State v. DeSmidt

Wisconsin, STATE of Plaintiff-Appellant-Cross

Respondent-Petitioner,

v. DeSMIDT, A. Woodrow Defendant-Respondent-Cross

Appellant. Supreme Court Argued No. January May 10, 88-1356-CR. 1990.—Decided

1990. (Also reported 780.) in 454 N.W.2d plaintiff-appellant-cross respondent-peti- For the argued by Barry tioner Levenson, the cause was M. attorney general, assistant with whom on the briefs was Hanaway, attorney general. Donald J. defendant-respondent-cross appellant For the there by Gazeley Zuidmulder, was a brief L. Steven Miller and Appel, Bay, argument by S.C., & Green and oral Mr. Miller.

DAY, J. This is a of a review decision of the court appeals, DeSmidt, State v. 151 Wis. 2d (Ct. 1989), App. N.W.2d 420 which affirmed the order of county, the circuit court for Brown the Honorable John Judge, suppressing except Hoffmann, P. evidence, all provider handbooks, Medicaid seized in a warrant- authorized search of Dr. DeSmidt's offices. dental question first is whether the search Dr. DeSmidt's dental offices and seizure of his dental and business I, records either violated Art. Sec. 11 of the Wisconsin Constitution or the Fourth Amendment of the United States Constitution. If the search and seizure was consti- tutionally question infirm, the second is whether this adopt "good exception court should faith" to the exclusionary rule established the United States Supreme Leon, Court United States v. 468 U.S. 897 (1984).We conclude the search and seizure was constitu- tional and reverse. We therefore do not reach the Leon issue.

An investigation of Dr. DeSmidt's in dental Bay Green arose late August 1985 after a former employee DeSmidt's, of Dr. Ms. Berger, Harriet con- Department tacted the Wisconsin alleging Justice that Dr. DeSmidt was submitting fraudulent Medicaid and insurance claim forms. The matter was investigated by Mr. P. Isely, John an investigator with the Medicaid Fraud Control Unit of Department the Wisconsin Justice. Investigator Isely interviewed Ms. Berger on 24, September several occasions. On Investigator Isely Complaint Warrant, filed a for Search by drafted General, an Attorney Assistant supporting and a affida- detailing vit the interviews with Ms. Berger and her allegations. affidavit, appended which is in full to decision, appeals' the court of provided pertinent part that Ms. Berger employed by had been Dr. DeSmidt early from June of through mid-August of that year. same Berger's Ms. duties preparing included third forms, party claim and she had access to all Dr. DeSmidt's business Berger records and files. Ms. alleged Dr. that DeSmidt was engaged a series of illegal activ- Berger ities. Ms. alleged gave specific and examples of claim forms that had been seeking filed Medicaid assis- for. performed tance services on patient one date when records and other documents disclosed that in fact the performed services had been on another date when the patient ineligible was to receive Medicaid assistance. Ms. Berger alleged practices being that similar were utilized in filing private claim forms with companies insurance gave specific examples of such Berger cases. Ms. also stated Dr. adjusted private DeSmidt some bills to insurance companies customary so as to receive his full particular for policy pro- fee a service even though

125' coverage only percentage vided for of the fee. Ber- Ms. alleged ger routinely Dr. also submitted periapical x-rays Medicaid claim forms for when in fact x-rays wing x-rays performed. wing bite had been Bite only covered are Medicaid if assistance authorization prior Berger is received to treatment. Ms. she stated associate, McClain, Dr. believed that DeSmidt's Dr.

being illegal trained to conduct her business in a similar Berger alleged fashion. Ms. that McClain had stated presented eligibility prob- her that Medicaid dates no lem inasmuch as the service could be backdated on eligibility period. to claim forms ger fall within the Ber- Ms. that an stated examination of the business records of Dr. and Dr. DeSmidt McClain would disclose other containing in which instances claim forms false informa- private filed tion were for Medicaid assistance or with companies. Berger insurance Ms. stated when she engag- confronted Dr. with the fact he DeSmidt that was ing illegal, merely in activities which were he and smiled Shortly said that it was his office. after this confronta- Berger's employment. tion, Dr. DeSmidt terminated Ms. September A 25,1985, search warrant was on county, issued the circuit court for Brown the Honorable Judge. Grant, R. Alexander The warrant authorized the following for and search seizure items: records, Patient recording, charts and dental among things, actually performed, other services dates of service; x-ray negatives envelopes in attached to the patient records; individual dental business records to, including appointment but not limited book or books, statements, copies patient receipt book or books, schedule, ledgers, daily fee business summa- ries, forms; provider remittance Medicaid handbooks. 25,1985, September

On Investigator Isely and three Department other Wisconsin agents of Justice entered Dr. DeSmidt's dental offices in Bay Green to execute the search Dr. warrant. DeSmidt was copy served with a warrant, copy the search but not a of the affidavit. The search approximately lasted hours two and ten minutes. Investigator Isely agents directed the to seize all business records patient and all files dated from 1979. While the search, agents conducting other were Investigator Isely questioned Dr. DeSmidt his The ques- office. tioning approximately ceased after one hour when Dr. speak DeSmidt to attorney. agents asked an materials, twenty-two seized boxes of including all patient" files, records, "active financial accounting ledg- ers, statements, personal business and bank appoint- books, day ment recording daily sheets work per- formed, payroll expense and check Dr. stubs. DeSmidt was allowed to retain blank business checks photocopy and to the charts of those patients expected day days the next as well as several appoint- of the ment Investigator Isely book. and the agents transported the materials to their offices in Madison. 3, 1986,

In an complaint July amended filed on charged State with nine counts of medical fraud, 49.49(l)(a), assistance violation of sec. Stats. (1983-84), fraud, and four counts of insurance in viola- 943.395, (1983-84). of preliminary tion sec. Stats. A 23, 1987, January examination was held on the cir- Dr. cuit court bound DeSmidt over for trial. On Febru- 23, 1987, ary against the State filed an information Dr. charging counts of eleven medical assistance fraud, 49.49(1)(a). in violation of sec. 31,1987,

On March Dr. suppress DeSmidt moved to offices, all evidence seized of his during alleg- the search I, ing the search and seizure violated Art. Sec. 11 of the Wisconsin Constitution and the Fourth Amendment the United States Constitution because the warrant was probable cause, issued without the warrant was not suffi- ciently particular describing seized, the items to be and the execution the search was overbroad. On 1988, March the circuit court a issued memorandum holding sufficiently decision that the warrant not was particular, description except pro- for the of Medicaid vider handbooks. The circuit court also found that there probable support seizing not to was cause Dr. all of May 31, 1988, DeSmidt's On records. circuit court suppressing entered an order all evidence obtained exception provider search, with the of the Medicaid handbooks. appealed pursu-

The State the circuit court's order (1983-84). 974.05(l)(d)2, majority ant to sec. A Stats. appeals the court of concluded that the warrant seized, the items to described be which amounted to all Dr. records, of DeSmidt's dental and business suffi- with particularity. DeSmidt, cient majority 151 Wis. 2d at 330. The probable

held, however, that there was not support seizing cause to of Dr. all DeSmidt's records. Id. appeals, noting 333. The at dissent the court that Berger's allegations the affidavit made reference to Ms. filing practice" false claim forms was "common routinely” disagreed offices, and "done at DeSmidt's support seizing cause to all of Dr. lacking. (Myse, J., DeSmidt's was Id. at 341-42 records dissenting). The reasoned: dissent clearly Berger's] allegations pat- indicate that a

[Ms. practice tern in the office of fraudulent existed Berger employment. time started her she [Because was of the exact com- not aware date this menced], necessary it for to suf- the state obtain ficient records demonstrate difference between depending pay- the amounts billed on the method of way processed ment and the claims were order to prove alleged practice. fraudulent Because no starting practice accurate date of this was available to state, they were unable to limit the seizure of specific period. records to a time Id. 342. petitioned review,

The State this court for which was granted. proba- We conclude that bécause there was ble cause to believe Dr. DeSmidt's dental fraud," "permeated with the search for and seizure of all DeSmidt's dental and business records was rea- constitutional, sonable and therefore accordingly and we reverse. previously I,

As this court has recognized, Art. Sec. 11 of the Wisconsin Constitution and the Fourth Amendment of the United States Constitution are sub Anderson, stantially the same. See State v. 138 Wis. 2d Fry, State v. 451, 461, (1987); 406 N.W.2d 398 131 Wis. denied, cert. 153, 172, (1986), 2d N.W.2d 565 (1986). I, 11 provides: U.S. 989 Art. Sec. people right . . . The of the

Searches and seizures houses, persons, papers, to be secure in their and against effects unreasonable searches and seizures violated; shall not be no warrant shall issue but and cause, upon probable supported by or affirma- oath tion, place particularly describing to be and persons things searched and the or to be seized. provides: The fourth amendment people persons, right to be secure in their houses, effects, papers, against and unreasonable seizures, violated, no searches shall not be and cause, issue, sup- upon probable Warrants shall but affirmation, particularly by ported Oath or and searched, place persons describing to be and the things seized. or to be provisions

Where state and federal constitutional at identical, virtually traditionally issue are this court has provision interpreted pro- the state consistent with the v. State counterpart. tections afforded its federal 116, 133, Tompkins, 144 Wis. 2d 423 823 N.W.2d (1988). particularly This been true with respect has to provisions issue here. This court has held on numerous occasions principles the standards and surrounding appli- the fourth amendment generally are See, e.g., I, to cable the construction of Art. Sec. 11. 131-38; Anderson, Tompkins, 144 Wis. 2d at Wis. 138 461; Fry, State v. Boggess, 172-74; 2d at 131 Wis. 2d at 443, n.8, 115 State (1983); Wis. 2d 448 340 N.W.2d 516 Beal, v. 607, 612, (1968); 40 2dWis. 162 N.W.2d 640 Paszek, v. State 619, 624, 50 Wis. 2d 184 836 N.W.2d (1971). purpose prohibition

The basic of the against unrea sonable searches and is to seizures safeguard privacy security arbitrary and of individuals against invasions Boggess, government officials. 115 Wis. 2d at 448-49. The inquiry central under the fourth is amendment the governmental reasonableness of intrusion in light Wilks, v. circumstances. State all of the 93, 121 Wis. 2d denied, 100, cert. (1984), 358 N.W.2d 273 471 U.S. 1067 (1985). Because the particularity cause requirements of the fourth only pro amendment are the person a tections has against general search of his or papers, her somewhat scrutiny closer been given has review authorizing warrants the search for and seizure documents, especially rights where the parties third See Maryland, Andresen v. may be involved. 427 U.S.

130 (1976); Washington, 463, 482 n.11 United States v. 797 (9th 1986); 1461, Klitzman, F.2d Cir. Klitzman & Gallagher (3rd 1984); Krut, 955, v. 744 F.2d Cir. (1st Abrams, United v. States 1980). longer court,

On review this Dr. DeSmidt no con- particular insufficiently tends that the warrant was describing granted the items to be seized and therefore agents executing too much discretion to the the warrant. parties agree particularly that the warrant author- ized the for search and seizure of all Dr. of DeSmidt's only dental and business records. contends probable support that there was insufficient cause to the seizing of of all his dental and business records and that the of the execution warrant was unreasonable. may only

A search warrant issue on the basis of a finding by probable of cause a "neutral and detached magistrate." United v. United States States District (1972); Court, 297, 407 U.S. Ritacca v. 318 Kenosha County Court, 72, 77, 91 Wis. 2d N.W.2d 280 751 (1979). probable Whether cause exists is determined analyzing "totality Illinois v. of the circumstances." (1983). Gates, 462 U.S. 238 issuing magistrate simply of the to task is make whether, practical, given a decision all common-sense the circumstances set forth the affidavit before him, including 'veracity' knowledge' and 'basis of information, persons supplying hearsay of there is a probability fair of that contraband or evidence a place. particular crime will be found in a warrant-issuing judge Id. This court has stated that the apprised must be of facts to excite an honest "sufficient sought objects belief in are a reasonable mind that the 131 crime, linked with commission of a and that objects sought place will found in the be to be searched." Starke, 399, 408, State v. Wis. 81 2d 260 N.W.2d 739 (1978). quantum "The necessary support evidence a probable for finding of cause search a warrant is less required than that for a conviction or for bindover fol- Ritacca, lowing preliminary a examination." 91 Wis. 2d Starke, 77; also see 2dWis. at 411. "Probable cause not susceptible 'stringently mechanical defi- [is] is required nitions.' What is than possibility, more a but probability, not a is likely conclusion more than always not. This court has stressed the reasonableness Tompkins, factor." 144 Wis. 2d at 125. A finding of probable cause under federal standards generally will probable finding result cause under state stan- Beal, dards. 2dWis. at 612.

In reviewing whether cause existed for the warrant, issuance aof search are confined we to the record that was before the warrant-issuing judge. State v. Milwaukee, 646, 649, 292 Princess Cinema Wis. 2d (1980). The person N.W.2d 807 challenging the warrant bears burden demonstrating the of the evidence warrant-issuing before the judge clearly was insufficient. Ritacca, 91 Wis. 2d 78. of warrant-issuing at Review the judge's finding Gates, probable of cause is not de novo. Rather, 462 U.S. 236. great given at deference should be Id.; Leon, to judge's the warrant-issuing determination. 468 U.S. 914. by grudging negative

'A or reviewing attitude courts toward warrants' ... is inconsistent both the with encourage process by desire to use of the warrant police recognition officers with the that once a obtained, upon warrant has been intrusion interests protected by the Fourth is severe Amendment less

132 may ... A than otherwise be the case deferential appropriate to standard of review is further the preference strong for searches Fourth Amendment's pursuant to a warrant. conducted (1984) Upton, v. 727, Massachusetts (quot 466 U.S. 733 Ventresca, 102, United States v. 380 U.S. 108 ing (1965)). simply court is to duty reviewing of a "[T]he had a 'substantial basis for magistrate ensure that the probable . . . cause existed." concluding]' Gates, v. United Jones (quoting U.S. at 238-39 Anderson, States, see also (I960)); 257, 362 U.S. particular may 469. it "Although 138 Wis. 2d at a case an easy not be to determine when affidavit demonstrates cause, probable the resolution of doubt the existence largely ful or cases in this area should be deter marginal Ven preference mined to be accorded warrants." tresca, 380 U.S. at 109. of the

At issue this case is whether breadth warrant, search for and seizure of all of records, supported and business DeSmidt's dental large by probable cause. "The search and seizure of if is the material is within quantities justified of material underlying the warrant." scope cause (9th Cir. Hayes, States v. United 794 F.2d denied, see also (1987); cert. 1986), 479 U.S. 1086 Inc., Pittsburgh, v. American Investors United States 1989), cert. denied. 110 S. 1087, 1106 (3rd (1959). has Supreme United States Court Ct. 368 that, involving complex a scheme recognized cases defraud, may require piecing investigation a criminal of evi puzzle, like a number bits together, jigsaw might comparatively if show dence which taken alone Andresen, there is at 481 n.10. Where little. 427 U.S. pervasive exists a to believe that there probable cause 133 defraud, scheme to all the records a be may business Brien, seized. United States v. (1st 309 denied, cert. 1980), (1980). 446 U.S. 919 "The com illegal may an plexity of scheme not be used as a shield to avoid detection when the State has demonstrated probable cause to believe that a crime has been commit ted probable cause believe that of this evidence Andresen, suspect’s possession." crime is in the 427 U.S. at 481 n.10.

We that here conclude there was a substantial basis warrant-issuing for the judge's determination that seizure of all of Dr. supported by DeSmidt's records was probable cause. The record at the time the was warrant solely Investigator issued consisted Isely's in affidavit support application. warrant The affidavit was upon allegations based Berger. Ms. "The asser- tions an affidavit a seeking may search warrant be hearsay provided based on the affiant indicates State, is credible and reliable." Bast v. informant 87 689, 694, (1979). Wis. 2d N.W.2d Ms. Berger's reliability credibility or is not challenged by Dr. DeSmidt, event, any Investigator Isely's and in affidavit clearly supports finding a that Ms. Berger was a credible and reliable informant. The affidavit set Ms. forth that Berger past DeSmidt, employee of Dr. and that capacity she had access to DeSmidt's dental and business directly records and her duties prepar- involved party third claim forms. The ing further affidavit set through forth that an examination of government records, Isely Investigator confirmed much of the infor- provided Berger concerning specific mation Ms. claims. Investigator Isely also stated his affidavit belief Berger in asserting that Ms. was correct that false claims filed. In determining had been whether cause agent experi- exists, the conclusions of based on his an investigations may with ence be considered. United (9th 1985). Crozier, 1376, States v. 111 F.2d 1380 Cir. We note the outset is that there no doubt the on its affidavit face established cause to search for and seize at least those dental and business records of relating specific Dr. DeSmidt to the instances of fraud by alleged Berger. argues Dr. Ms. DeSmidt that the scope of the warrant should have been limited to those specific disagree. To limit instances. We the warrant to solely specific seizure the search for and instances unreasonably alleged by Berger of fraud Ms. would investigation. restrict and frustrate Starke, State's Cf. magistrate "[A] 81 Wis. 2d at 416. is entitled to upon go beyond common the averred facts and draw making reasonable from those facts." sense inferences (1st Hershenow, 847, States v. 680 F.2d 852 Cir. United 1982); Bast, see also 87 Wis. 2d at 693. "The Fourth deny not law enforcement officers Amendment does support . . the usual inferences . reasonable men draw [only] requires evidence,... that such infer from the it magistrate." by detached ences be drawn a neutral and logical Starke, inference from the Wis. 2d at 409. by Berger spe provided was that the information Ms. only "tip were of fraud she referred to cific instances iceberg." v. Known as United States of the Offices (9th 1983), Distrib., 1374-75 State (1984). Isely's Investigator denied, 465 U.S. 1021 cert. Berger allegations Dr. Ms. that contained affidavit illegal "engaged activities;" in a series of prac "routinely" "common Dr. DeSmidt and as a that x-rays; x-rays periapical wing Dr. that billed bite as tice" practices not limited to were DeSmidt's fraudulent filing claims, false claim but also included Medicaid private companies; forms with insurance that in addi particular identified, tion to the she fraudulent claims Berger other alleged claims false had been filed. Ms. further "training" Dr. DeSmidt was his associate illegal similar, conduct her fashion. We supported conclude affidavit the inference of a probability throughout fraud DeSmidt's dental practice. Compare Henson, United States v. 848 F.2d (6th 1988), 1374, denied, Cir. cert. 1383 109 S. Ct. 784 (1989); (1st Diaz, 1, United States v. 841 F.2d 5 Cir. 1988); (Law Impounded Firm), 196, In re Case 840 F.2d (3rd 1988); Sawyer, 201 Cir. United States v. 799 F.2d 1986), (11th denied, 1494, 1508 Cir. cert. 479 U.S. 1069 (1987);Hayes, 1356;Hershenow, 794 F.2d at 680 F.2d at Supp. 852-53; Hoskins, 512, United States v. F. 639 (W.D.N.Y. 1986), (2nd aff'd., 516-17 875 F.2d 308 Cir. 1989); Agents, Supp. v. Hearn Internal Revenue 597 F. (N.D. 1984); Hughes, 966, 970 88, 93 Texas State v. 2d 433 So. (La. 1983). argues

Dr. DeSmidt that seizure of all of a business' only permissible records is where the defendant's entire "illegitimate." recognize major- business is While we the ity reported of in the decisions which the seizure of all of the defendant's been records has allowed have involved illegitimate disagree businesses, we that the character of determining assessing the is business in factor magnitude reasonableness the seizure. The a search, itself, is insufficient to establish a con- Santarelli, stitutional violation. United States v. 778 (11th 1985). 609, F.2d Cir. Where a warrant autho- particular rizes the seizure of records relevant to a crime category, and all of a business' fall into records all of may lawfully the records be seized and removed from the premises irrespective of nature of See the business. Kunze, id. Williams v. 616; (5th 1986); Sawyer, 799 F.2d at 1508.

Dr. DeSmidt further argues that the warrant was unreasonable because it was not limited time to dental and business records relating only to the duration of Ms. Berger's employment. The observations of a ten or cannot, eleven employee week Dr. asserts, lead to a reasonable belief year DeSmidt's fifteen "permeated upon with fraud." It was this basis that majority of appeals, the court relying Abrams, upon dicta in concluded that the warrant lacked cause. Abrams,

In employees three former of the defend- Department Health, ants informed the Education and defendants, Welfare that who were physicians, had filed false Medicare claim forms. employees The former alleged that claim forms had been submitted to Medicare billing for laboratory actually tests never performed. An investigation ensued and a warrant was obtained to search the defendants' offices. The warrant broadly authorized the search for and seizure of "certain busi- billing ness and and patients medical records of of [the which show per- actual medical services defendants] formed and fraudulent services claimed to have been performed in a scheme to defraud the United States and to submit false medicare pay- and claims for medicaid Id., ..." ment 615 F.2d at 542. The court sup- district pressed the evidence seized the search the court of and appeals ground affirmed on the the warrant failed to meet Id. requirement the constitutional particularity. of appeals at 543. The court of rejected government's the argument the warrant authorized the seizure of all records, of the defendants' concluding support- the ing support affidavit failed to an pervasive inference of

137 fraud and should have included a time limitation. Id. at n.7, The appeals 545. court of then on went to make following the "observation": employee an affidavit contains an averment an

[I]f practices regularly pursued that fraudulent were dur- ing employment, his or her and term of the such forth, employment is set warrant the could authorize the seizure of all records of Medicare and Medicaid purportedly performed during services billed and the period. added).

Id. at 545 (emphasis disagreed: concurrence I my think are brothers a bit narrow their view of the relevant time frame. The fact that a former employee practices indicates that certain fraudulent being regularly period are during followed of his think, employ might, or I depending her on the cir- cumstances, supply probable cause to believe that the for fraud continued a reasonable time I the future. analysis applied think the same of sort could also be in regards prior dating to seizure of records to the employee's time tenure. J.,

Id. at 550 n.3 (Campbell, concurring). We conclude opinion concurring states the proper approach. See Zanche, United v. States 541 F. Supp. (W.D.N.Y. 1982), cases cited therein. In a case nature, this whether the search and seizure should be specified limited to a relating period records time is certainly always paramount consideration. But whether is a search and seizure unreasonable and there- fore unconstitutional due to the lack a time limitation dependent upon is particular facts each case. See Sawyer, 1509; Howland, v. VonderAhe (9th 1975); Callaway, F.2d 369 Cir. 2d 106 Wis. at case, 511-12. Under the facts of this we conclude of a time limitation was not unreasonable. Compare lack Abrams, Hughes, 433 So. 2d 88. Unlike the affidavit specific contained allegations filing here practice" fraudulent claim forms was a per- "common "routinely" offices, Dr. formed at DeSmidt's and that practice this fraudulent was not limited to Medicaid private claim forms but also company insurance claim addition, In forms. the affidavit here contained an alle- gation that Dr. DeSmidt was "training" his associate to forms, submit false claim another allegation present not Abrams, in greatly supports which the inference that "permeated DeSmidt's entire dental case, given with fraud." While this is a close our deferen- tial standard of Supreme review and United States explicit Court's directive that the resolution of doubtful or marginal largely cases should be determined warrants, preference to be accorded to we conclude there supporting warrant-issuing was a substantial basis probable Hayes, cause. judge's finding Compare here, in Analogous holding F.2d at 1356. to our the court Hayes fifty-eight held that known cases of the defen- dant II illegally prescribing drugs Schedule violation fairly of the Controlled Substances Act could be consid- Id. representative pervasive ered as of more violations. Dr. DeSmidt the execution of next contends that suppression the warrant was so unreasonable that of the Because it con- justified. evidence seized the search is cause, the court of cluded the warrant lacked appeals did not reach this issue. inception may

A its later search reasonable States v. scope. unreasonable See United become denied, Heldt, 1238, 1256 (D.C. 1981), cert. (1982); Wilks, 121 Wis. 2d at 200. 102 S. Ct. 1971 have been "Claims that otherwise reasonable searches in an unconstitutionally conducted man unreasonable judged ner must be under the facts and circumstances of Penn, v. each case." United States (9th 1980), denied, (1980). cert. In 449 U.S. 903 determining the reasonableness of the execution of a warrant, reviewing a court must consider the whether scope reasonably of the search and seizure was to related justified the circumstances which the intrusion in the Wilks, 121 place. first Wis. 2d at 100. to need "[T]he strictly scope limit the of the search is particularly acute . . . the where warrant authorizes the seizure of docu Washington, ments." 797 F.2d at 1468.

Dr. DeSmidt first argues the execution of the war- rant was unreasonable because the State examined alleges numerous files he suspected were not of contain- ing fraudulent documents. We fail see to the basis for Dr. argument DeSmidt's abandoning view his the con- tention satisfy warrant did not particularity requirement. event, In any because we conclude the affi- probable davit established cause to believe Dr. DeSmidt's dental was "permeated with fraud" and that therefore the search and seizure of all his dental and business records was Dr. justified, argu- DeSmidt's ment must fail. probable supports Where cause business, search for and seizure of all of the records of a authorizing warrant seizure all such records and them in describing generic terms is to sufficient meet the Kunze, particularity 598; requirement. See 806 F.2d at Brien, 309; Hershenow, 617 F.2d at 680 F.2d at 852. Abrams, upon relies, Dr. which distinguish- is able because there the search for and seizure of all of the defendants' records was not supported by Abrams, cause. See F.2d 548-49. relying upon DeSmidt, Klitzman,

Dr. Klitzman & Gallagher lastly argues VonderAhe, that the execu- tion of the warrant was unreasonable due the effect of particularly length, upon seizure, terms of its professional patients' DeSmidt's livelihood and his wel- Subsequent seizure, fare. to the Dr. DeSmidt made a request formal to the State to return his dental and copies business records or at least of them. The State agreed parts patient to return of the files on an "as alleges Dr. needed" basis. comply DeSmidt the State failed to agreement, however, with that and often either portions did not send the needed the records or failed respond complaint, to at all. After the State filed the Dr. seeking DeSmidt filed a motion return of the documents. (1983-84). August 968.20, 1,1986, See sec. Stats. On county, circuit court for Brown the Honorable William Duffy, Judge, directing J. issued a written order original Dr. State to return to DeSmidt all records the State did not intend to use as evidence at trial and to copies return of all records the State needed. Dr. alleges DeSmidt that when the State returned the August many 4, 1986, records on of the records were incomplete many Dr. and were unaccounted for. directly subsequently the State DeSmidt moved to have comply August order, 1,1986, Dr. with the but DeSmidt alleges although that the State returned some additional portions records, there were still of records and entire missing. records alleged disagree in the State's misconduct

We returning records Dr. DeSmidt's dental and business suppression requires of the evidence. Just as the exercise by executing cannot officers a warrant discretion warrant, United see rehabilitate an otherwise defective Court, in case the District 407 U.S. at this States subsequent alleged misconduct of the State cannot "reach back" to invalidate the lawful search and seizure here. of property properly The return seized be can 968.20, pursuant obtained court order to sec. If Stats. issues such and non-compli- court an order there is ance, contempt may an action for lie. See secs. 785.01(l)(b) (d), Moreover, and Stats. 1983-84. if the State negligent handling its of Dr. DeSmidt's property, may remedy. any he seek a civil Nor do we find complaint merit in Dr. DeSmidt's that the State to failed any notify of Dr. DeSmidt's patients that their records being were examined. While we are mindful of and sensi- rights parties tive to of third involved cases such this, authority, as we are of no aware none, requires cites State circumstances such this notify parties as the third involved that their being records are examined. The rights parties of third essentially are from person derivative those of the being searched, protected by and are prohi- constitutional against bition unreasonable searches seizures. here, Unlike the in circumstances neither case relied upon by Dr. DeSmidt was there cause to believe "permeated defendant's entire business was with Klitzman, fraud." See Gallagher, Klitzman & 960; VonderAhe, 508 F.2d at 369-70. By the Court. —The decision of the of appeals court is reversed and cause remanded to the circuit court for further proceedings not opinion. inconsistent with this ABRAHAMSON, (dissent-

SHIRLEY S. J. ing). For the warrant to patients seize "all" the records period valid, over an time to unlimited be the affidavit provide must a substantial basis for the inference that DeSmidt's entire dental was "permeated with or fraud" that seizure all was necessary records illegal show defendant's activities. Both the circuit appeals court and the court of determined that the affi- adequate. davit was not agree appeals: presence

I with the court of "The practices during criminal the summer of 1985 does not give rise to the reasonable inference that DeSmidt was engaged wrongful in a lifetime of conduct . . .. The informant this case made no claim to know the con- employment period tents of files outside her [of ten or reasonably weeks] eleven .... if Even is fraud precede employment, [the inferred to informant's] there nothing suggest many is in the affidavit to it went on for years." DeSmidt, 324, 332-33, State v. 151 Wis. 2d (Ct. 1989). App. N.W.2d 420 I therefore dissent. upheld permit- While courts have search warrants ting they records, the search and seizure of "all" business very namely circumstances, have done so limited (1) when there is substantial evidence that entire e.g., illegal, business can be characterized as "boiler operations, opera- room" stock sales mail or wire fraud plots, tions, schemes; extortion and massive fraudulent (2) legitimate illegal or the business is but activities are pervasive. legitimate When the business is and the affi- pervasive fraud, davit does not show the warrant to search and In seize all records is invalid. these instances the warrant should be limited to the documents relevant segregable e.g., Application See, to the fraud. In re the (1st 1979). Lafayette Academy, 610 F.2d 1 majority opinion sup None of the cases the cites ports legitimate holding its the face of a business mag fraud, and no documentation of extensive a factual (judge) may istrate authorize the seizure of all business patient and records.* sup majority opinion primarily

* The relies on three cases to port records are relevant to a its rule of law that when all business

143 In this case the not suggest affidavit does operated solely his dental for criminal crime, (whether particular all the records of a a business it be not) legitimate may analogous business or be seized. None is the instant case. Santarelli, 609, (11th v.

United States 615 F.2d Cir. 1985), business, loansharking a involved that included the use repayment fire-arms and violence to enforce loans. The affida- vit detailing was on from based information one of borrowers the defendant, a series he of loans had taken with the from other FBI agents, taped telephone and from a conversation between the upheld borrower and the defendant. The court the search warrant probable because the affidavit showed cause to believe that the part operation. documents were of an illicit credit extortionate Kunze, (5th In 1986), v. Williams Cir. Investigation Criminal Division the Internal Revenue Service conducting was an investigation allegedly of several fraudulent tax organized operated shelter schemes Caymen and from the Services, by Limited, Planning Islands United States Tax and investigation licensee, licensee. After an extensive of the includ- ing by agents clients, posing several visits as undercover an IRS sought investigator application sup- a search warrant. The ported by investigator's IRS affidavit and affidavit aof Special Agent, previously who had conducted a nationwide inves- tigation upheld of USTPS. The court the search because the affidavits showed there was cause to believe the entire merely business was a scheme to defraud or all the records of likely the business are to constitute tax evidence of evasion. (11th 1986), In Sawyer, States United v. 799 F.2d 1494 denied, (1987), cert. 479 U.S. 1069 the court considered a "boiler operation. room" investigators sales Affidavits submitted twenty described in detail five customer transactions and repeated misrepresentation instances of or concealment of mate rial facts other fraudulent conduct in which defendants engaged. The affidavits persons also identified a number sales engaged deceptive who techniques many sales and enumerated unauthorized generated transfers of customer funds to commis- purposes. Nor the does affidavit allege observation any wholesale fraud. In reported the absence of com- plaints against by patients, employees other or any informants and the police absence intensive or investigations other agency corroborating pervasive ille- activities, gal opinion the majority parses words and affidavit, phrases to find evidence of endemic Allegations fraud. using conclusory words like "routine" or "commonplace" are no substitute for the or evidence documentation necessary to establish cause. majority opinion's

The attempts distinguish Abrams, (1st 1980) United States v. 615 F.2d 541 Abrams, are In unconvincing. the court an considered presenting affidavit information obtained from three employees former alleging approximately 50 incidents of false for payments. claims Medicare The Abrams court warrant, struck concluding down the that there was no support in the affidavit providing probable cause to patients' believe billings all were inflated. See Seizures, Ringel, Searches and Arrests Confessions 5.6(c), pp. sec. through 5-39 5-45. opinion

The on majority Judge relies a footnote to Abrams, Campbell's concurring opinion in lan- but the guage quoted Judge Campbell is taken out of context. joined his on colleagues concluding the Abrams court that the warrant to search all the doctor's over records period an unlimited Judge time was unconstitutional. Campbell period would not have limited the time as nar- rowly opinion's the majority suggested. Judge as dicta Campbell in Abrams: wrote warrants, concluding upheld

sions. court the affida- widespread through vits showed efforts to defraud customers variety representations. misleading disclosures and

.... I am not general satisfied statement up measures to the [in affidavit] particularity expressly required by the Fourth least, Amendment. At this is so where the search and files, seizure is directed at medical and not at files of substantially wholly illegal or enterprise, involving privacy interests of a lessor character. government, moreover, should have been able to do Surely better. its records reflected the names of patients for whom Dr. Abrams had obtained reimbursement, Medicare-Medicaid and in what amounts. Could it not have patients named these in the warrant and directed the seizure of evidence of performed the services respect with to these individuals?, least, very At the relevant time [the] frame should have been indicated.3 3 My suggest brothers that 'if an affidavit contains an averment employee regularly an pursued that fraudulent were during employment, his employment or her and the term of such is forth, set the warrant could authorize the seizure of all records of Medicare purportedly performed and Medicaid services billed and during period.' (Emphasis added.) my I think brothers are a bit narrow in their view of the relevant time frame. The fact that a employee practices former being indicates that certain fraudulent are regularly during period employ might, followed of his or her I think, depending upon circumstances, supply probable cause to believe that the fraud continued for a reasonable time in I the future. analysis think applied the same sort regards could also be to the prior dating employee's seizure records to the time of the tenure. context, When viewed in Judge Campbell's state- ments support do not the majority opinion case; in this they support position that the warrant in this case is unconstitutional. The affidavit in this case fails to ade- quately identify any rational nexus between the time of employment informant's at DeSmidt's office and prior acts of Abrams, medicaid or insurance fraud. As the search warrant failed to support the inference of a probability of fraud for the entire time Dr. DeSmidt practiced dentistry.

I conclude that a warrant authorizing the search patient seizure "all" and business files without limitations on nature of the records or the period time amounts this case to the government's wholesale rummaging through prohibited by documents the fourth amendment.

Case Details

Case Name: State v. DeSmidt

Court Name: Wisconsin Supreme Court

Date Published: May 10, 1990

Citation: 454 N.W.2d 780

Docket Number: 88-1356-CR

Court Abbreviation: Wis.