Court: District Court, D. Puerto Rico; January 8, 2012; Federal District Court
Defendant Carlos Lopez-Diaz’s motion to suppress evidence obtained from his home on July 27, 2011, has been denied by the Court, which adopted the Magistrate Judge’s Report and Recommendation. Lopez-Diaz, a dentist indicted for conspiracy to commit health care fraud and aggravated identity theft, argued that the search warrant lacked probable cause, claiming it was primarily based on an investigation into his brother and that agents failed to disclose his lack of knowledge regarding fraudulent activities. He sought to suppress all evidence obtained from the search and requested a Franks hearing due to alleged factual issues. The Government countered that probable cause existed for the warrant, supported by evidence from Medicare records and other documentation establishing Lopez-Diaz’s residence as a business location. The standard for reviewing the Magistrate Judge's findings allows for a de novo determination if objections are filed within ten days, and a district court may accept, reject, or modify the recommendations. The Supreme Court’s Spinelli decision outlines key principles regarding probable cause and the issuance of search warrants.
The standard for establishing probable cause is based on the probability of criminal activity rather than a prima facie showing. Affidavits supporting probable cause are evaluated under less stringent standards than those for admissibility of evidence at trial. Magistrates are encouraged to use common sense without overly restrictive limitations, and their assessments should be given significant deference by reviewing courts.
Defendant Lopez-Diaz [2] challenges the Magistrate Judge's finding of probable cause for searching his home and offices, arguing the affidavit lacks evidence linking him to his brother's alleged illegal activities. He claims the search warrant was invalid due to insufficient probable cause for his arrest. However, this argument is countered by the Supreme Court's ruling in Zurcher v. Stanford Daily, which allows for property searches based on probable cause to believe evidence of a crime is present, irrespective of whether there is probable cause to arrest the property owner.
The First Circuit supports this interpretation, noting that property may be searched if there is probable cause to believe it contains evidence of a crime, even if the occupant is not directly implicated. Despite the defendant’s assertion that the affidavit did not establish probable cause for his involvement in criminal activity, the warrant for searching his property remains valid. The Magistrate Judge's conclusion that the affidavit suggested probable cause for a crime and that evidence might be concealed at the defendant's property is upheld.
The defendant attempts to differentiate his case by citing Voicenet Communications, Inc. v. Corbett, which involved an affidavit asserting the property owner's direct involvement in a federal offense. However, the court clarifies that while probable cause is necessary to issue a search warrant, in this case, the affidavit contained ample information indicating the occurrence of a health-care fraud scheme, rendering the Corbett case irrelevant to the current analysis.
The prime suspect, defendant José López-Díaz [1], utilized his brother Carlos López-Díaz [2]’s mobile medical practice to execute a fraudulent scheme involving Medicare claims. Evidence indicated that a spreadsheet containing patient information was created and stored at defendant [2]’s home, where defendant [1] would copy it to facilitate false claims. Ms. Williams-Nieves, a secretary for the brothers, confirmed that defendant [1] maintained medical documents at defendant [2]’s office. This information led to a conclusion of probable cause for a search warrant of López-Díaz [2]’s properties, which was upheld by the Magistrate Judge despite claims of material omissions in the warrant application. The Judge found these omissions irrelevant due to substantial evidence from other sources supporting probable cause. López-Díaz [2] argued that a lack of evidence regarding his knowledge of the fraud undermined the warrant's validity, but the Court maintained that this knowledge was not necessary to uphold the warrant. Additionally, a request for a Franks hearing was deemed unnecessary, as the warrant would remain valid regardless of any findings regarding López-Díaz [2]’s awareness of his brother's actions. Consequently, the Court adopted the Magistrate Judge’s recommendation, denying the motion to suppress and the request for a Franks hearing.
Co-defendant López-Díaz faces charges for aggravated identity theft in Counts Sixteen through Twenty, as he allegedly aided and abetted defendant 1 by unlawfully possessing, using, and transferring another person's identification, violating 18 U.S.C. § 1028A(a)(1) and 2. On November 23, 2011, he filed a motion to suppress evidence obtained from a search of his home and offices on July 27, 2011, arguing the search warrant lacked probable cause. He contends that the investigation primarily focused on his brother, defendant 1, who was accused of submitting fraudulent Medicare billings, and asserts that the agents failed to disclose that there was no evidence implicating him in these fraudulent activities. Consequently, he claims the Leon good faith exception does not apply and requests a Franks hearing to challenge the validity of the warrant.
The government responded on December 5, 2011, arguing that probable cause existed for the search warrant, asserting that evidence related to health care fraud and identity theft was likely to be found at López-Díaz's residence. They noted that his address was identified through Medicare enrollment documentation, bank records, and Puerto Rico Department of Motor Vehicle records, establishing it as a business location for him. The motion to suppress was referred to a Magistrate Judge who subsequently issued a report and recommendation.
In the legal discussion, López-Díaz argues that the affidavit supporting the warrant did not establish probable cause to believe evidence of a crime would be found at his property. The government countered that the affidavit provided sufficient basis for the Magistrate Judge to conclude there was a fair probability of finding relevant evidence at the searched location. The First Circuit Court of Appeals emphasizes a practical, commonsense review of the affidavit, granting deference to the issuing magistrate’s determination of probable cause. A search warrant must demonstrate that a crime has occurred and that evidence of that crime will likely be found at the specified location, establishing a nexus between the crime and the place searched based on various factors, including the type of crime and the opportunities for concealment.
Probable cause for a search warrant is established when, based on the totality of circumstances in an affidavit, there is a fair probability that evidence of a crime will be found. Special Agent Kristina Ruisanchez's affidavit provided sufficient grounds for the search warrant at Urb. Baldrich concerning defendant López-Díaz. The investigation initiated by HHS-OIG in August 2010 followed complaints from SafeGuard Services and Medicare Advantage Plans (MMM and MCS) regarding Dr. José López-Díaz's billing practices. Allegations included submitting false medical claims for unnecessary or non-rendered services, particularly emergency treatments and surgeries. Interviews with approximately 20 beneficiaries revealed they did not recognize Dr. López-Díaz and had not received the billed services. Further review showed that 18 beneficiaries were listed as residing at Hogar Huertos De Jesús, an assisted living facility. When agents visited the facility, the owner, Rosana Martínez-Jiménez, confirmed Dr. Carlos López-Díaz had provided dental services there. However, she indicated that none of the residents had been taken to Guaynabo Medical Mall for the medical conditions listed in the claims submitted by Dr. José López-Díaz, which raised significant concerns regarding the legitimacy of those claims.
Ms. Martínez-Jiménez, as legal guardian, stated she would sign authorizations for services at her facility. On June 1, 2011, federal agents met with Social Worker Margarita Ortiz at Hogar Cristo Rey, where Dr. Carlos López-Díaz [2] offered dental services. Ortiz provided him with a list of patients, including María Robles-Pimentel, who later received a service detail sheet from Triple-S indicating services from Dr. José López-Díaz [1]. Ortiz inquired about the billing with Dr. Carlos López-Díaz [2], who claimed Dr. José López-Díaz [1] was his associate. Ortiz subsequently rejected further services from Dr. Carlos López-Díaz [2].
SA Ruisanchez shared a list of patients billed by Dr. José López-Díaz [1], and Ortiz confirmed that several had prior dental services from Dr. Carlos López-Díaz [2]. On July 14, 2011, Leslie Williams-Nieves, a secretary at Centro Pediátrico, LV, and Cuidado Dental Terapéutico (owned by Dr. Carlos López-Díaz [2]), stated she handled administrative and billing tasks and was the only secretary with access to the medical billing system. She noted that Dr. José López-Díaz [1] did not work at Centro Pediátrico but left documents there.
On July 20, 2011, Williams-Nieves reiterated that Dr. Carlos López-Díaz [2] proposed mobile dental services to various public entities, collecting patient healthcare information, which he took to his residence. Along with Nahir Rodríguez-Candelario, she maintained patient records and billed electronically. Williams-Nieves asserted that Dr. José López-Díaz [1] was allegedly employed as a general practitioner but she never witnessed him providing medical services to Dr. Carlos López-Díaz [2]'s patients.
A spreadsheet containing patient information was created for claims billing. Williams-Nieves indicated that Dr. José López-Díaz [1] visited Dr. Carlos López-Díaz [2]'s residence to copy patient records, including the spreadsheet. This information, in SA Ruisanchez's sworn affidavit, established a fair probability that evidence pertinent to the offense was present at Dr. Carlos López-Díaz [2]’s home and home offices, countering his motion to suppress.
The affidavit was compiled using information from various sources, including co-defendant Ms. Williams-Nieves, the owner of Hogar Huerto de Jesus, a social worker, medical claim reviews, and federal agents' investigations. It establishes that López-Díaz [1], a general practitioner, collaborated with López-Díaz [2], a dentist, as the latter required a general practitioner for compliance with state regulations. The affidavit details that López-Díaz [1] used patient information from López-Díaz [2] to fraudulently bill Medicare for services he did not provide, having never treated the patients in question. López-Díaz [2] maintained patient records at his home, where Ms. Williams-Nieves managed medical records and data entry. Additionally, López-Díaz [2] falsely billed for services purportedly rendered at his home office. A spreadsheet containing patient information for billing purposes was also stored there, and López-Díaz [1] accessed this information to commit fraud. Given this context, the affidavit provided sufficient probable cause for the search warrant issued for López-Díaz [2]'s residence.
The defendant López-Díaz [2] asserts that the agents did not inform the magistrate judge of his lack of knowledge or evidence regarding his involvement in the alleged fraudulent activities. The government counters that all relevant facts were presented to the judge. The court found that defendant López-Díaz [2]'s claims regarding omissions or misleading statements were vague and lacked specificity. He did not allege any deliberate falsehoods by the agents. Citing precedent from United States v. Nelson-Rodriguez, the court noted that even with omissions, the affidavit's substantial evidence from multiple sources still supported the probable cause determination. Thus, the arguments for suppression were deemed insufficient.
The court determines that the search conducted by law enforcement was not a pretext for unlawful actions, as it was based on a specific offense and particularized evidence obtained from multiple sources. Defendant López-Díaz's claim that agents failed to inform the Magistrate Judge of his non-involvement and lack of profit is deemed unfounded. The defendant's request for a hearing is denied because he has not met the threshold showing that material facts are in dispute that cannot be resolved from the paper record. A defendant does not have a presumptive right to an evidentiary hearing on a motion to suppress unless they demonstrate sufficient grounds, such as allegations of deliberate falsehood or reckless disregard for the truth in the warrant affidavit. López-Díaz's motion lacks such allegations, failing to warrant a hearing.
Additionally, regarding the challenge to the search warrant, the court finds sufficient probable cause existed, and even if there were omissions, the good faith exception applies. Under the good faith doctrine established in United States v. Leon, suppression of evidence is not warranted when law enforcement officers reasonably rely on a warrant, even if it is later deemed defective. The good faith exception is not applicable if the warrant lacks probable cause or is facially deficient. In this case, the court concludes that the good faith exception is appropriate, as the officers acted within reasonable belief of the warrant's validity.
The case of United States v. López-Díaz involves a motion to suppress evidence obtained from a search warrant executed at the defendant's residence and home offices. The court determined that the search warrant was issued based on probable cause, thus validating the agents' reasonable belief in the warrant's legitimacy. Even if the warrant were deemed deficient, the agents would qualify for a good faith exception. The recommendation is to deny López-Díaz's motion to suppress, with parties given fourteen days to file objections, as failure to do so waives the right to appeal. The indictment includes a forfeiture claim under Title 18 U.S.C. § 982(a)(7) for $547,410.01 related to the offenses. The affidavit supporting the search warrant, which included information from multiple sources, was deemed adequate for establishing probable cause. The magistrate judge clarified that the warrant was authorized by them, countering the government's claim that it was authorized by the Chief District Judge. The case also touches on the roles of entities investigating potential Medicare fraud, emphasizing the importance of compliance with established regulations. Further discussion on the good faith exception is anticipated.
