Sanchez v. Secretary of Health and Human Services

In the United States Court of Federal Claims
OFFICE OF SPECIAL MASTERS
*********************
TRYSTAN SANCHEZ, by and *
through his parents, GERMAIN * No. 11-685V
SANCHEZ and JENNIFER * Special Master Christian J. Moran
SANCHEZ, *
* Filed: March 17, 2023
Petitioners, *
v. * Enlargement of Time;
* Growth Rate
SECRETARY OF HEALTH *
AND HUMAN SERVICES, *
*
Respondent. *
*********************
Lisa A. Roquemore, Law Office of Lisa A. Roquemore, Rancho Santa Margarita,
CA, for petitioners;
Jennifer L. Reynaud, United States Dep’t of Justice, Washington, DC, for
respondent.
PUBLISHED ORDER DENYING MOTION FOR LEAVE TO FILE
OUT OF TIME AND RULING FINDING GROWTH RATE1
Mr. and Ms. Sanchez are entitled to compensation for the harm a vaccination
caused their son, Trystan. Compensation includes unreimbursable expenses for
various non-medical items.
1 Because this order contains a reasoned explanation for the action in this case, the
undersigned is required to post it on the United States Court of Federal Claims' website in
accordance with the E-Government Act of 2002. 44 U.S.C. § 3501 note (2012) (Federal
Management and Promotion of Electronic Government Services). This means the order will be
available to anyone with access to the internet. In accordance with Vaccine Rule 18(b),
petitioners have 14 days to identify and move to redact medical or other information, the
disclosure of which would constitute an unwarranted invasion of privacy. If, upon review, the
undersigned agrees that the identified material fits within this definition, the undersigned will
redact such material before posting the decision.
The parties disagree about the growth rate for non-medical items. One
party, the petitioners (Mr. and Ms. Sanchez) submitted evidence. The other party,
the respondent (the Secretary of Health and Human Services) has not submitted
evidence. The Secretary did not submit evidence because the Secretary failed to
comply with scheduling orders. As such, the present order explains why the
Secretary’s most recent motion to enlarge a deadline is DENIED. In the absence
of evidence from the Secretary rebutting the evidence the Sanchezes presented, the
Sanchezes’ evidence is credited. Accordingly, the growth rate for non-medical
items is six percent.
Procedural History regarding the Submission of Reports from Economists
The Sanchezes filed their petition in 2011, making this case the second
oldest case currently pending in the Office of Special Masters. The Federal Circuit
ruled that the Sanchezes are entitled to compensation. After the mandate was
issued, the Court of Federal Claims remanded the case to determine damages.
Order, issued Aug. 16, 2022.
The first order regarding damages provided preliminary guidance regarding
discount rates and growth rates. Here, the undersigned proposed that 4 percent
could serve as an appropriate growth rate for non-medical items. But, the parties
did not have to accept this proposal. Order, issued Aug. 30, 2022, at 5. Both
parties were instructed to submit status reports regarding the growth rate.2 The
deadline for the status report from the Sanchezes was September 9, 2022, and the
deadline for the Secretary was September 16, 2022. Id. at 6, 7.
The Sanchezes submitted their status report, early, on September 7, 2022.
There, the Sanchezes indicated additional research was required due, in part, to the
increase in the cost of services after the Covid pandemic. Pet’rs’ Status Rep., filed
Sept. 7, 2022, at 3.
The Secretary did not present his view on the date required. As such, the
Secretary was reinstructed to comment on the proposed rates. Order, issued Sept.
2 While the August 30, 2022 order proposed discount rates and growth rates, ensuing
orders did not always use the term “growth rates.” However, a “discount rate” necessarily entails
a growth rate as a net discount rate reflects the rate at which an investment would increase and
the price increase (or growth rate) of a cost. See Petronelli v. Sec’y of Health & Hum. Servs.,
No. 12-285V, 2016 WL 3252082, at *4 (Fed. Cl. Spec. Mstr. May 12, 2016); Childers v. Sec’y
of Health & Hum. Servs., No. 96-194V, 1999 WL 159844, at *1 (Fed. Cl. Spec. Mstr. Mar. 5,
1999). Any imprecision appears not to have contributed to the Secretary’s failure to submit a
report from an economist on time.
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20, 2022. Without discussing why his submission was late, the Secretary stated
that discount rates are set on a “case-by-case basis” and that expert testimony
might be required. Resp’t’s Status Rep., filed Sept. 22, 2022.
The parties’ submissions and the current economic situation suggested that
resolving the appropriate growth rate might be a difficult question. Order, issued
Sept. 27, 2022, at 1. The parties were informed that if they could not agree upon
an appropriate discount rate, they would be required to submit expert reports on the
topic simultaneously. Id. The “undersigned propose[d] to resolve the discount rate
sooner rather than later.” Id.The September 27, 2022 order was discussed in the first status conference
regarding damages, held on October 13, 2022. The Secretary did not oppose the
simultaneous submission of expert reports. To allow time for negotiations and to
ascertain more information about the parties’ positions, the undersigned directed
the Sanchezes to file a status report by November 30, 2022. Order, issued Oct. 13,
2022.
The Sanchezes disclosed that they were proposing a growth rate of 6 percent
for non-medical items. Pet’rs’ Status Rep., filed Nov. 30, 2022, ¶ 3. The same day
that the Sanchezes submitted their status report, the undersigned stated: “If the
parties do not agree to discount rates, the parties will be obligated to submit reports
regarding discount rates simultaneously by Wednesday, February 1, 2023.
Because the parties are aware of this deadline, the undersigned does not intend to
extend the deadline as a matter of routine.” Order, issued Nov. 30, 2022, at 2.
This was the first warning. The Secretary was also ordered to submit a status
report as to whether the proposal from the Sanchezes was acceptable. Id.The Secretary advised that the parties were attempting to resolve any
differences regarding the growth rates. Resp’t’s Status Rep., filed Friday, Dec. 16,
2022. On the next business day, the undersigned directed the Secretary to provide
specific numbers for various categories of growth rates. Order, issued Dec. 19,
2022. The undersigned added: “if the parties have not reached an agreement
regarding discount rates, both parties are required to submit reports from experts
on Wednesday, February 1, 2023. The undersigned does not anticipate extending
this deadline as a matter of routine.” Id. This was the second warning.
As instructed, the Secretary disclosed that he proposed a growth rate of 4
percent for non-medical items. Resp’t’s Status Rep., filed Dec. 23, 2022. In
response, the undersigned stated: “In accord with the previous orders, both parties
are required to submit reports from experts regarding growth rates on Wednesday,
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February 1, 2023. The undersigned does not anticipate extending this deadline as a
matter of routine.” Order, issued Dec. 29, 2022. This was the third warning.
On Friday, January 20, 2023, the Sanchezes advised that they are consulting
an economist regarding the growth rate for non-medical items and services. Pet’rs’
Status Rep., filed Jan. 20, 2023. The next business day, the undersigned stated:
“Previous orders have established that the deadline for both parties to file expert
reports is Wednesday, February 1, 2022. This deadline remains in effect. The
undersigned does not intend to extend the deadline absent a showing of good
cause.… The failure of either party to submit expert reports regarding [growth]
rates by February 1, 2023 is likely to be construed as a waiver of any argument
regarding [growth] rates.” Order, issued Jan. 23, 2023, at 1. This was the fourth
warning.
Despite being alerted four times that the deadline would not be extended, the
Secretary requested additional time to file a report from an economist on January
30, 2023. The Secretary submitted this motion two days before the February 1,
2023 deadline, which was announced in the November 30, 2022 Order. The
Secretary’s motion did not set forth with any persuasive specificity the reason that
would justify extending the deadline. Accordingly, adjudication of the motion was
deferred until after a status conference. Order, issued Jan. 30, 2023.
In a February 2, 2023 status conference, the Secretary’s counsel stated that
although the economist whom the Secretary had retained, Patrick Kennedy, had
indicated that he would meet the February 1, 2023 deadline, the Secretary’s
attorney learned upon her return from vacation that he could not. The obstacles
that prevented Dr. Kennedy from fulfilling the obligation to submit a report by the
February 1, 2023 deadline were not presented in the status conference. In any
event, the asserted explanation did “not constitute ‘good cause.’” Order, issued
Feb. 2, 2023, at 1, citing Vaccine Rule 19(b). Nevertheless, the Secretary was
afforded an additional week. “If the report is not filed, barring unusual
circumstances, the undersigned will move forward in the absence [of] respondent’s
report.” Id.Within hours of conclusion of the February 2, 2023 status conference, the
Sanchezes submitted a report from an economist, Thomas Young. Dr. Young
proposes a growth rate of 6 percent for non-medical items. Exhibit 221.
On the second deadline for the Secretary to file an expert report, the
Secretary renewed his motion for additional time for Dr. Kennedy to submit a
report regarding growth rates. Resp’t’s Memo., filed Feb. 10, 2023. The Secretary
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provided no information as to why Dr. Kennedy could not present a report by
February 10, 2023. Instead, respondent’s counsel asserts “Despite best efforts,
Respondent’s economist’s report is not yet complete.” Id. at 2. However, the
nature of these efforts was not explained at all. Accordingly, the Secretary’s
renewed motion was denied. Order, issued Feb. 13, 2023.
In conjunction with the renewed motion, the Secretary also presented a
memorandum, consisting of attorney arguments against Dr. Young’s proposal of a
6 percent growth rate for non-medical items. The Sanchezes were permitted an
opportunity to respond to these criticisms. Id.The Sanchezes responded to the Secretary’s February 10, 2023
memorandum by defending the opinion of Dr. Young. Pet’rs’ Resp., filed Feb. 27,
2023.
On Friday, March 3, 2023, the Secretary filed a third motion regarding the
deadline for the submission of an economist’s report. Recognizing that the
previous two motions had been denied, the Secretary sought leave to file Dr.
Kennedy’s response as exhibit R.
The Sanchezes opposed this motion in a response filed the next business
day, Monday, March 6, 2023. The Secretary did not submit a reply within the time
permitted by the Vaccine Rules. Accordingly, the issues are ready for
adjudication.
Two issues require resolution. First, has the Secretary established good
cause to extend the deadline for a report from an economist? Second, how does
the evidence regarding growth rate preponderate?
Additional Time Has Not Been Justified
Although the Secretary does not cite any caselaw regarding the enforcement
of compliance with scheduling orders, the Federal Circuit and the Court of Federal
Claims have provided guidance. When a party fails to comply with a scheduling
order due to a lack of diligence, the question of prejudice to the other party has
much less significance. O2 Micro Internat’l Ltd. v. Monolithic Power Systems,
Inc., 467 F.3d 1355, 1368 (Fed. Cir. 2006) (holding a district court did not abuse
its discretion in finding a lack of diligence did not support allowing a late
amendment to a party’s infringement contentions). Adherence to and enforcement
of scheduling orders deter future dilatory behavior. Trilogy Communications, Inc.
v. Times Fiber Communications, Inc., 109 F.3d 739, 745 (Fed. Cir. 1997) (holding
a district court did not abuse its discretion in striking an expert’s report filed after
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its due date); Pac. Gas & Elec. Co. v. United States, 82 Fed. Cl. 474, 479 (2008)
(awarding attorneys’ fees for a violation of a protective order). Late compliance
does not necessarily cure a lack of diligence. Sterling-Kates Properties Joint
Venture v. United States, 5 Cl. Ct. 398, 400 (1983).
Here, the Secretary has not established diligence that justifies the late
submission of a report from an economist. Preliminarily, almost all the potential
explanations for why the Secretary did not submit a report until March 3, 2023 are
contained within his March 3, 2023 motion. The Secretary’s previous two motions
filed on January 30, 2023 and February 10, 2023 were noticeably sparse.
In any event, the Secretary appears to offer potentially two explanations for
his late submission of a report from an economist. The first might be a potential
confusion regarding imprecision in various submissions regarding discount rates
and growth rates. Resp’t’s Mot. for Leave, filed Mar. 3, 2023, at 1-2. Certainly,
the undersigned’s orders could have been clearer. However, the Secretary has not
developed an argument that the Secretary was confused about the issues an
economist was required to address by February 1, 2023. In the undersigned’s
experience, when the parties disagree over discount rates and growth rates, each
party retains a single economist to opine about discount rates and growth rates.
The undersigned has never encountered a situation in which a party retained one
economist to address discount rates and a second economist to address growth
rates. To the extent that the Secretary has attempted to justify a failure to comply
with the scheduling orders on the lack of clarity in those orders, that argument is
unpersuasive. See Resp’t’s Mot. for Leave at 2 n.1 (“In retrospect, to avoid
confusion as to the scope of the expert reports, respondent should have requested
clarification from the Court.”)
The Secretary grounds the failure to comply with the scheduling orders on
Dr. Kennedy’s busyness. Resp’t’s Mot. for Leave at 5-6. But, the story the
Secretary tells lacks some details and is not persuasive. The account should begin
with the Secretary’s September 22, 2022 status report. At that early date, the
Secretary recognized that expert testimony could be required. In the October 13,
2022 status conference, the parties were afforded some time to reach an agreement
regarding discount rates and growth rates. Yet, the parties knew that if they did not
agree, they would be required to submit expert reports simultaneously as set forth
in the September 27, 2022 order. The Secretary’s March 3, 2023 motion omits this
chronology. As such, the date on which the Secretary took any steps to obtain an
economist’s report is unknown.
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The Secretary did not state when he had retained Dr. Kennedy. But, at some
unspecified date, the Secretary “deferred having Dr. Kennedy begin working on
the case.” Resp’t’s Mot. for Leave at 5. When to direct Dr. Kennedy to begin
work was the Secretary’s choice. Apparently, the Secretary waited too long. The
Secretary represents that Dr. Kennedy has many responsibilities:
He is a managing partner of Torrey Partners and oversees
approximately 20 employees. In addition to retentions
within the Program, Dr. Kennedy is retained in civil
litigation matters ranging from intellectual property
disputes to personal injury and wrongful death claims. At
any given time, Dr. Kennedy is the retained damages
expert on 50+ cases. Between December 23, 2022,
through March 2, 2023, Dr. Kennedy has testified at
deposition approximately seven times, testified in trial
approximately five days, and executed approximately ten
damages reports.
Id. at 6.
These circumstances seem routine and foreseeable. Indeed, the busyness of
some professionals is one reason the undersigned advised the parties as early as
November 30, 2022 that routine motions for enlargement should not be anticipated.
The Secretary has not explained how he planned to meet the deadline with Dr.
Kennedy. If the Secretary knew in early December that other professional
responsibilities would interfere with the Secretary’s requirement to file a report by
February 1, 2023, then the opportunity to address those matters was in early
December, shortly after the November 30, 2022 scheduling order.
The Sanchezes draw a contrast in how the parties approached the deadlines.
“As anyone who works routine in this Vaccine Program knows, delays are
epidemic. Respondent rarely meets a deadline and seems to treat them as
‘optional.’” Pet’rs’ Resp., filed Mar. 6, 2023, at 2. In contrast, the Sanchezes were
aware that “this Court made it very clear that the deadline regarding expert reports
was not going to be extended absent good cause. Hence, Petitioner[s] continue to
assure [their] economist expert report was ready by the deadline.” Id.
As O2 Micro Internat’l explains, the predominant inquiry regarding a lack of
compliance with scheduling orders is “diligence.” 467 F.3d at 1368. The
Secretary has not shown sufficient diligence. The Secretary has not stated: (1)
when he retained Dr. Kennedy, (2) when he informed Dr. Kennedy about the
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February 1, 2023 deadline, (3) any efforts to confirm that Dr. Kennedy was on
schedule to meet the February 1, 2023 deadline, and (4) whether any previously
unforeseen events prevented Dr. Kennedy from meeting the deadline. The
Secretary has not presented a contract documenting when he retained Dr. Kennedy.
The Secretary has not shown any emails reminding Dr. Kennedy of the deadline
and confirming his anticipated compliance with the deadline. In light of the lack of
diligence, any prejudice to the Sanchezes is much less important.
An enforcement of scheduling orders deters future dilatory behavior.
Trilogy Communications, 109 F.3d at 745. This factor plays a role in denying the
Secretary’s motion for additional time. If the Secretary were to cure a lack of
compliance with scheduling orders by filing materials at the Secretary’s
convenience, then who is setting the schedule? While special masters typically do
not catalog every instance in which a party fails to act within a deadline, the
Secretary and the experts whom he retains often seek additional time. As long as
this slowness in litigation is tolerated, the Secretary is likely to continue his
practice as usual. But, as the undersigned has attempted to communicate
throughout the case upon remand from the Federal Circuit, the Sanchez case merits
diligent attention because (a) the Sanchezes are entitled to compensation and (b)
the case is more than a decade old. Thus, the Secretary was aware that
enlargements of time based upon routine reasons were unlikely to be accepted.
For these reasons, the Secretary’s March 3, 2023 motion for leave to file an
expert’s report is DENIED. The Clerk’s Office is instructed to strike Exhibit R.
Reasonable Growth Rate
While life care planners can estimate the cost for current services, Trystan
will receive some services for many years into the future. Thus, awards for future
costs are expanded to reflect anticipated increases in costs. See Delozier v. Sec’y
of Health & Hum. Servs., No. 89-49V, 1990 WL 270202, at *7 (Cl. Ct. Spec. Mstr.
Oct. 10, 1990) (finding for two non-medical items an appropriate growth rate was
5.25 per year). The Sanchezes, as petitioners, bear the burden of establishing a
reasonable growth rate.
Here, the Sanchezes have presented some evidence in the form of a report
from Dr. Young. Dr. Young earned a Ph.D. in finance and economics from the
University of Utah in 2009. Exhibit 222 (curriculum vitae). For approximately
twenty years, he has worked as a “chief economist,” whose duties include
“macroeconomic analysis and forecasting.” Id. The Secretary has not challenged
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Dr. Young’s qualifications to opine on growth rates. See Resp’t’s Memo., filed
Feb. 10, 2023.
Dr. Young concludes that “a more applicable inflation measure for the non-
medical services likely to be experienced by Trystan would be in the 6% range, up
from the current 4% estimate.” Exhibit 221 at 10-11. Although the report contains
more details, the crux of Dr. Young’s opinion is that previous estimates that non-
medical services would increase by four percent per year were appropriate when
inflation was expected to be about two percent per year. But, now that “broader
inflation expectations [are] 50% higher today, the 4% estimate should also be
adjusted forward by at least 50% to 6%.” Id. at 5. To ground his opinion as to
why inflation is likely to be higher, Dr. Young identifies factors such as de-
globalization, non-tradeable goods / services, and demographic transformation. Id.
at 5-8.
Through counsel, the Secretary has presented two types of objections. The
first type is that awarding a six percent growth rate for non-medical items would be
“without precedent.” Resp’t’s Memo., filed Feb. 10, 2023, at 4. Whether this
statement is accurate seems immaterial. As the Secretary stated very early in the
damages process, a discount rate is assessed on a “case-by-case basis” based upon
expert testimony. Resp’t’s Status Rep., filed Sep. 22, 2022. While the Secretary
cited numerous cases in which special masters have accepted growth rates of four
percent, the Secretary has not identified any reasoned opinions on this topic within
the last three years that account for recent changes. See Pet’rs’ Resp., filed Feb.
27, 2023 at 2. Thus, the evidentiary value of those previous adjudications is
minimal when the Sanchezes have presented different evidence.
The second type of objection that the Secretary has raised through counsel is
more evidentiary in that they attempt to challenge some of the foundations for Dr.
Young’s opinion. See Resp’t’s Memo., filed Feb. 10, 2023, at 9-12. The
Sanchezes’ attorney, in turn, attempts to parry them. See Pet’rs’ Resp., filed Feb.
27, 2023, at 2-5.
At the end of the day, the record contains some evidence supporting a
growth rate of six percent and no evidence in favor of a different growth rate. Dr.
Young has provided a reasonable explanation of why interest rates can be expected
to remain higher than previously and his opinion, overall, is persuasive. Thus, the
evidence preponderates in favor of finding that an appropriate growth rate is six
percent.
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This finding is based upon the evidence in the record. If the Secretary had
wanted to present evidence regarding growth rates, the Secretary had a full and fair
opportunity to present that evidence. See Vaccine Rule 3(b)(2). The Secretary
knew no later than November 30, 2022 that the Sanchezes were proposing a
different growth rate. To the extent that the evidence has come from only one
party, the Secretary is responsible for that lapse.
Conclusion
Both parties were informed of the deadline for submitting reports from an
economist and were informed that the deadline would not be extended as a matter
of routine. Both parties were reminded of the deadline multiple times.
One party presented evidence; the other did not. The submitted evidence is
credited.
1. Respondent’s March 3, 2023 motion for leave to file a report out of
time is DENIED.
2. The Clerk’s Office is directed to STRIKE the document labeled as
Exhibit R.
3. The growth rate for non-medical items is six percent.
IT IS SO ORDERED.
s/ Christian J. Moran
Christian J. Moran
Special Master
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