Stout was retained by Novo Nordisk, Inc. to provide expert testimony in connection with qui tam litigation filed by Relator-Plaintiff Jamie Siegel, M.D. on behalf of the United States of America against defendant Novo Nordisk, Inc. The case, which was filed in the U.S. District Court for the Western District of Washington (the “Court”) and presided over by Judge Benjamin H. Settle, ended on November 7, 2025, with the federal jury clearing Novo Nordisk of all allegations.

Background

Dr. Jamie Siegel is a medical doctor who was employed by Novo Nordisk as its Director of Hematology in Clinical Development Medical and Regulatory Affairs from 2008 to 2009. Novo Nordisk is a Danish, multi-national pharmaceutical company that focuses on the therapeutic areas of diabetes, rare bleeding disorders, growth hormone-related disorders, and obesity.

As part of the lawsuit filed by Dr. Jamie Siegel, it was alleged that Novo Nordisk violated the Federal Anti-Kickback Statute through payments made to various hematology/oncology doctors in exchange for services provided by the doctors. Given the experience and recognition of these doctors, they were often considered to be key opinion leaders (KOLs). The services provided by the KOLs to Novo Nordisk included various advisory and consulting services.

The Federal Anti-Kickback Statute prohibits knowingly and willfully offering, paying, soliciting, or receiving anything of value to induce referrals or to generate business reimbursable by federal health care programs.1 Nick Janiga, ASA, on behalf of Stout, performed a retrospective analysis of the payments made by Novo Nordisk to various KOLs to determine whether these payments were consistent with fair market value.

Plaintiffs filed a Daubert motion to exclude the testimony of Nick Janiga, and stated that “[Nick Janiga’s] opinions are not premised on sufficient facts or data, nor are they the product of reliable principles and methods.” The Court denied Plaintiffs’ motion and stated the following:

“Janiga has sufficient expertise and experience appraising healthcare enterprises and compensation arrangements. His knowledge, background, and opinions about whether NNI compensated the 12 physicians at fair market value satisfy Rule 702’s requirement in that his testimony will assist the jury in understanding the evidence and determining the facts in issue. His testimony will be permitted because he is a qualified expert in the healthcare compensation appraisal through education, training, experience, knowledge, and skill, his report is based on sufficient facts or data, and his opinions are the product of the reliable application of principles and methods.”2

Valuing Compensation Arrangements for KOLs

Standard of Value

The standard of value defines the hypothetical set of conditions under which a valuation is performed, one of which is “fair market value.” The standard of value can be mandated depending on the purpose of the valuation. The term “fair market value” has generally been defined as the price, expressed in terms of cash equivalents, at which property would change hands between a hypothetical willing and able buyer and a hypothetical willing and able seller, acting at arm’s length in an open and unrestricted market, when neither is under compulsion to buy or sell and when both have reasonable knowledge of the relevant facts.3 However, in the context of valuing healthcare services arrangements, the term “fair market value” is often defined as the value in an arm’s-length transaction, consistent with the general market value of the subject transaction. In the context of compensation for services, “general market value” means the compensation that would be paid at the time the parties enter into the service arrangement as the result of bona fide bargaining between well-informed parties that are not otherwise in a position to generate business for each other.4 Key concepts within the definition include:

  • Arm’s-length transaction: Transactions in which two or more unrelated and unaffiliated parties agree to do business, acting independently and in their self-interest5
  • Bona fide bargaining: A process where parties negotiate in “good faith” without fraud, deceit, or intent to mislead
  • Well-informed parties: Assumes that each party has reasonable knowledge of the relevant facts
  • …not otherwise in a position to generate business for each other: The analysis needs to be focused on valuing the compensation for the specific services being performed, without factoring in any potential referrals or business that may be generated for either party

Valuation Approaches

To determine fair market value compensation for services provided by the KOLs, Nick Janiga utilized both the Market Approach and Cost Approach, which, in this context, were fundamentally similar as both approaches are based on the principle of substitution. In the context of a service agreement, market data is utilized in the Market Approach to establish the reasonable cost to replicate the contemplated services under the Cost Approach.

Consistent with Stout’s general approach to valuing KOLs, Janiga categorized the KOLs into different “Tiers” depending on their individual qualifications and experience. In fact, the Court even stated that it “views a physician’s influence in the medical community akin to stature and reputation,” and that “this is a legitimate factor in arriving at a physician’s compensation…” The experience and recognition that Janiga took into account included, among others, the following:

  • Number of invited presentations at domestic conferences sponsored by professional organizations, associations, and/or societies (not life sciences companies)
  • Number of peer-reviewed publications, manuscripts, books, and book chapters
  • Years in clinical practice post-residency/post-fellowship
  • Number of invited presentations at international conferences sponsored by professional organizations, associations, and/or societies (not life sciences companies)
  • Number of appointed editorial review boards / journals served as reviewer
  • Number of leadership positions in professional societies/associations
  • Highest academic position
  • Number of research projects served as a PI or Co-PI and/or number of completed research projects
  • Number of completed fellowships
  • Number of board certifications

As an example, KOLs classified by Janiga as “Tier 1” would have had very substantial clinical, research, and/or leadership experience and generally have achieved an international level of recognition. KOLs classified by Janiga as “Tier 2” would have had extensive clinical, research, and/or leadership experience and generally have achieved a national level of recognition. KOLs classified by Janiga as “Tier 3” would have had a moderate level of clinical, research, and/or leadership experience and generally have achieved a regional level of recognition.

Utilizing these valuation approaches, Janiga opined that the payments made by Novo Nordisk to various KOLs were consistent with fair market value.

Summary

Physician compensation arrangements with healthcare organizations may carry regulatory risk given the potential for patient referrals. It is important that the compensation paid under these arrangements is consistent with fair market value. Stout regularly provides fair market value opinions for healthcare organizations related to arrangements ranging from compensation for clinical services to compensation for KOLs providing advisory/consulting services and is often called to serve as an expert witness in cases involving kickback allegations, such as in United States ex rel. Siegel v. Novo Nordisk, Inc.

Stout can provide global fair market value opinions that allow healthcare organizations the flexibility to utilize the opinion on various compensation arrangements with similar terms or scope. Furthermore, Stout also offers a web-based application that allows clients to assess fair market value compensation for both U.S.-based arrangements and arrangements in more than 70 countries around the world. Click below to learn more:

Life Sciences Caluculator

  1. See 42 U.S.C. § 1320a-7b(b)
  2. Case 3:23-cv-05459-BHS Document 503, United States District Court Western District of Washington at Tacoma, July 15, 2025.
  3. International Glossary of Business Valuation Terms
  4. 42 CFR §411.351
  5. "arm's length," Wex, Legal Information Institute