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Litigation Services Handbook: The Role of the Financial Expert, 5th Edition by David P. Hoffman, Daniel G. Lentz, Roman L. Weil

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Chapter 6

Use of Statistical Sampling in Litigation

Mark A. Gustafson

Peter P. Simon

6.1 Introduction

Sampling can play an integral part in many aspects of litigation, including discovery, proof of liability, and estimation of damages. Analysts use sampling to control litigation costs. Sampling can allow one to accurately identify the characteristics of a population by reviewing only a portion of it and incurring a fraction of the costs required to review the entire population. Analysts can then generalize the results to the entire population to form the basis of an expert opinion, or counsel can use the results to advance legal arguments.

Analysts most often use sampling when they need to analyze a large number of distinct, observable units that are prohibitively expensive to review in aggregate, but that they can review in reasonable numbers. For example, financial audits that deal with millions of accounting entries often use sampling. When state governments audit sales and tax payments, they use sampling. At the federal level, the Internal Revenue Service uses sampling in its examination process, as does the Center for Medicare & Medicaid Services (CMS) in the Medicare Integrity Program, which audits payments made by the Medicare trust fund.

Experts have used sampling in many types of litigation—including product liability cases, medical billing disputes, and commercial damages cases—as well as in discovery. These applications of sampling involve large amounts of difficult ...

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