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Agents must confine themselves to scope of the warrant
(Editor’s note: This is the second in a two-part series that began in the July issue on your legal rights when federal or state agents show up at your doorstep with warrants connected to a fraud and abuse investigation. In this segment, we discuss your legal rights related to search and seizure.)
The scenario is becoming all too common: A special federal agent, accompanied by a dozen stern-looking officers, has marched unannounced into your office demanding to search your billing and medical files, question employees, gain access to your computers, and remove records from the office.
They cannot be dissuaded, and it looks inevitable that the search will proceed. What can you do?
"Unfortunately, there’s not much that can be done to prevent the search of your files and premises as described in a proper warrant," says Philip L. Pomerance, JD, a health care lawyer with the Chicago firm of Hinshaw & Culbertson.
The agents will search for and seize property corresponding to the description in the warrant. However, there are three key things to keep in mind while you monitor the conduct of the agents during the search, stresses Pomerance:
• Make sure the agents confine their search to the scope delineated by the warrant.
• If agents seize any property, make sure such seizure is proper according to the terms of the warrant.
• Know what parts of your records are shielded from discovery by virtue of attorney-client privilege, and defend that privilege during the search.
Your Fourth Amendment protections allow only search warrants that are "particularly describing the place to be searched and the persons or things to be seized."
"The requirement that the description must be particular’ has been extensively litigated, especially as it relates to business records," says Pomerance. "A generic description of files,’ business records,’ or medical records’ in conjunction with a well-defined search location will probably pass the test."
At this point, it is important to remember that you are unlikely to prevent or even delay the search based on an allegation that the warrant is insufficiently particular as to items to be seized.
The agents will most likely seize all records they believe could be relevant to the subject of the warrant. "Later, you may argue successfully to suppress seized evidence because of a defective warrant, but during the execution of the warrant, neither the agent in charge nor the supervising prosecutor is likely to withdraw or delay the search based on your claims of a defective warrant," says Pomerance.
There is an exception. If you notice that the warrant is blatantly defective — for instance, it lists the wrong address or business name or is limited to one floor of a multistory office — immediately raise this issue with the agent in charge and the prosecutor, and before a judge if necessary.
Property’ includes medical, business records
The federal rule governing seizure under search warrants is quite broad. Property or people may be seized with a warrant. A warrant may be issued under this rule to search for and seize any (1) property that constitutes evidence of the commission of a criminal offense; or (2) contraband, the fruits of crime, or things otherwise criminally possessed; or (3) property designed or intended for use or which is or has been used as the means of committing a criminal offense; or (4) person for whose arrest there is probable cause, or who is unlawfully restrained.
"Medical records and business records are property. If the warrant describes the seizure of business records, patient records, ledgers, charts, logs, and other papers, the agents will take these records, even over your objections," Pomerance points out.
In turn, make sure you have a photocopy of each item seized and a detailed inventory of all items removed from the premises. If the agent in charge refuses your request to inventory or photocopy, immediately contact the supervising prosecutor and argue the matter. It’s also wise to document your objection, as it will help in future negotiations over the return of seized documents.
Also make sure you ask the agent executing the warrant to make an inventory of property seized. However, these inventories are often perfunctory.
"If you can, have an assistant make a record of the items being removed," Pomerance recommends. "This may slow the search, but a complete record of what was seized will be invaluable as you argue for return of items and challenge the search in front of the magistrate."
It’s important to remember that the agents will number the rooms of your client’s premises by hanging or nailing numbered cards on the door to each room. You must make sure someone records the numbering scheme, because all later references to rooms searched and items taken in the official inventory and in any other government documents will refer to the room number assigned by the agents during the search.
Some experts also recommend you take photographs and videotape during the search, and that everything said by the officers executing the search be tape-recorded.
Make backups of computer data
Before the agents make a copy of what is on your computer, make sure you have backup copies of all disks in case any of the data are damaged.
If the warrant permits the agents to physically seize your computers and if your data is encoded or otherwise does not yield to discovery, the agents may actually remove your machines from the premises.
"To prevent this catastrophe, attempt to persuade the agent in charge that you will help make copies of all data," says Pomerance. Have your data processing team assist the agents in dumping and copying the data.
Instruct your employees not to interpret or analyze any requested data. The agents are only allowed access to the material. You have no obligation to interpret the data for them. If the agents insist on seizing entire computers, insist on copying or backing up all data and software before the machines are seized so you can continue doing business.
Pomerance also recommends paying close attention to the conversations between agents. "Try to take note of what materials they are seizing. Remember, they have planned for, and are executing, the search under a case theory," he says.
"By linking the information contained in the warrant with details you and your assistants pick up during the search, you may be able to learn that theory, or at least better understand what the agents are seeking.
"Clients, and often untutored attorneys, immediately assume that the role of defense counsel during a search is to assert loudly the various privileges that will, in their minds, cause the agents to cease searching the target site and go away. In fact, there are few relevant privileges, and assertion of a privilege — even a valid one — will not stop the agents from searching," says Pomerance.
Issues of privilege are legal issues, and must be argued first to the prosecutor controlling the search, and often then to the magistrate. Even after you assert a privilege, the agents will likely seize the material. Attempts to persuade the magistrate by telephone to limit the taking of materials for reasons of privilege also usually fail.
Keep privileged materials segregated
Notes Pomerance, "I believe that the most productive course you can follow is to identify the physical locations where you may keep privileged materials, and ask that the search exclude those specific offices, computers, file cabinets or desks."
The agent in charge and the prosecutor will probably deny that request, however. If they do, fallback options include:
• First, ask that the investigators seal the allegedly privileged materials in clearly identified boxes and segregate them from the other materials being seized until the court has ruled on your claims of privilege.
• Alternatively, demand that your lawyer supervise the agents examining the allegedly privileged documents so that you can see what privileged items they are examining and possibly seizing.
This tactic has two benefits, says Pomerance. It allows you to preserve the questions of privilege for later review by the magistrate, and it allows you to concentrate your efforts on monitoring the search.
He also notes that "this tactic delays the search of these prospectively dangerous areas," he notes. "Later in the search, when the agents come to the identified privileged’ areas, they are likely to be tired and less observant, and therefore less careful, which could let human nature work to your favor."
As a last resort, if the prosecutor ignores all attempts to preserve the privilege, you should demand an immediate hearing on questions of privilege before the magistrate.
A target of a search has significant problems maintaining a claim of Fifth Amendment privilege in connection with a search or subpoena, note legal experts, because they cannot prevent the forcible search and seizure of incriminatory material under warrant. If the privilege applies at all, it applies to subpoenas or records requests, which are directions to a target to produce documents or property that might incriminate the target.
In addition, the Supreme Court has decided that business records (such as billing records, payroll, accounts receivable and accounts paya ble records, and sometimes medical records created by health care providers in the course of business) are not protected from disclosure by the Fifth Amendment privilege against self-incrimination.
You can also try to claim physician-patient privilege when the search document requires the production of medical records. But, again, this argument generally provides little protection.
"The privilege belongs to the patient, and the physician must honor the privilege only if the patient has not waived his or her rights. A search is not likely to stop, or even to slow, because the target physician asserts patients’ privilege," says Pomerance. In many instances, investigators will be seeking specific medical records for which they have already obtained waivers of the privilege from the patient before executing the search warrant.
Not every letter from a lawyer is privileged
The attorney-client privilege can be used to shield certain documents from production under either a warrant or a subpoena. However, these documents must be evidence of privileged attorney-client communications, created and preserved in accord with the rules regarding attorney origination and non-disclosure.
"Not every letter from a lawyer is automatically privileged," says Pomerance. "Further, communications between company employees who are not lawyers about legal issues are usually not privileged. Prosecutors are sensitive to the attorney-client privilege, and you may be able to protect actual privileged communications found in your files from disclosure."
Recommendation: As soon as possible, alert the agent in charge and the prosecutor that certain areas of the premises being searched likely contain attorney-client privileged documents, and demand that the agents segregate these materials and not search them. If you and your attorneys established a practice of clearly labeling all privileged communications, it will be easier to identify these privileged documents.
Also, remember that privileged documents are not subject to seizure or production, even though they are found in the files of non-attorney employees of the client, so long as steps have been taken to protect the privilege.
The attorney-client privilege also can protect information relating to a client’s internal corporate investigations regarding possible criminal conduct if the information has been properly maintained as privileged information.
Self-evaluation may confer privilege
A relatively new legal privilege that could help you involves self-evaluation that promotes candid business self-criticism in the public interest. The privilege — first recognized in a health care setting — states that information gleaned from a business’ internal review of its conduct or operations during confidential self-analysis is privileged from discovery if preserving the confidentiality of the information serves the public interest.
Asserting this privilege during a search raises at least three problems.
• It is a new, judicially created idea that most jurisdictions have not adopted and the prosecutor most likely will not recognize. As a practical matter, you may have to raise the privilege to preserve it, although it will not impede the searchers or the prosecutor at all, says Pomerance.
• Jurisdictions that recognize the privilege to some extent often allow the disclosure of information to government agencies and only preserve the privilege against private litigants.
• Despite the fact that some states have adopted some kind of internal audit privilege, other federal agencies have said their policy is to ignore it.
"My suggestion is to be aware of the self-evaluation privilege and raise it during the search, if appropriate," says Pomerance. "However, don’t expect this to stop the investigators from seizing the material in question, which means you’ll probably end up arguing your right to exclude the allegedly privileged materials after the search."