The district court denied the defendants’ motion to suppress evidence seized by the government during the execution of a search warrant in relation to an investigation of healthcare fraud. The defendants argued the government improperly withheld from the magistrate judge the fact that their supporting information originated with a whistleblower who would have a financial stake in the outcome of the investigation, but the court found this omission was unintentional and not material to the grant of the warrant. The court also found the relator’s information compelling and the government’s support for the warrant thorough. The defendants also argued that the government improperly seized employees’ personal information, but the court reasoned that the government could not have guessed that employees would store sensitive personal information on company-issued devices.
The defendants in a criminal prosecution moved to suppress evidence seized during a search of corporate business premises pursuant to a search warrant. The government opposed.
Defendants Indivior Inc. and its parent company, Indivior PLC, are alleged to have deceived health care providers and benefit programs into believing that the sublingual form of its prescription medication Suboxone is safer and less susceptible to diversion and abuse than other similar drugs. The government alleged multiple counts of fraud, including healthcare fraud in violation of the False Claims Act.
In their motion to suppress, the defendants argued the search warrant was invalid because the government omitted from its application material information about the original human source of its information and that person’s financial conflict as a qui tam relator. Second, they argued the warrant was facially invalid because it failed to properly attach or incorporate the supporting documents. Third, they alleged the warrant’s language was overly broad and lacked probable cause to seize a majority of the defendants’ physical and electronic files. Finally, they argued the government exceeded the scope of the warrant. The defendants also claimed that the government’s retention of the seized evidence has been unreasonable.
In response, the government argued that the magistrate judge’s probable cause finding is presumptively valid and that it relied in good faith on the warrant. Even if the defendants’ arguments were true, the government argued that suppression would be an extreme remedy. The government asserted that its cooperating witness’s status as a qui tam relator does not make her less credible, but actually increases her reliability since her financial incentives are dependent on whether her information is accurate. Consequently, the government argued the omission of this fact was not material to the magistrate judge’s probable cause determination. Finally, the government maintained that the materials necessary to satisfy the Fourth Amendment’s particularity requirement were attached to the warrant and also incorporated by reference.
The government asserted that the warrant was not overly broad but was tailored to seek materials relating to the specific pharmaceuticals and the areas of the business likely to have stored information about the scheme. The government acknowledged that some of the seized items might have been outside the scope of the warrant but asserted that such errors do not require blanket suppression. Finally, the government described how the seized information has been retained, as well as its efforts to segregate privileged and irrelevant materials from its database with the cooperation of the defendants.
The investigation commenced when a whistleblower came forward with the allegations and corroborating internal documents and secretly recorded conversations. The relator filed a qui tam complaint in 2013 while the government continued its investigation, which resulted in this warrant.
First, the court held that the omission of the nature of the source of the allegations was not material to the grant of the warrant. While the defendants wished to impeach the motives of the relator in coming forward, the court also reasoned that an informant’s personal interest could create a strong motive to supply accurate information. Even applying doubt to the relator’s motives, the court found that the level of detail provided in her description of the alleged wrongdoing clearly demonstrated she personally witnessed the conduct. Therefore, her information was entitled to greater weight. While inclusion of the source’s potential financial interest might have been relevant for the magistrate judge, the court did not believe the omission was material. Furthermore, the defendants did not show the government intended to deliberately mislead the magistrate judge.
The court found that attachments to the government’s application for the search warrant described the place to be searched and the materials to be seized. It also included a sample of the documents provided by the relator to show probable cause. The court found the attachments satisfied the Fourth Amendment’s particularity requirement. While the defendants argued that neither the affidavit nor the application were attached to the warrant during the search, the court explained that this is not required.
The defendants argued that Attachment B’s “things to be seized” could not independently tethered to specific criminal violations within the four corners of the attachments or the warrant, but the court held that the Fourth Amendment’s particularity requirement is separate from the probable cause requirement. The criminal violations were listed in the affidavit and application and thereby viewable by the magistrate judge, albeit not immediately viewable by the defendants during execution of the warrants. The court found this to be an extremely nuanced point without any authority to bolster it. The court found no requirement that the subject of the search be able to inspect the suspected criminal violations and probable cause finding detailed to, and adopted by, the magistrate.
Next, the court agreed that the magistrate judge’s probable cause determination had a substantial basis that supported the attachment listing items to be seized. The court did not consider it overly broad and without sufficient probable cause. Instead, the court found it bore many of the indicia of a strong search warrant application. The affidavit described an extensive conspiracy that touched numerous states and spanned across multiple levels of the defendants’ command structure, as well as motive. It was also apparent that the affidavit was not a hastily assembled document based on a single tip, but was the product of at least an eight-month investigation to corroborate the information provided by the source. The court held the affidavit carefully linked the probable cause to the defendants’ headquarters and items to be seized.
Finally, the defendants argued that the government exceeded the scope of an already broad information. However, the court noted the defendants identified only two categories of items as outside the warrant’s scope: the collection of their employees’ corporate-issued electronics, and their employees’ personal data that was stored on the corporate-issued electronics.
In response, the government questioned whether the defendants have standing to contest the seizure of their employee’s corporate-issued electronics. However, the court held they did, because the cellphones and laptops are corporate property clearly owned by the defendants, even if they were provided to their employees for work-related activities. However, the court also held that the defendants cannot have it both ways and claim that the employees were personally searched when the corporate-issued electronics were seized. The court held that the agents’ direction for employees to leave their corporate-owned devices in their offices to be within the scope of the warrant.
Next, the defendants argued that the breadth of the search justifies blanket suppression of all items seized, but the court was not persuaded that the number of items or the nature of employees’ personal data stored on their devices merited suppression. The personal data was only collected because their employees chose to store private information on the defendants’ corporate property. Further, the government could not have anticipated that the defendants’ employees would store such private information with their employers, and the government already agreed to segregate out irrelevant information in the agreed order entered shortly after execution of the warrant.
Generally, the court held that the defendants had not provided any probative indicia of flagrant disregard or bad faith, while the government had provided significant evidence of good-faith steps taken both during and after the search to work with the defendants and their counsel. The court also found they defendants failed to show that a significant proportion of the evidence seized was outside the scope of the warrant or even capable of being segregated during execution of the warrant.
