Appellate Court of Maryland applies the recently adopted Daubert/Stevenson standard to overturn the exclusion of expert testimony

 

Parkway Neuroscience and Spine Institute, LLC v. Katz, Absoch, Windesheim, Gershman & Freedman, P.A., et al., No. 658, September Term, 2021, Opinion by Adkins, J.

                On September 30, 2022, the Appellate Court of Maryland overturned the Howard County Circuit Court’s decision to strike the testimony of a “lost profits” expert. Parkway Neuroscience and Spine Institute (“PSNI”) brought a professional malpractice suit against its prior accounting firm: Katz, Abosch, Windesheim, Gershman & Freedman, P.A. (“Katz Abosch”). In essence, PNSI claimed to Katz Abosch’s proposed compensation model plunged PNSI “deeply in debt,” causing several members to leave the practice and further causing a significant loss in earnings. PNSI retained a certified public accountant (CPA) as a damages expert on the issue of lost profits.

                The case was initiated in 2018, when Maryland still employed the Frye-Reed standard to govern the admissibility of expert testimony. The Frye-Reed standard largely considered whether an expert’s opinion was “generally accepted” within the scientific community. See Reed v. State, 283 Md. 374, 381 (1978) (quoting Frye v. U.S., 293 F. 1013, 1014 (D.C. Cir. 1923)). While PNSI’s case was pending, the Supreme Court of Maryland abandoned Frye-Reed as the controlling standard in favor of Daubert. See Rochkind v. Stevenson (Stevenson II), 471 Md. 1, 35–36 (2020). The Stevenson II court recognized that “Daubert . . . refocuses the attention away from acceptance of a given methodology—although that is not totally removed from the calculus—and centers on the reliability of the methodology used to reach a particular result.” Id. at 31; Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 589–90 (1993).

                Based on the substantive change in the in the law, Katz Abosch renewed their motion to strike PSNI’s CPA expert. After a hearing, the trial granted the motion and excluded the testimony of the CPA, taking issue with the CPA’s lack of experience in evaluating the finances of medical practices, her methodology in using a “before and after” method to calculate lost profits, her reliance on “subjective” decisions, and her selection of 2015 as the year from which to base her opinions.

                On appeal, the Appellate Court disapproved of the trial court’s decision to exclude the CPA’s testimony based on her lack of experience with medical practices such as PSNI. The appellate court considered it “an abuse of discretion to exclude testimony simply because the trial court does not deem the proposed expert to be the best qualified or because the proposed expert does not have the specialization that the court considers most appropriate.” See also Holbrook v. Lykes Bros. S.S. Co., Inc., 80 F.3d 777, 782 (3d Cir. 1996) (citation omitted). The Appellate Court also found fault in the trial court’s decision to exclude the testimony over what the trial court considered an unreliable methodology.  Though the trial court questioned whether the expert’s chosen methodology (the “before and after” method) was the best method to calculate lost profits, this method was nevertheless an “indisputably legitimate choice of methodology.”

                Ultimately, the Appellate Court acknowledged that the issues raised with the expert’s qualifications and methodology go to the weight of her testimony, not necessarily its admissibility. The Appellate Court formally reversed the trial court’s decision to exclude the lost profits expert and remanded the case to the trial court. While this case is somewhat specific to CPA related experts, it provides a helpful framework for practitioners applying Maryland’s new Daubert/Stevenson standard to evaluate the admissibility of expert testimony.