues Raised in the Hearing i. 2015 as the Base Year After describing why other methodologies to determine contractual damages and lost business value (and, relatedly, lost future profits) were not applicable here, Ms. Cardell described the before-and-after methodology that she chose to apply. She testified that this method “in [her] experience is the most commonly used and most commonly accepted methodology of measuring lost profits,” that she had used it in her career “many, many times,” and that she had seen it used by other experts in and out of litigation settings just as frequently.

She oriented her analysis around the harm event of seven of nine doctors withdrawing from the practice within a short time; the first doctor left in June 2015, a few more at the end of 2015, and a few more by June 2016. So calendar year 2015 was her benchmark “before” period, and the “after” period (or “loss” period) began in calendar year 2016 and ran through 2019. She described this as a “conservative proxy” for the practice’s future earnings, had so many members not left. The business had been profitable in 2015, and PNSI had been investing to grow; Ms. Cardell said “[t]he practice had sort of hit its stride in 2015.” She said medical businesses are not subject to swings of consumer preference that might have destabilized the results of those investments, and the medical specialty industry was projected to grow because of aging Baby Boomers and the prevalence of chronic illness.

The trial court articulated some concerns with Ms. Cardell’s methodology. First, the court asked why she had chosen just one year (2015) rather than a benchmark of multiple years before the harm event; Ms. Cardell said the benchmark could be an average or could 11 be one year, particularly if there were past years that would not be representative of what future earnings would look like. Second, the court noted that 2015 had been the most profitable year since 2010,4 and the court did not understand why 2015, rather than a slower year, should become the “new normal,” as there might have been post-harm years that also would have been a “squeeze.” Ms. Cardell believed 2014 was not entirely unusual but would have been unrepresentative because 2015 was the year when PNSI had emerged from the phase of significant expenditures (and reduced profits) in order to grow the practice. Third, the court questioned how Ms. Cardell knew that PNSI had truly hit its stride in 2015 and that there would not have been significant future problems caused by overexpansion – personality conflicts between the new doctors, sub-par new facilities, etc. She answered that the practice had been profitable in 2016 even as the exodus had begun, showing that it could still be profitable despite some amount of dysfunction and confirming that it would have continued to generate profits in the future without the full exodus. ii.

Other Data and Assumptions (Reimbursement Rates) Ms. Cardell assumed that, but for the harm event, PNSI’s profits in 2017, 2018, and 2019 would have at least equaled the 2015 profits. Ms. Cardell had not analyzed changes in medical service reimbursement rates (which had been decreasing) during the relevant years, although the market research she examined showed that medical industry revenues were expected to grow because of expanded access to Medicare, Medicaid, and private health insurance under the Affordable Care Act. The core of the trial court’s concern was 4 As measured by Ms. Cardell, PNSI had had a $22,000 profit in 2010, losses in 2011-14, and a $321,751 profit in 2015. 12 whether Ms. Cardell had looked “at all of the various revenue threads that come up with the fabric of [PNSI’s] yearly income” or whether she had just been “looking at numbers without understanding from further records or where those numbers came from[.]” Ms. Cardell said that her analysis was based on revenues. iii. Correction of Calculations Ms. Cardell described normalizing adjustments she had made to her calculations earlier in that month relating to trauma and on-call payments.

In 2016, PNSI had made payments to its physicians based on trauma and on-call revenues the practice had received in 2015. Ms. Cardell initially included those payments as expenses of the practice for 2016. After Ms. Cardell discovered that the practice had received the associated revenues in 2015, she removed that expense from 2016 and added it to 2015. This reduced by half PNSI’s adjusted income in base year 2015 by increasing adjusted expenses.

Ms. Cardell’s $395,010 downward adjustment in expenses for 2016 increased adjusted income for that year, making 2016 profitable (compared to her earlier May 2021 estimates for 2016, which had shown a loss) and contributing to the elimination of any loss in profits in 2016. There were also trauma and on-call adjustments for 2017, 2018, and 2019. In those years, Dr. Holmes and Dr. O’Malley earned income based on their trauma and on-call services, and that money flowed to the practice for normal pass-through purposes, but they chose not to pay themselves those funds; rather, they effectively loaned those amounts to the practice in order to increase its cash on hand. In the past, those guaranteed payments would have been recorded as expenses, so Ms. Cardell included them as such via the June 2021 adjustments.

Her first updated calculations (issued May 2021) had included upward 13 trauma and on-call expense adjustments for years 2017 ($129,573), 2018 ($767,573), and 2019 ($767,573). Each of these upward adjustments had the effect of increasing adjusted expenses and therefore reducing adjusted income, making the lost profits figures (and thus PNSI’s alleged damages) larger for each year. Ms. Cardell’s second updated calculations (issued June 2021) decreased the upward expense adjustments for 2017 (to $77,000) but increased the upward expense adjustments for 2018 (to $842,400) and 2019 (to $1,233,617) in comparison to her first updated calculations. For all three years, the post-update upward adjustments still increased adjusted expenses, decreased adjusted income, and increased lost profits (and damages).

Although the information that led to these adjustments had long been available to her, Ms. Cardell explained that she looked again at the numbers ahead of the Daubert- Rochkind hearing and identified a payment that looked like it belonged to a different year. A PNSI accounting manager confirmed this intuition, and so Ms. Cardell made the judgment that the changes relating to trauma and on-call payments/expenses were needed. The trial court expressed concern that Ms. Cardell’s calculations might be liable to additional such changes; Ms. Cardell testified that she did not believe any other adjustments were necessary. KatzAbosch’s counsel attempted to characterize Ms. Cardell’s updates to her calculations (from May 2021 to June 2021) as a “fifty percent error rate” because she had made revisions between the first and second updates. 14 iv.

Treatment of Member Draws The trial court noted two different ways that a business could treat member draws when calculating profits. To illustrate the point, the court referred to a hypothetical limited liability corporation that, after paying all its expenses other than potential draws to its owner, has $100 in cash. On the one hand, the owner could withdraw the $100 as salary and the business would show no profit that year. On the other hand, the business could be considered to have $100 in profits regardless of whether the owner withdraws it from the business that year.

Ms. Cardell said that she believed the latter was the correct way to look at it, but there was no industry standard on this issue one way or the other. The trial court expressed skepticism that there was no industry standard, given that the classification of draws (owner salary) as profits or expenses “seems like a pretty basic issue that [is] capable of rearing its head in every case in which … an owner’s draw is possible.” v. Lack of Member-Specific Lost Profits Calculation Ms. Cardell was “unable to parse out” the financial effects of any particular member’s departure from the practice. She could not recall whether she had looked at specific collections for Dr. Holmes and Dr. O’Malley, her analysis having been based on overall revenues for the practice. Defense counsel presented her with PNSI financial records showing that those doctors’ post-exodus revenue collections declined from 2016 through 2019. b.

The Trial Court’s Ruling PNSI acknowledged that “reasonable minds can differ” as to whether its profits in 2015 was the appropriate benchmark against which to measure the practice’s future profits. 15 However, PNSI argued that none of the Daubert-Rochkind factors militated toward excluding Ms. Cardell. The court ruled from the bench, granting KatzAbosch’s motion to exclude Ms. Cardell’s testimony, based on the Daubert-Rochkind standard. i. The Court’s Overall Sense The trial court began its ruling by acknowledging the wide acceptance of the before- and-after methodology for calculating lost profits. The court then highlighted its prime concerns with Ms. Cardell’s testimony: speculation, ipse dixit “judgment calls,” helpfulness to the jury, and information Ms. Cardell had failed to consider.

First, the court found that Ms. Cardell’s selection of profitable 2015 as a benchmark (rather than unprofitable 2011-14, marginally profitable 2010, or an average) was speculation, especially given that she had no specialization in a niche practice like PNSI. So, too, was Ms. Cardell’s analysis that, after years of unprofitability, 2015 marked the critical turning point and that, in the court’s words, “the rocket had left the launch pad and was going straight up.” The speculation finding was bolstered by the fact that Ms. Cardell relied heavily on direct oral communications with PNSI and its employees rather than information more concretely assessable by the jury. Second, the court pointed to unreliable and ipse dixit “judgment calls.” The court discerned possible bias and some degree of unreliability in the judgment calls that Ms. Cardell made without some clear authority as to (1) the June 2021 normalizing adjustments (which the court said Ms. Cardell could have made as part of her original calculations); (2) “whether owner draws reduce profits or not”; and (3) Ms. Cardell’s subjective 16 understanding of the term “economic impact.”5 These judgment calls took on special importance because, the court said, either Ms. Cardell lacked awareness of industry standards or no industry standards existed, heightening her reliance on unverified sources of information and her own say-so. Third, the court questioned how helpful Ms. Cardell’s testimony would be to the jury.

Ms. Cardell chose not to disaggregate revenues according to each individual departing physician, and instead she considered lost profits in an “all or nothing” manner, rendering her opinion “only helpful if the jury accepts that each and every doctor of the seven … left solely because … of the acts of [KatzAbosch].” Relatedly, the trial court stated that “[n]ot every doctor, necessarily is going to make or contribute the same amount of money each and every year. There was nothing presented in the Report to, that considered whether or not the income, the revenue generating ability of the remaining doctors or the leaving doctors was considered [sic]. It was just, let’s take 2015 and go from there. Let’s just use the numbers as we get them without examining whether or not, you know, the doctors who have income would have had that income and things of that nature.

And again, there’s nothing about her training to me that would qualify her to make those assumptions that all these numbers would not be affected by passage of time and the doctor’s passage of time.” 5 Ms. Cardell testified that she considers “economic impact” in her work. When the court asked her what “economic impact” means, Ms. Cardell began her response by saying, “the way I think about it is…” This raised a red flag for the trial court: “[Y]ou start off with, ‘the way I think of it’. What does your industry consider it to be?” Ms. Cardell could not provide a specific industry definition for the term. 17 Fourth, the court noted that Ms. Cardell had failed to consider certain important pieces of information, including: (1) whether Dr. Holmes and Dr. O’Malley had other income streams; and (2) how changing insurance reimbursement rates were influencing the practice’s profitability. ii. The Daubert Factors The trial court then considered the Daubert-Rochkind factors: (1) Testing – The court acknowledged that a “before-and-after” analysis was appropriate and testable generally, but questioned the testability of Ms. Cardell’s judgment calls, including why she had chosen 2015 as the base year and the meaning of “economic impact.” (2) Peer review – The court did not find this factor relevant.

(3) Rate of error – The court did not find this factor relevant as it is normally applied, where there is some known rate of false positive or false negative results. But the court did note concern with Ms. Cardell’s June 2021 pre-hearing updates, as those changes were not caused by a change in the facts. (4) Standards and controls – The court said “there was very little evidence of any standards of controls that exist,” in particular on economic impact and the treatment of owner draws in profit computations. 18 (5) General acceptance – The court acknowledged that the before- and-after analysis to measure lost profits was generally accepted. (6) Purpose: prior research or litigation – Although the court expressed that there is “no inherent negativity” to experts who develop their opinions for litigation purposes compared to those who develop their expertise for independent research, the court did express concerns about Ms. Cardell’s heavy reliance on oral communications with PNSI personnel.

(7) Unjustifiable extrapolation from an accepted premise – The court said: “This applies if the … premise that we’re talking about from which the unfounded conclusions roles [sic] would be the acceptance of 2015 as the benchmark[.]” (8) Accounting for obvious alternative explanations – The court found that Ms. Cardell “clearly” had not accounted for alternative explanations – in particular, she had failed to consider doctor- specific revenue generation and changing reimbursement rates’ effects on revenue. (9) Care here as in professional non-litigation work – The court observed as to this factor: “I don’t find that to be applicable, I don’t know what to say about that and I have no reason to think that she blew this off as an inconsequential project, I mean she took this very seriously.” 19 (10) Field known to reach reliable results for this type of opinion – The court “incorporate[d] everything [it had] said,” noting in particular the June 2021 updates (driven by subjective reasons rather than newly revealed facts) as “mak[ing] the whole reliability even that much more suspect.” In sum, the court said, PNSI had failed to meet its burdens primarily as to Ms. Cardell’s reliability and secondarily as to Ms. Cardell’s usefulness to the jury, although the court described the “usefulness” finding as a “very, very slight factor.” On the following day, the trial court issued a written supplement to its oral ruling in which it discussed the persuasive value of CDW LLC, et al. v. NETech Corp., 906 F. Supp. 2d 815 (S.D. Ind. 2012). In CDW, the expert determined lost profits by using the “yardstick method” – i.e., he compared the subject business branch’s profits to the plaintiff-business’s other branches. The CDW Court noted that “[a]n expert’s choice in data sampling is at the heart of his methodology.

A yardstick approach is an acceptably reliable method under Daubert for calculating lost profits only if the benchmarks (or yardsticks) are sufficiently comparable that they may be used as accurate predictors of what the target would have done.” CDW, 906 F. Supp. 2d at 824 (internal citation omitted). “Absent the requisite showing of comparability, a damage model that predicts either the presence or absence of future profits is impermissibly speculative and conjectural.” Id. (internal quotation marks and citation omitted). The trial court found the before-and-after and yardstick methods sufficiently similar and wrote that “the expert’s choice of a benchmark in CDW is analogous to the expert’s choice of 2015 as the benchmark in the instant case. … Thus 20 [this] Court cites CDW as having persuasive value in finding that [PNSI] has not satisfied Maryland Rule 5-702 and this Court’s decision to exclude this expert on Daubert grounds.” The parties subsequently filed a stipulation of dismissal, agreeing (among other things) that PNSI could not prove a prima facie case with respect to its claims for accountant malpractice, negligent misrepresentation, and breach of contract, in light of the trial court’s exclusion of Ms. Cardell’s expert testimony. The trial court entered summary judgment in favor of KatzAbosch and dismissed the case in its entirety. 3.

Appeal PNSI appealed to the Appellate Court of Maryland. In a reported opinion, the Appellate Court held that the circuit court had abused its discretion in finding Ms. Cardell’s methodology unreliable under Daubert-Rochkind. Parkway Neuroscience and Spine Institute, LLC v. Katz, Abosch, Windesheim, Gershman & Freedman, P.A., et al., 255 Md. App. 596 , 623-37 (2022). The Appellate Court discerned error in the trial court’s criticisms of Ms. Cardell’s testimony based on: (1) the selection of 2015 as the base year; (2) insurance reimbursement rates; (3) standards for member draws; (4) the June 2021 updates to her calculations; and (5) the lack of individual per-doctor lost profit figures.

Id. at 623-37 . The Appellate Court also interpreted the trial court’s comments regarding Ms. Cardell’s lack of experience with respect to specialty medical practices as a finding that she lacked the requisite qualifications to be accepted as an expert. See id. at 622-23 . Specifically, the Appellate Court concluded that “[a]nalyzing reimbursement rates, selecting the base year, and relying on data from and conversations with PNSI all are issues with the soundness of the data” rather than with the reliability of Ms. Cardell’s 21 methodology.

Id. at 627 n.9. The court further opined that “[w]hether Ms. Cardell should have deducted the member draws from the projected profits is something [KatzAbosch] can attack during cross-examination before a jury – but not at the Daubert-Rochkind hearing.” Id. at 633 . The Appellate Court considered the proper treatment of member draws to be “a fact-laden issue – involving credibility, not reliability.” Id. As to the June 2021 updates, the Appellate Court determined that the trial court misapplied the “known or potential rate of error” Daubert factor, because “[t]he error rate that Daubert speaks of is the rate of unknown errors in the methodology employed, not an error correction rate.” Id. at 634 (internal quotation marks and citation omitted) (emphasis in original).

To find methodological unreliability in an expert’s decision to correct errors in her earlier analysis “would be a disincentive to disclose and explain errors.” Id. at 635 . Finally, regarding Ms. Cardell’s failure to calculate member-specific lost profits, the Appellate Court concluded that the circuit court looked improperly to causation when the purpose of the Daubert hearing was to assess the reliability of Ms. Cardell’s methodology – not whether PNSI had met its burden of proof on causation. Id. at 636 . The Appellate Court reversed the circuit court’s decisions excluding Ms. Cardell, striking PNSI’s lost profits claim, and granting summary judgment.

The Appellate Court remanded the case to the circuit court for proceedings consistent with its opinion. Id. at 639 . KatzAbosch then petitioned this Court for a writ of certiorari, which we granted on January 20, 2023. Katz, Abosch, Windesheim, Gershman & Freedman, P.A. v. Parkway Neuroscience and Spine Institute, LLC, 482 Md. 534 (2023).

KatzAbosch presents the 22 following question for our review: “Did the [Appellate Court] err in finding that the trial court abused its discretion in excluding expert testimony on lost profits?” II Standard of Review Appellate courts review a trial court’s decision concerning the admissibility of expert testimony under Maryland Rule 5-702 for abuse of discretion. See Rochkind, 471 Md. at 10-11 ; State v. Matthews, 479 Md. 278, 305-06 (2022). As we said in Matthews: Under this standard, an appellate court does “not reverse simply because the ... court would not have made the same ruling.” Devincentz v. State, 460 Md. 518, 550 (2018) (internal quotation marks and citation omitted). “Rather, the trial court’s decision must be well removed from any center mark imagined by the reviewing court and beyond the fringe of what that court deems minimally acceptable.” Id. (internal quotation marks and citation omitted); see also Williams v. State, 457 Md. 551, 563 (2018) (“An abuse of discretion occurs where no reasonable person would take the view adopted by the circuit court.”); Jenkins v. State, 375 Md. 284, 295-96 (2003) (“Abuse occurs when a trial judge exercises discretion in an arbitrary or capricious manner or when he or she acts beyond the letter or reason of the law.”).

Matthews, 479 Md. at 305-06 ; see also Abruquah v. State, 483 Md. 637 , 652 n.5 (2023) (an abuse-of-discretion analysis requires a reviewing court to determine the “outer bounds of what is acceptable expert evidence”). As the Supreme Court has explained, “the law grants a [trial] court the same broad latitude when it decides how to determine reliability as it enjoys in respect to its ultimate reliability determination.” Kumho Tire Co. v. Carmichael, 526 U.S. 137, 142 (1999) (emphasis in original). 23 III Discussion A. From Frye-Reed to Daubert- Rochkind 1 . Frye-Reed Starting with Maryland’s 1978 adoption of the D.C. Circuit’s 1923 Frye general acceptance test, Maryland courts deciding the admissibility of expert testimony predicated on a novel scientific principle or discovery would determine whether the scientific principles or discovery were generally accepted in the relevant scientific community. Reed v. State, 283 Md. 374 (1978); see Rochkind, 471 Md. at 13 (collecting cases under the Frye- Reed regime).

In 1993, in Daubert v. Merrell Dow Pharmaceuticals, Inc., the Supreme Court held that Federal Rule of Evidence 702 superseded Frye. The Court provided a non-exclusive list of factors that may be pertinent when determining whether the scientific testimony at issue is not only relevant but reliable. 509 U.S. 579, 589, 593-94 (1993). “The Daubert analysis, according to the Supreme Court, was more flexible than the ‘uncompromising [Frye] general acceptance test’ and gave trial courts greater discretion to admit scientific expert testimony that is relevant and founded on sound principles, even though novel or controversial.” Rochkind, 471 Md. at 14 (quoting Daubert, 509 U.S. at 596 ) (additional internal quotation omitted). Daubert allowed trial courts to admit a broader range of scientific testimony than would have been possible under Frye – including, for example, minority opinions within a field. General Electric Co. v. Joiner, 522 U.S. 136, 142 (1997). 24 But it did not uncritically throw the doors open to expert testimony, and instead it required the trial court to act as a “gatekeeper.” Id.

Under the Frye-Reed regime, the proponent of the evidence typically showed the general acceptance of the scientific expert’s methodology “by surveying scientific publications, judicial decisions, or practical applications, or by presenting testimony from scientists as to the attitudes of their fellow scientists.” 1 MCCORMICK ON EVID. § 203.1 (8th ed. 2020) (Standards for admitting scientific evidence–The general- acceptance requirement). “Daubert, by contrast, refocus[ed] the attention away from acceptance of a given methodology … and centers on the reliability of the methodology used to reach a particular result.” Rochkind, 471 Md. at 31 . While Daubert originally focused solely on the expert’s methodology (as opposed to their conclusions), the Joiner Court recognized that conclusions and methodology “are not entirely distinct from one another. Trained experts commonly extrapolate from existing data. But nothing in either Daubert or the Federal Rules of Evidence requires a district court to admit opinion evidence that is connected to existing data only by the ipse dixit of the expert.

A court may conclude that there is simply too great an analytical gap between the data and the opinion proffered.” Joiner, 522 U.S. at 146 . 25 2. Maryland Rule 5-702 This Court adopted Maryland Rule 5-702 in 1994, shortly after the Supreme Court issued Daubert but well before this Court fully embraced Daubert’s approach in Rochkind.6 Under Rule 5-702, [e]xpert testimony may be admitted, in the form of an opinion or otherwise, if the court determines that the testimony will assist the trier of fact to understand the evidence or to determine a fact in issue. In making that determination, the court shall determine (1) whether the witness is qualified as an expert by knowledge, skill, experience, training, or education, (2) the appropriateness of the expert testimony on the particular subject, and (3) whether a sufficient factual basis exists to support the expert testimony. The third “sufficient factual basis” prong includes two sub-factors.

First, the expert must have available an adequate supply of data. Second, the expert must use a reliable methodology in analyzing that data. Matthews, 479 Md. at 309 ; Roy v. Dackman, 445 Md. 23, 42-43 (2015). Absent either of these factors, an expert opinion is “mere speculation or conjecture.” Matthews, 479 Md. at 309 (quoting Rochkind, 471 Md. at 22 ). 3.

Rochkind After the consensus among the states had shifted to the Daubert regime, Maryland courts followed suit in 2020. Rochkind pointed to the problem with Frye that Daubert was 6 In the 40 years after Reed, Maryland courts experienced a “jurisprudential drift: the Frye-Reed standard announced in 1978 slowly morphed into a ‘Frye-Reed Plus’ standard, implicitly and explicitly relying on and adopting several Daubert principles.” Rochkind, 471 Md. at 5 . 26 meant to solve: the court sought not just pure liberalization but instead to correct errors in both directions. “[U]sing acceptance as the only measure of reliability presents a conundrum: a generally accepted methodology may produce ‘bad science’ and be admitted, while a methodology not yet accepted may be excluded, even if it produces ‘good science.’” Rochkind, 471 Md. at 30 . Maryland’s adoption of Daubert’s focus on reliability would “streamline the evaluation of scientific expert testimony under Rule 5-702.” Id. at 35 . Under Rochkind, trial courts “should consider a number of factors in determining whether the proffered expert testimony is sufficiently reliable to be provided to the trier of fact.” Matthews, 479 Md. at 310 .

They are: (1) whether a theory or technique can be (and has been) tested; (2) whether a theory or technique has been subjected to peer review and publication; (3) whether a particular scientific technique has a known or potential rate of error; (4) the existence and maintenance of standards and controls; … (5) whether a theory or technique is generally accepted[;] […] (6) whether experts are proposing to testify about matters growing naturally and directly out of research they have conducted independent of the litigation, or whether they have developed their opinions expressly for purposes of testifying; (7) whether the expert has unjustifiably extrapolated from an accepted premise to an unfounded conclusion; (8) whether the expert has adequately accounted for obvious alternative explanations; 27 (9) whether the expert is being as careful as he [or she] would be in his [or her] regular professional work outside his [or her] paid litigation consulting; and (10) whether the field of expertise claimed by the expert is known to reach reliable results for the type of opinion the expert would give. Matthews, 479 Md. at 310-11 (summarizing Rochkind) (internal citations omitted). The Rochkind Court added several overarching items of guidance in adopting the Daubert standard: 1. The reliability inquiry is flexible. 2.

Trial courts must focus “solely on principles and methodology, not on the conclusions that they generate,” although those are not entirely distinct and thus a trial court must consider the relationship between the two. 3. A trial court need not “admit opinion evidence that is connected to existing data only by the ipse dixit of the expert”; rather, a court may conclude that there is simply too great an analytical gap between the data and the opinion proffered. 4. All of the Daubert factors are relevant in the reliability inquiry, but none is dispositive, and a trial court may apply some, all, or none depending on the particular expert testimony at issue. 5. Rochkind did “not upend [the] trial court’s gatekeeping function. ‘Vigorous cross-examination, presentation of contrary evidence, and careful instruction 28 on the burden of proof are the traditional and appropriate means of attacking shaky but admissible evidence.’” See Matthews, 479 Md. at 311-12 (summarizing the Rochkind Court’s observations). 4.

Matthews In Matthews, this Court for the first time post-Rochkind addressed under the Daubert standard whether a trial court erred in deciding the admissibility of expert testimony. Matthews, 479 Md. at 284 . In attempting to solve a murder, the State enlisted the help of an FBI scientist who used a technique known as “reverse projection photogrammetry” to estimate the height of a suspect who had been caught on video but whose face was indiscernible. Id. at 288-89 .

The FBI scientist determined that the suspect on the video was approximately 5’8” tall, plus or minus two-thirds of an inch; defendant Matthews was approximately 5’9”. Id. But the FBI scientist’s expert report noted that, due to several variables, “the degree of uncertainty in this measurement could be significantly greater,” and at a pretrial hearing, the expert testified that she could not scientifically quantify several variables that might lead to uncertainty greater than two-thirds of an inch. Id.

Nevertheless, the trial court admitted the expert testimony, and the jury convicted Matthews of the murder. Id. at 297, 304 . The intermediate appellate court reversed Matthews’s conviction, reasoning that the inability to quantify the effect of the variables noted by the expert made her height measurement unreliable. The court perceived an “analytical gap” between the underlying data and the expert’s conclusion, and therefore held that the trial court abused its discretion in admitting the expert opinion testimony.

Id. at 304-05 . 29 This Court reinstated Matthews’s conviction, concluding that the expert’s methodology was reliable and finding no analytical gap in the expert’s proffered testimony. Matthews had argued that only one Daubert-Rochkind factor warranted exclusion of the testimony: the error rate, driven by the expert’s inability to provide an overall margin of error for her height estimate. This Court explained that “it is not sufficient to point to an unknown degree of uncertainty/error rate that applies to an expert opinion and claim that a trial court is necessarily stripped of discretion to admit that opinion.” Matthews, 479 Md. at 314 . Instead, we distinguished between “uncertainty inherent in an expert’s methodology” and “uncertainty that applies to an expert’s conclusions following the application of a reliable methodology.” Id. at 315 .

Under the former circumstance of inherent uncertainty, a trial court more likely would exclude expert testimony due to “the unacceptably high risk of an inaccurate conclusion being reached in every case where the technique is used.” Id. at 316 . However, the latter scenario, involving uncertainty in an expert’s conclusion following the application of a reliable methodology, “is generally less problematic than where an expert has applied a technique that is unreliable in every instance in which it is used.” Id. In Matthews, it was undisputed that the expert’s methodology was reliable, and that the uncertainty related to the expert’s conclusion following the application of that methodology. Thus, we recognized, the trial court was not required to exclude the testimony due to an inherently unreliable methodology.

Id. at 317 . However, we “emphasize[d] that just because the trial court was not required to exclude [an expert’s] testimony when [the expert] acknowledged an unknown degree of uncertainty, it does not 30 follow that the trial court was required to admit it.” Id. We further explained that, if the uncertainty applies to the expert’s conclusions, the “trial court should determine whether the uncertainty in the expert’s conclusions is the product of an analytical gap in the expert’s analysis and/or whether the uncertainty ultimately renders the opinion unhelpful to the trier of fact.” Id. at 314-15 . If either of those circumstances exist, the trial court acts within its discretion in excluding the proffered testimony.

Id. In Matthews’s case, we perceived no analytical gap in the expert’s testimony, where there was no disconnect between the results of the expert’s analysis and the expert’s opinion. Id. at 318 . There was nothing illogical about the expert’s explanation that her analysis showed the subject’s height was 5’8” plus or minus two-thirds of an inch, although the margin of error might be greater based on other variables she could not quantify.

Id. at 318 . We also concluded that the trial court had acted within its discretion in finding that the expert’s testimony would “assist the trier of fact to understand the evidence or to determine a fact in issue” – in other words, that it was helpful, as required by the text of Rule 5-702. See id. at 319-23 . First, the expert had explained her analysis in detail.

Matthews, 479 Md. at 319 . Second, the expert had explained why, even with the unknown degree of uncertainty attributable to certain variables, she remained comfortable with her height estimate, including the two-thirds inch margin of error. Id. at 319-20 . Finally, the expert herself had stood in the same spot and position as the subject in the image, and was able to opine that the subject of the image was just slightly shorter than the expert herself, who was between 5’9” and 5’10”.

Id. at 320 . Together, these factors allowed the trial court 31 to reasonably conclude that the expert’s opinion would help the jury, despite the expert’s acknowledged uncertainty. Id. at 320-21 . B. Applying Daubert-Rochkind Here The case centers on the primacy – and boundaries – of methodological reliability in the Daubert-Rochkind analysis.

As we explain below, the trial court acted within its discretion in considering most of its points of concern at the Daubert-Rochkind hearing. However, the court made a significant error when it relied on Ms. Cardell’s June 2021 normalizing adjustments regarding trauma and on-call pass-through payments as a basis for excluding her testimony. We shall order a limited remand under Maryland Rule 8-604(d)(1) for the trial court to revisit its ruling without consideration of the June 2021 normalizing adjustments as reflecting on the reliability of Ms. Cardell’s methodology. 1. The Relationship Between Data and Methodology An expert witness generally arrives at an opinion by choosing a methodology, selecting data to which to apply the chosen methodology, and drawing conclusions based on the results of the application of the methodology.

The reliability of the expert’s methodology is a core focus of a trial court under Rule 5-702. Without reliable methods (in addition to an adequate supply of data), an expert’s opinion lacks sufficient factual basis to support it and is instead “mere speculation or conjecture.” Matthews, 479 Md. at 309 . The disagreement here largely is over the precise boundary between data and methodology when assessing the factual basis of an expert’s testimony. There are two competing visions.

KatzAbosch and the trial court offer one vision, in which input-related choices an expert makes can be so central to a straightforward methodology that those choices 32 implicate the reliability of the methodology itself. As the trial court stated in its supplemental written memorandum, “[a]n expert’s choice in data sampling is at the heart of his methodology.” (Quoting CDW, 906 F. Supp. 2d at 824 .) The before-and-after method for measuring a company’s lost profits is as widely accepted as it is simple: identify a benchmark period before an alleged harm event and compare the company’s profits during that benchmark period to the company’s profits in subsequent periods. The play in the joints arises out of the choices the expert makes in identifying the benchmark period and thereby deciding what will be the “before” period and what will be the “after” period, and in the choices the expert makes about how she will measure “profits.” Should the expert use pre- or post-“guaranteed payment” figures? Should she apply the before-and-after method to a medical practice’s financial performance without regard to changes in reimbursement rates between years?

In KatzAbosch’s and the trial court’s view, these considerations concerning data differ from consideration of the soundness of the data that an expert uses in applying their methodology, or the soundness of the data from which an expert extrapolates after completing the application of the methodology.7 7 Consider the use of inputs where their selection does not depend on judgment calls in the way that the trial court viewed the selection of the benchmark year in this case. For example, imagine hypothetically that KatzAbosch did not dispute that 2015 was the proper benchmark year and agreed that Ms. Cardell used all the correct sources of data in her calculation of lost profits, but KatzAbosch called the veracity of some of the data into question (perhaps suggesting that bookkeepers at PNSI had not accurately classified various expenses in the company’s books and records). In that instance, KatzAbosch would have been complaining about the soundness of the data to which Ms. Cardell applied a concededly reliable methodology. The veracity of the data in this hypothetical is a factual question that the expert has no real impact on; instead, it is up to the jury to decide whether the expert’s reliable methodology has been applied to accurate data or whether the 33 PNSI and the Appellate Court offer a more rigid vision, arguing that anything dealing with the inputs is a “data” question to be siloed off from the methodological reliability analysis and instead left to the jury.8 They acknowledge that the line between data and methodology (and, for that matter, conclusions) is blurry, but they draw the line sharply in this case, arguing that only the core before-and-after subtraction counts as methodology, and the rest is data (e.g., why 2015?) or conclusion.

In this regard, PNSI relies primarily on the Seventh Circuit’s decision in Manpower, Inc. v. Ins. Co. of Pa., 732 F.3d 796 (7th Cir. 2013), noting that we cited Manpower in Matthews.9 In Manpower, the federal district court excluded insured-plaintiff Manpower’s accounting expert, whom Manpower needed to establish business interruption damages in its suit against the insurer-defendant. The insurer-defendant challenged the reliability of the expert’s methodology, and the district court found that the expert had followed the master insurance policy’s “straightforward” methodology for his calculations. Manpower, 732 F.3d at 801-02 .

But the calculations’ reliability nevertheless “turn[ed] on whether [the expert] used reliable methods when selecting the numbers used in his calculations.” Id. at proponent has offered “garbage in, garbage out” expert testimony to be discredited even after being admitted. 8 For example: “Whether Ms. Cardell failed to consider reimbursement rates is not an issue with the methodology – the before-and-after method. Rather, it is an issue with the soundness of the data she used to reach her conclusion.” Parkway Neuroscience, 255 Md. App. at 627. 9 See Matthews, 479 Md. at 316 (quoting Manpower, 732 F.3d at 806 : “The district court usurps the role of the jury, and therefore abuses its discretion, if it unduly scrutinizes the quality of the expert’s data and conclusions rather than the reliability of the methodology the expert employed.”). 34 801. The district court found that the answer to that question was no. The expert used a shorter base period (from which he extrapolated a relatively high growth rate) because of recent corporate acquisitions, new policies, and new managers at Manpower, and the expert did not consider other indicators that may have affected the growth rate.

Id. The district court also criticized the expert’s reliance on conversations with the company managers. Id. But the district court primarily found that the expert’s “‘analysis [broke] down’ at his choice of growth rate.” Id.

In the district court’s view, “[o]nly a more thorough analysis of the reasons for the growth would have supported [the expert’s] choice of a projected growth rate.” Id. The Seventh Circuit reversed the district court’s exclusion of the expert, agreeing with Manpower that “the district court exercised its gatekeeping role under Daubert with too much vigor.” Id. at 805 . The federal appellate court opined that reliability is primarily a question of the expert’s methodology, not the data that is the input or the conclusions that are the output. Id. at 806 .

The Manpower Court acknowledged the blurriness of the line between undue scrutiny of an expert’s data and proper scrutiny of an expert’s methodology, writing that “[t]he critical inquiry is whether there is a connection between the data employed and the opinion offered.” Id. Opinions are properly excluded when they are connected to existing data “only by the ipse dixit of the expert.” Id. More specifically, the Manpower Court said that the district court should have stopped its inquiry when it found the methodology reliable, but instead it “drilled down to a third level in order to assess the quality of the data inputs [the expert] selected” and then took issue with that data selection. Id. at 807 .

The expert’s data selection was “substantially 35 more nuanced and principled than the district court’s characterization reflects,” and so the ultimate opinion was not ipse dixit but rather “reasoned and founded on data.” Id. at 809 . Each of the district court’s criticisms of the expert’s reliability “was a comment on the soundness of the factual underpinnings of his calculation” and the district court’s rulings could even have been something of a “roadmap for [the defendant-insurer’s] cross- examination of [the expert].” Id. “But the district court supplanted that adversarial process with its admissibility determination” and “set the bar too high and therefore abused its discretion.” Id. The Manpower Court’s understanding of the line between data and methodology, of course, does not bind this Court, and its rigidity is not in keeping with the approach taken by other federal appellate courts. Instead, many federal courts have explained the Daubert standard in ways that reject this sharp line and acknowledge that problems with data and data selection (which itself can involve its own methodology) can bear on admissibility before the judge and not just weight before the jury.

See, e.g., EEOC v. Freeman, 778 F.3d 463, 467, 472 (4th Cir. 2015);10 Elcock v. Kmart Corp., 233 F.3d 734 , 10 In Freeman, plaintiff EEOC’s industrial psychologist expert witness delivered a report based on a database riddled with errors, introducing even more errors in an updated analysis; the “sheer number of mistakes and omissions” rendered the expert’s analysis “outside the range where experts might reasonably differ” under Kumho Tire, and so the district court did not abuse its discretion in excluding the proffered expert’s testimony as unreliable. The EEOC unsuccessfully argued that “the issue of the reliability of an expert’s data is always a question of fact for the jury, except perhaps in some theoretical, rare case.” Freeman, 778 F.3d at 472 (Agee, J., concurring). 36 755-56 (3d Cir. 2000);11 In re Mirena IUS Levonorgestrel-Related Products Liab. Litig. (No. II), 982 F.3d 113, 123 (2d Cir. 2020).12 Consider as one example Rink v. Cheminova, an Eleventh Circuit case in which the appellate court found no abuse of discretion in the district court’s exclusion of a putative class’s expert. 400 F.3d 1286, 1293-94 (11th Cir. 2005).

The plaintiffs maintained that Cheminova’s pesticide malathion defectively contained elevated levels of isomalathion, which makes malathion particularly toxic to humans and which, they claimed, was created by exposure of the malathion supply to temperatures above 77 degrees Fahrenheit during storage at sites in Texas, Georgia, and Florida. Id. at 1289 . The plaintiffs’ expert estimated the isomalathion content of pesticides used in Tampa; he began with National Weather Service temperature readings near the malathion storage sites, using the recorded high and low temperatures as upper and lower limits of the probable exposure temperatures. Id.

Because there was evidence that the inside of the Texas storage facility was actually 18 degrees warmer than the outside ambient air temperature, he added 18 degrees to the 11 In Elcock, the Third Circuit held that the district court abused its discretion in admitting the expert’s economic damages model, which relied on empirical assumptions not supported by the record, fearing that a jury would be “likely to adopt the gross figure advanced by a witness who has been presented as an expert.” 233 F.3d at 755-56 . 12 In Mirena, the Second Circuit rejected the plaintiffs’ contention that a trial court erred by taking a “hard look” at their expert’s methodology: “[A]n expert’s methodology must be reliable at every step of the way, and in deciding whether a step in an expert’s analysis is unreliable, the district court should undertake a rigorous examination of the facts on which the expert relies, the method by which the expert draws an opinion from those facts, and how the expert applies the facts and methods to the case at hand.” 982 F.3d at 123 (internal quotation marks and citation omitted) (emphasis added by the Mirena Court). 37 upper plausibility limits. Id. at 1290. He then averaged the upper and lower limits to find the most probable exposure temperature. Id.

He took that temperature and plugged it into an equation to calculate the level of toxic isomalathion as a function of time and temperature. Id. Importantly, the plaintiffs’ theory hinged on the isomalathion content of the pesticides used in Tampa, Florida, which included not just the malathion that had initially been stored in Texas, but also malathion that had been initially stored at sites in Florida and Georgia. See id. at 1289-90.

The district court excluded the expert’s testimony for several reasons, including the expert’s “method of extrapolating data from one site [Texas] to another [Florida and Georgia] without making particularized findings which accounted for the differences in conditions and length of storage at each site.” Id. at 1290. On appeal, the plaintiffs argued that the district court had improperly taken issue with the expert’s temperature data and not his methodology. The Eleventh Circuit disagreed: While [the plaintiffs] suggest that the only methodology at issue was [the expert’s] use of an equation to determine isomalathion levels, this argument belies the fact that [the expert] employed two methodologies: first, he employed certain methods of extrapolation and transposition to arrive at temperature data; and second, he inserted the temperature data into an equation to arrive at the level of isomalathion in the [pesticide]. As we have explained, the district court’s exclusion of [the expert] was based on its rejection of his methodology to derive temperature data, not the data itself.

Thus, the district court’s exclusion of [the expert] can be distinguished from a situation in which an exclusion is based on a district court’s refusal to credit hard data arrived at by unassailable methods.… Here, the data [the expert] produced was driven by the methodology he used, and thus the district court’s inquiry into how he arrived at the data is not inappropriate 38 considering that the district court is charged with evaluating an expert’s methodology. Id. at 1293.13 The Rink Court took an appropriately holistic view of the methodology being applied, examining the production of the equation’s inputs as part of the process itself. A narrower understanding of the methodology – something along the lines of “use this formula to calculate the isomalathion content of this pesticide” – might have called for allowing the expert to testify at trial, where opposing counsel could have impeached him by showing the weaknesses in his Tampa storage temperature input selection. We agree with the Eleventh Circuit that, under a proper application of Daubert, the trial court in Rink acted as an appropriate gatekeeper.

Another useful case to consider is In re Wholesale Grocery Products Antitrust Litigation, an Eighth Circuit antitrust case in which the district court had excluded an expert witness who sought to establish the plaintiff’s injury by selecting a competitive benchmark. 946 F.3d 995 (8th Cir. 2019). The district court excluded as unreliable the benchmark the expert selected, because the expert’s choice of a non-independent chain grocery store (Stop & Shop) was premised on an unfounded assumption that independent retailers’ charges 13 The Rink Court contrasted the case before it with Quiet Tech. DC-8, Inc. v. Hurel- Dubois UK Ltd., 326 F.3d 1333 (11th Cir. 2003), where the district court had admitted testimony of Hurel-Dubois’s expert on computational fluid dynamics. Rink, 400 F.3d at 1293 .

After losing at trial, Quiet Tech argued that the district court abused its discretion by admitting the other side’s expert testimony. The Eleventh Circuit disagreed, observing that Quiet Tech “does not argue that it is improper to conduct a [computational fluid dynamics] study using the sorts of aerodynamic data that [the expert] employed, but rather that the specific numbers that [the expert] used were wrong. Thus, the alleged flaws in [the expert’s] analysis are of a character that impugn the accuracy of his results, not the general scientific validity of his methods.” Quiet Tech, 326 F.3d at 1343-44 . This case resembles Rink, whereas the hypothetical we pose above in footnote 7 resembles Quiet Tech. 39 followed the same pattern as Stop & Shop’s.

Id. at 999. The plaintiff argued on appeal that benchmarking is a recognized tool for establishing antitrust injury, and once the expert chose a benchmark, there was nothing left for the district court to analyze under Daubert; what remained were questions of fact for the jury. Id. at 1001. The Eighth Circuit rejected this argument “because it is the foundation of the assumption underlying the application of the method employed by [the expert] on these facts … that led the district court to its conclusion that [the expert’s] testimony should be excluded under Rule 702.” Id. “The district court did not go ‘miles beyond’ its appropriate role in this case, as [the plaintiff] argues, but rather held that the reasoning underlying [the expert’s] testimony was not on solid footing because the assumption upon which the report relied was insufficient to validate his opinion.” Id. at 1002. “[T]he district court held that ultimately these analyses were a house of cards of sorts and our own analysis reveals no abuse of discretion in this conclusion.

At its base level, the core assumption of the analysis was by the ipse dixit of [the expert].” Id. Here too, we see the same arguments as in Manpower and in the case before us: undue scrutiny and a tunnel vision focus on methodology. But the Eighth Circuit declined to accept the benchmark selection without question and instead approved of the district court’s inquiry into the assumptions underlying the expert’s choice of benchmark. This is a long way from Manpower’s approach.

In short, whether an expert’s methodology is sufficiently reliable to admit the expert’s testimony at trial will sometimes require a trial court to consider data and assumptions that the expert has employed in deciding threshold points relating to the methodology. Manpower’s rigid separation of “data” and “methodology” misses this grey 40 area and creates a categorical rule when the Daubert-Rochkind regime calls for flexibility and deference. When this Court cited Manpower in Matthews, it did so to demonstrate the proposition that where a sufficient factual basis exists under Rule 5-702(3) and Daubert- Rochkind – that is, where an expert has applied a reliable methodology to an adequate supply of data – courts should not exclude an expert merely because the expert’s particular conclusions may be inaccurate, but rather should only exclude expert testimony that is “mere speculation or conjecture.” Matthews, 479 Md. at 316 . The Appellate Court in this case relied on the part of Manpower to which we do not subscribe, categorizing the 2015 base year choice, the failure to consider reimbursement rates, etc., as arguable defects in the soundness of Ms. Cardell’s data, rather than defects of her methodology.

See Parkway Neuroscience, 255 Md. App. at 627-28 & n.9. The Appellate Court was right to center methodology in its analysis of the expert opinion’s reliability, a critical aspect (along with the data’s adequacy) of the opinion’s factual basis without which the opinion would be “mere speculation or conjecture.” Matthews, 479 Md. at 309 (citing Rochkind, 471 Md. at 22 ); see Parkway Neuroscience, 255 Md. App. at 629 & n.11. But the intermediate appellate court, relying on Manpower, took an overly rigid approach in analyzing the relationship between data and methodology, holding that the trial court’s analysis of Ms. Cardell’s opinion went to her data rather than to her methodology. Just as the U.S. Supreme Court has noted the blurred line between methodology and conclusions, Joiner, 522 U.S. at 146 , we note the sometimes blurred line between data and methodology.

Trial courts must not transmute all questions of data’s provenance or veracity 41 into questions of methodology, just as they must not – under Joiner – transmute all disagreements with conclusions into disagreements with methodology. But by the same token, trial courts should not wear “methodology blinders” and deny the existence of some limited overlap between data and methodology (and between methodology and conclusions). Determining whether a dispute concerning expert testimony implicates the soundness of data or soundness of methodology is precisely the type of matter that calls for the exercise of a trial court’s discretion. Here, the trial court explicitly noted speculative, insufficiently substantiated judgment calls that were central to Ms. Cardell’s application of the before-and-after method.

In the trial court’s estimation, Ms. Cardell exercised subjective judgment in settling on the 2015 base year – that is, it was impossible to test the validity of that decision. Relatedly, the trial court was troubled by the effect on the base year determination of Ms. Cardell’s treatment of member draws as expenses without understanding whether that decision was consistent with any industry standard. In addition, the trial court faulted Ms. Cardell for failing to appropriately factor in confounding variables (in particular, declining insurance reimbursements) into her methodology. The court determined these judgment calls veered toward speculation and conjecture and ate away at the factual basis for Ms. Cardell’s opinions, because even though many of the problems had to do with the “inputs” to the before-and-after method, the selection of those inputs is central to the reliability of the method itself.

We rely on trial courts that conduct Daubert-Rochkind hearings to determine where the line between data and methodology is in the specific cases before them, and whether 42 the proffered expert’s choices relating to data, assumptions, and other inputs implicate the reliability of the expert’s methodology. In this part of the trial court’s analysis, the court did just that. That is, we discern no error in the trial court’s analysis of Daubert-Rochkind factors one and two and four through nine.14,15 14 The trial court discussed Ms. Cardell’s decision not to account for the doctors’ individual revenue generation capabilities as part of the court’s discussion of Daubert factor eight (accounting for obvious alternative explanations). As discussed below, we think the court’s concerns on that front go more to the reliability of the before-and-after- method when used to calculate lost profits of a limited liability company with a small number of revenue generators, rather than a failure to account for obvious alternative explanations. 15 The trial court said that, at the Daubert hearing stage, it was not the court’s responsibility to determine whether Ms. Cardell qualified as an expert or not.

And the court explicitly stated that it was not deciding one way or the other whether Ms. Cardell was, in fact, qualified to render an expert opinion at trial. However, the court did note Ms. Cardell’s lack of experience with specialty medical practices and her reliance on oral communications with PNSI staff (rather than universally available, concrete sources of information), and her reliance on her own experiences and judgment rather than on industry standards. In the court’s mind, these points undermined Ms. Cardell’s overall reliability. We do not discern any abuse of discretion in the court’s reliance on these points.

However, it is important to acknowledge that there is nothing inherently problematic with an expert’s use of information provided orally or in writing by the proponent of her testimony. Experts routinely rely on such information in arriving at their opinions. Nor is it uncommon for experts to apply their subjective judgment, based on their training and experience, in formulating their opinions. The trial court did not indicate that it believed it was per se improper for an expert to rely on oral communications with the proponent of her testimony or to make subjective judgment calls.

Rather, the trial court’s point was that, in the absence of other sources of information that tended to support the reliability of Ms. Cardell’s methodology – such as industry standards – and given her inability to adequately explain why she made the judgment calls she did, Ms. Cardell’s reliance on oral communications with PNSI and on her subjective judgment detracted from the reliability of her methodology. 43 2. The Federal Analog to Maryland Rule 5-702 The direction of analogous Federal Rule 702 confirms our understanding of meaningful gatekeeping as to an expert opinion’s factual basis. In a May 2022 report, the Advisory Committee on Evidence Rules wrote that the Committee resolved to respond to the fact that many courts have declared that the reliability requirements set forth in Rule 702(b) and (d) – that the expert has relied on sufficient facts or data and has reliably applied a reliable methodology – are questions of weight and not admissibility, and more broadly that the expert testimony is presumed to be admissible. These statements misstate Rule 702, because its admissibility requirements must be established to a court by a preponderance of the evidence.

The Committee concluded that in a fair number of cases, the courts have found expert testimony admissible even though the proponent has not satisfied the Rule 702(b) and (d) requirements by a preponderance of the evidence – essentially treating these questions as ones of weight rather than admissibility…. COMM. ON RULES OF PRAC. AND PROC.

OF THE JUD. CONF. OF THE U.S., REP. OF THE ADVISORY COMM.

ON EVIDENCE RULES 6 (May 15, 2022), available at https://perma.cc/PK3B-Q8G5. Absent any contrary Congressional action, Federal Rule 702 will officially reflect this reality come December 1, 2023, when a set of amendments will take effect to provide that the proponent of expert testimony must meet Rule 702’s standards – including related to the testimony’s factual basis – by a preponderance of evidence, or else the testimony is inadmissible and may not go to the jury: A witness who is qualified as an expert by knowledge, skill, experience, training, or education may testify in the form of an opinion or otherwise if the proponent demonstrates to the court that it is more likely than not that: (a) the expert’s scientific, technical, or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue; 44 (b) the testimony is based on sufficient facts or data; (c) the testimony is the product of reliable principles and methods; and (d) the expert’s opinion reflects a reliable application of the principles and methods to the facts of the case. U.S. SUPREME COURT, ORDER 4 (April 24, 2023), available at https://perma.cc/RU2S- KEYM (most relevant new language emphasized). The change emphasizing the preponderance standard “specifically was made necessary by the courts that have failed to apply correctly the reliability requirements of [Federal Rule 702].” FED.

R. EVID. 702 advisory committee’s note to 2023 amendment. “[M]any courts have held that the critical questions of the sufficiency of an expert’s basis, and the application of the expert’s methodology, are questions of weight and not admissibility. These rulings are an incorrect application of Rules 702 and 104(a).” Id.; see Sardis v. Overhead Door Corp., 10 F.4th 268, 283-84 (4th Cir. 2021) (observing that the then-proposed amendments to Federal Rule 702 would make explicit the preponderance of evidence standard of admissibility to the rule’s sufficiency of basis and reliability analyses; confirming that these rule revisions and clarifications “clearly echo[] the existing law on the issue” from Daubert, Kumho Tire, and Rule 702 itself). The new amendments comprehend that some challenges to expert testimony will, in fact, go to weight rather than admissibility. For example, if the court finds it more likely than not that an expert has a sufficient basis to support an opinion, the fact that the expert has not read every single study that exists will raise a question of weight and not admissibility.

But this does not mean, as certain courts have held, that arguments about the sufficiency of an expert’s basis always go to weight and not admissibility. Rather it means that once the court has found it more likely 45 than not that the admissibility requirement has been met, any attack by the opponent will go only to the weight of the evidence. FED. R. EVID. 702 advisory comm. note to 2023 amendment (emphasis added).

Indeed, they do not require federal courts to “nitpick an expert’s opinion in order to reach a perfect expression of what the basis and methodology can support,” but instead seek to block “claims that are unsupported by the expert’s basis and methodology.” Id. 3. The Trial Court’s Error Although we discern no error in most of the trial court’s application of the Daubert- Rochkind factors, we are constrained to conclude that the court erred in one respect. The trial court viewed Ms. Cardell’s June 2021 updates, which the court discussed in the context of Daubert-Rochkind factors three (known or potential rate of error) and 10 (whether the field of expertise is known to reach reliable results for the projected type of expert opinion), as implicating the reliability of her methodology. To be sure, the court observed that the error rate factor did not apply “as it was ordinarily considered,” e.g., concrete and numerical probabilities of correctness in DNA testing.

Still, the court was troubled by the timing of Ms. Cardell’s updates – without new information and “for fully subjective reasons” – which, the court believed, reflected negatively on her methodology. This analysis missed the mark. In fact, there was new information of a sort: Ms. Cardell noticed something she had not noticed before on first examination. She then sought clarification and revised her opinion, just as a doctor might order a biopsy and diagnose a patient with skin cancer if the doctor had missed a mole upon first examination of the patient.

Catching something peculiar the second time around neither undermines the 46 adequacy of the data (the patient’s skin) nor the court’s understanding of the expert’s methodology (examining the patient’s skin for disease indicators). Notably, when discussing the tenth Daubert factor – whether the field of expertise is known to reach reliable results for the type of opinion the expert would give – the trial court specifically referenced the June 2021 adjustments, stating that “the mere fact the findings changed in June of this year for fully subjective reasons, it had nothing to do with any new information. It kind of makes the whole reliability even that much more suspect.” This comment, along with the court’s other references to the June 2021 adjustments, leaves us with the abiding concern that, in this instance, the trial court strayed from its gatekeeping role and that this error was significant in the court’s overall analysis.16 Ms. Cardell’s decision to make the adjustments relating to trauma/on-call payments in 2016 did not implicate the reliability of her methodology. At most, it went to the care with which she 16 The trial court also erred when it stated that Ms. Cardell’s lost-profit calculations would not be helpful to the jury.

The court reached this conclusion based on Ms. Cardell’s failure to consider each departing physician’s projected revenue generation in her calculation of lost profits. The court’s point was that, if the jury concluded that one (or more) of the departing physicians left for reasons other than KatzAbosch’s negligence, a lost-profits analysis that included that physician’s projected revenue would overstate the practice’s lost profits and therefore not help the jury to accurately calculate damages. The court stated, however, that its finding with respect to helpfulness was a “very, very slight factor” in its decision to exclude Ms. Cardell’s testimony. We confirmed in Matthews that a trial court has discretion under Maryland Rule 5-702 to exclude an expert’s opinion based on a reliable methodology if the court nevertheless concludes that the expert’s testimony would not be helpful to the jury.

See Matthews, 479 Md. at 320-21 . Here, however, there was no way to know before the trial whether the jury would conclude that any of the physicians left for reasons other than KatzAbosch’s negligence. The trial court’s conclusion that Ms. Cardell’s testimony would not be helpful, therefore, was speculative and not a proper ground for exclusion. 47 applied her methodology, which is a matter to be explored on cross-examination before the jury (if Ms. Cardell’s testimony is otherwise found to be sufficiently reliable).17 In Matthews, we “emphasize[d] that just because the trial court was not required to exclude [the expert’s] testimony when [the expert] acknowledged an unknown degree of uncertainty, it does not follow that the trial court was required to admit it.” 479 Md. at 317 . Similarly, we do not believe that, based on the record before the trial court in this case, the court was required to exclude Ms. Cardell’s testimony.

Rather, based on the factors that the trial court appropriately considered in this case, it was within the trial court’s discretion to admit or exclude Ms. Cardell’s testimony. Having carefully reviewed the record, we conclude that the fair and prudent course of action at this point is to order a limited remand to the circuit court under Maryland Rule 8-604(d)(1) so that the trial court may decide to admit or exclude Ms. Cardell’s