Court Opinion

ID: 9736797
Source: CourtListenerOpinion
Date Created: 2023-08-26 19:06:48.422094+00
Date Added: 2024-06-11T07:23:54.738769
License: Public Domain

SHIRLEY S. ABRAHAMSON, J.
(dissenting). For the warrant to seize "all" the patients records over an unlimited time period to be valid, the affidavit must provide a substantial basis for the inference that Dr. DeSmidt's entire dental practice was "permeated with fraud" or that seizure of all records was necessary to *143show the defendant's illegal activities. Both the circuit court and the court of appeals determined that the affidavit was not adequate.
I agree with the court of appeals: "The presence of criminal practices during the summer of 1985 does not give rise to the reasonable inference that DeSmidt was engaged in a lifetime of wrongful conduct . . .. The informant in this case made no claim to know the contents of files outside her employment period [of ten or eleven weeks] .... Even if the fraud is reasonably inferred to precede [the informant's] employment, there is nothing in the affidavit to suggest it went on for many years." State v. DeSmidt, 151 Wis. 2d 324, 332-33, 444 N.W.2d 420 (Ct. App. 1989). I therefore dissent.
While courts have upheld search warrants permitting the search and seizure of "all" business records, they have done so in very limited circumstances, namely when there is substantial evidence that (1) the entire business can be characterized as illegal, e.g., "boiler room" stock sales operations, mail or wire fraud operations, extortion plots, and massive fraudulent schemes; or (2) the business is legitimate but illegal activities are pervasive. When the business is legitimate and the affidavit does not show pervasive fraud, the warrant to search and seize all records is invalid. In these instances the warrant should be limited to the documents relevant to the segregable fraud. See, e.g., In re the Application of Lafayette Academy, 610 F.2d 1 (1st Cir. 1979).
None of the cases the majority opinion cites supports its holding that in the face of a legitimate business and no factual documentation of extensive fraud, a magistrate (judge) may authorize the seizure of all business and patient records.*
*144In this case the affidavit does not suggest that DeSmidt operated his dental practice solely for criminal *145purposes. Nor does the affidavit allege observation of wholesale fraud. In the absence of any reported complaints against DeSmidt by patients, other employees or any informants and in the absence intensive police or other agency investigations corroborating pervasive illegal activities, the majority opinion parses words and phrases in the affidavit, to find evidence of endemic fraud. Allegations using conclusory words like "routine" or "commonplace" are no substitute for the evidence or documentation necessary to establish probable cause.
The majority opinion's attempts to distinguish United States v. Abrams, 615 F.2d 541 (1st Cir. 1980) are unconvincing. In Abrams, the court considered an affidavit presenting information obtained from three former employees alleging approximately 50 incidents of false claims for Medicare payments. The Abrams court struck down the warrant, concluding that there was no support in the affidavit providing probable cause to believe all of the patients' billings were inflated. See Ringel, Searches and Seizures, Arrests and Confessions sec. 5.6(c), pp. 5-39 through 5-45.
The majority opinion relies on a footnote to Judge Campbell's concurring opinion in Abrams, but the language quoted is taken out of context. Judge Campbell joined his colleagues on the Abrams court in concluding that the warrant to search all the doctor's records over an unlimited time period was unconstitutional. Judge Campbell would not have limited the time period as narrowly as the majority opinion's dicta suggested. Judge Campbell wrote in Abrams:
*146.... I am not satisfied that the general statement [in the affidavit] measures up to the particularity expressly required by the Fourth Amendment. At least, this is so where the search and seizure is directed at medical files, and not at files of a substantially or wholly illegal enterprise, involving privacy interests of a lessor character. The government, moreover, should have been able to do better. Surely its records reflected the names of patients for whom Dr. Abrams had obtained Medicare-Medicaid reimbursement, and in what amounts. Could it not have named these patients in the warrant and directed the seizure of evidence of the services performed with respect to these individuals?, At [the] very least, the relevant time frame should have been indicated.3
When viewed in context, Judge Campbell's statements do not support the majority opinion in this case; they support the position that the warrant in this case is unconstitutional. The affidavit in this case fails to adequately identify any rational nexus between the time of the informant's employment at DeSmidt's office and prior acts of medicaid or insurance fraud. As in Abrams, the search warrant failed to support the inference of a *147probability of fraud for the entire time Dr. DeSmidt practiced dentistry.
I conclude that a warrant authorizing the search and seizure of "all" patient and business files without limitations on the nature of the records or the period of time amounts in this case to the government's wholesale rummaging through documents prohibited by the fourth amendment.

 The majority opinion relies primarily on three cases to support its rule of law that when all business records are relevant to a *144particular crime, all the records of a business (whether it be a legitimate business or not) may be seized. None is analogous to the instant case.
United States v. Santarelli, 778 F.2d 609, 615 (11th Cir. 1985), involved a loansharking business, that included the use of fire-arms and violence to enforce repayment of loans. The affidavit was based on information from one of the borrowers detailing a series of loans he had taken with the defendant, from other FBI agents, and from a taped telephone conversation between the borrower and the defendant. The court upheld the search warrant because the affidavit showed probable cause to believe that the documents were part of an illicit extortionate credit operation.
In Williams v. Kunze, 806 F.2d 594, 598 (5th Cir. 1986), the Criminal Investigation Division of the Internal Revenue Service was conducting an investigation of several allegedly fraudulent tax shelter schemes organized and operated from the Caymen Islands by United States Tax Planning Services, Limited, and a licensee. After an extensive investigation of the licensee, including several visits by undercover agents posing as clients, an IRS investigator sought a search warrant. The application was supported by the IRS investigator's affidavit and the affidavit of a Special Agent, who had previously conducted a nationwide investigation of USTPS. The court upheld the search because the affidavits showed there was probable cause to believe the entire business was merely a scheme to defraud or that all the records of the business are likely to constitute evidence of tax evasion.
In United States v. Sawyer, 799 F.2d 1494 (11th Cir. 1986), cert. denied, 479 U.S. 1069 (1987), the court considered a "boiler room" sales operation. Affidavits submitted by the investigators described in detail twenty five customer transactions and repeated instances of misrepresentation or concealment of material facts and other fraudulent conduct in which the defendants engaged. The affidavits also identified a number of sales persons who engaged in deceptive sales techniques and enumerated many unauthorized transfers of customer funds to generated commis*145sions. The court upheld the warrants, concluding that the affidavits showed widespread efforts to defraud customers through a variety of misleading disclosures and representations.

 My brothers suggest that 'if an affidavit contains an averment by an employee that fraudulent practice were regularly pursued during his or her employment, and the term of such employment is set forth, the warrant could authorize the seizure of all records of Medicare and Medicaid services billed and purportedly performed during that period.' (Emphasis added.) I think my brothers are a bit narrow in their view of the relevant time frame. The fact that a former employee indicates that certain fraudulent practices are being regularly followed during the period of his or her employ might, I think, depending upon the circumstances, supply probable cause to believe that the fraud continued for a reasonable time in the future. I think the same sort of analysis could also be applied in regards to the seizure of records dating prior to the time of the employee's tenure.