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United States v. Wetselaar

United States District Court, D. Nevada

April 7, 2014

UNITED STATES OF AMERICA, Plaintiff,
v.
HENRI WETSELAAR, M.D., et al., Defendants.

ORDER

KENT J. DAWSON, District Judge.

Before the Court is the Magistrate Judge's Report and Recommendation (#132) regarding Defendants' Omnibus Motion (#65). Defendants objected (#138), the Government objected and responded (#139), and Defendants replied (#140). The Government also provided a separate notice of Intervening Supreme Court Decision (#141). It should be noted that a portion of Defendants' underlying motion was addressed and denied in this Court's prior Order (#118).

This case presents a host of nuanced and difficult issues. While the general contours of the relevant facts are laid out in the Factual Background section, additional facts will be discussed in the sub-sections to which they pertain. Finally, the Court notes that Defendants liberally employ the shotgun approach, often asserting (or at least implying) alternative legal theories from one paragraph to the next, often devoid of citations to authority. The Court finds all such mere assertions violate Local Criminal Rule 47-9, and therefore the Court cannot and will not consider them.

I. Factual Background

Dr. Henri Wetselaar ("Wetselaar") is a physician practicing in Las Vegas, Nevada, and employs co-defendant David A. Litwin ("Litwin") as his medical assistant (#104 at 138 ll. 6-12). The Government indicted Defendants for illegal drug distribution, money laundering, the structuring of transactions to evade reporting requirements, conspiracy to distribute a controlled substance, etc. (#4 at 2). On August 27, 2010, agents applied for and obtained a search warrant for Defendants' medical practice, which authorized the seizure of "[p]atient files and/or medical records maintained by Wetselaar, Litwin or [the medical practice], or their employees, for patients who received prescriptions for controlled substances." (Hearing before Magistrate Hoffman, 19 Sept. 2013, Ex. A-1; see also #65 at 8 ll.11-15). This warrant was executed on August 31, 2010 (Hearing before Magistrate Hoffman, 19 Sept. 2013, Ex. A-3). It is undisputed that the agents seized all of Wetselaar's patient medical records (#104 at 119; #123 at 33). Wetselaar used three different suites in his practice, and all three were searched, ##102, 105, and 107. Cash (as opposed to insurance) patient files were found in suites 107 and 102 (#123 at 39; #104 at 152-53). The agents involved described the seizing of all files as motivated by time and manpower constraints which made it impractical to filter the relevant files on-site (#104 at 119-120). This was likely exacerbated by the disorganized state of the files (#104 at 153-154; #123 at 39-40). No reliable estimate of the number of records seized, or of the proportion of records containing prescriptions for controlled substances has been submitted to the Court.[1]

On September 29, 2011, Government agents executed a search of Wetselaar's residence, seizing among other items, a plastic bag containing four safe deposit box keys and various notations including "Total about 150 gold coins" as well as numeric and alpha-numeric sequences (#68, Ex. 9 at 13 ll. 11-15). Defendants do not challenge either this warrant or this seizure here. The agents had previously been informed that Wetselaar purchased gold from American Coin Express ("ACE") (#104 at 162 ll. 18-24).

That same day, the agents noticed that ACE was located in the same shopping center as 24/7 Private Vaults ("PV") and decided to stop by (#104 at 162 ll. 18-24; #123 at 63-64). Agents thought it likely that the keys belonged to vaults located at PV based on "common understanding" in the law enforcement community and the general appearance of the keys and notations (#123 at 218 ll. 12-21). Upon arrival, the agents successfully accessed the front door to PV by entering one of the notations found in the plastic bag into the keypad (#123 at 64 ll. 13-14). It appears that upon the successful entry of the code, an employee of PV "buzzed" the agents into the building (#123 at 64-65).

Upon entering PV, the agents approached Sylviane Cordova ("Cordova") (#123 at 65-66). They then proceeded to show her the keys, at which time Cordova identified them as belonging to vaults there at PV (#123 at 66; #104 at 11-12). Cordova then proceeded to lead the agents through the various security doors and back into the "VIP room" which contained a large number of vaults (#104 at 13, 42; #123 at 66). Then, either Cordova or the agents used the keys to open three vaults which belonged to Defendants, revealing the metal liners (#123 at 66-67; #104 at 13-14, 47). Cordova then suggested that the metal liners be relocated to the floor vault, beyond Defendants' access (#104 at 48 ll. 12-20; #123 at 86 ll. 23-25). The agents then helped Cordova relocate the boxes from the wall vaults into a floor safe (#123 at 87; #104 at 49). Cordova then provided the agents with the combination to the large floor safe (#104 at 52-53; 123 at 89). The agents then secured the floor safe with evidence tape (#123 at 89; #104 at 57, 61). The agents never opened the metal liners during this visit (#104 at 55; #123 at 134). Sometime after the agents had left, Cordova contacted the agents and told them that she had identified a fourth vault belonging to Defendants and that she had placed small metal screws in the locking mechanism to secure the vault (#123 at 139-40).

On October 3, 2011, the agents applied for, obtained, and executed a search warrant for the three vaults originally discovered (#123 at 94, 140). The warrant was based on two affidavits. (Hearing before Magistrate Hoffman, 19 Sept. 2013, Ex. I-2 at 1, 4 ll. 14-16). Agent Norris' prior affidavit incorporated by reference does not reference any of the activities at, information gained from, or even the existence of PV (Hearing before Magistrate Hoffman, 19 Sept. 2013, Ex. B-2). Agent Norris' second affidavit explains how agents arrived at PV, entered the code in the key pad at the front door, and were granted access to the lobby (Hearing before Magistrate Hoffman, 19 Sept. 2013, Ex. I-2 at 6-7). The affidavit further discloses than an employee of PV identified the keys as likely belonging to PV vaults with some specificity. (Hearing before Magistrate Hoffman, 19 Sept. 2013, Ex. I-2 at 7 ll. 1-4). No further reference is made to PV or to activities occurring there. Upon execution, Agents discovered U.S. currency, foreign currency, as well as silver and gold coins within these vaults (Hearing before Magistrate Hoffman, 19 Sept. 2013, Ex. I-3). On October 5, 2011, the agents applied for, obtained, and executed a search warrant for the fourth vault secured via metal screws by Cordova, in which agents found both U.S. currency and three gold coins (Hearing before Magistrate Hoffman, 19 Sept. 2013, Ex. J-3).

II. Untimely Government Objections

The rules governing the timing of objections to a magistrate's findings and recommendation are found in 28 U.S.C. § 636(b)(1)(C) (2012). Fourteen days are provided for "any party" to file objections. Id . This Court's local rules are identical on this point. LR IB 3-2 (2014). The local rules also provide an additional fourteen days for a party to file points and authorities opposing any objections. Id . Here, the Finding and Recommendation was entered on December 31, 2013, and the parties were given until January 17, 2014 to file their objections (#132). Subsequently, the Court granted an extension of time (#136) based on the parties' stipulation (#134), making the objection due February 3, 2014 (#136). Defendants timely filed their objections (#138). However, the Government filed nothing until February 20, 2014, which is styled "Opposition to Defendant's [sic] Objections" (#139). Defendants then timely replied to the Government's opposition (#140).

However, despite these shortcomings, the Court is unable to find any prejudice to Defendants in construing the Government's filing as both an opposition and an objection, nor do Defendants allege any prejudice. Further, given the courts' strong preference for disposing of matters on their merits, the Court declines to strike the Government's objections as untimely.

III. Standard of Review

"The district court is in an appellate' role when reviewing the magistrate's findings and recommendations; its function is to correct those findings made by the magistrate when the litigant has identified a possible error." United States v. Remsing , 874 F.2d 614, 616 (9th Cir. 1989). Accordingly, the Court's obligation is "to arrive at its own independent conclusion about those portions of the magistrate's report to which objections are made."[2] Id. at 618. Specifically, the Court is to engage in "de novo" review of the findings and recommendations objected to. 28 U.S.C. § 636(b)(1)(C) (2012). This requires the Court to review the evidence, and not merely rely upon the magistrate's findings of fact and conclusions of law. Orand v. United States , 602 F.2d 207, 208 (9th Cir. 1979). Consequently, the Court may "accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge. The judge may also receive further evidence or recommit the matter to the magistrate judge with instructions." 28 U.S.C. § 636(b)(1)(C).

IV. Whether a General Search Occurred at Defendants' Place of Business

A. Legal Standard

The Fourth Amendment protects the public against unreasonable searches and seizures by the Government. U.S. CONST. amend. IV. This protection is achieved in part by requiring that warrants "particularly describe the things to be seized mak[ing] general searches under them impossible" Marron v. United States , 275 U.S. 192, 196 (1927). When officers violate the terms of a warrant in execution, two possibilities are before the Court. "[P]artial suppression [meaning suppression of those materials outside the warrant] is the norm...." United States v. Sears , 411 F.3d 1124, 1131 (9th Cir. 2005); see also United States v. Tamura , 694 F.2d 591, 597 (9th Cir. 1982) (denying total suppression because officers did not engage in indiscriminate fishing). However, where there is "flagrant disregard for the terms of the warrant" all evidence, including untainted evidence, may be suppressed. United States v. Chen , 979 F.2d 714, 717 (9th Cir. 1992). The Ninth Circuit has emphasized that such total suppression is an "extraordinary remedy" applicable only when "the violations of the warrant's requirements are so extreme that the search is essentially transformed into an impermissible general search." Chen , 979 F.2d at 717. In sum, "wholesale suppression is appropriate under the flagrant disregard standard only when the officers transform the search into an impermissible general search by ignoring the terms of the warrant and engaging in indiscriminate fishing." Id. at 717. Importantly, even "wholesale seizures" in excess of the warrant do not result in total suppression where the Government's acts "were motivated by considerations of practicality rather than by a desire to engage in indiscriminate fishing...." Tamura , 694 F.2d at 597.

B. Analysis

It is undisputed that the Government seized all of Wetselaar's patient files, an act which Defendants argue transformed a valid search under a valid warrant into a constitutionally impermissible general search (#138 at 4 ll.16-18). As noted above, the terms of the warrant are central to this analysis. Under partial suppression, only those items beyond the terms of the warrant will be excluded. Sears , 411 F.3d at 1131. Total suppression is reached only following flagrant disregard for the terms of the warrant. Chen , 979 F.2d at 717. Accordingly, the Court will begin with the terms of the warrant.

The warrant flatly authorized the search and seizure of "[p]atient files and/or medical records maintained by Wetselaar, Litwin or [the medical practice], or their employees, for patients who received prescriptions for controlled substances." (Hearing before Magistrate Hoffman, 19 Sept. 2013, Ex. A-1 at 5 ll. 1-3; see also #65 at 8 ll.11-15). Such unambiguous terms needs no further clarification, and the Court turns now to the files seized.

As noted above, it is undisputed that the Government seized all of Wetselaar's patient files. Accordingly, the normal remedy would be partial suppression of all of those files which did not contain prescriptions for controlled substances. Sears , 411 F.3d at 1131. However, Defendants do not seek this remedy, and the Court declines to grant it sua sponte. The Court also notes that it appears that Defendants seek the partial exclusion of all Medicare patients' files.[3] Clearly this is not justified by the terms of the warrant. Defendants attempt to avoid this obstacle by implying that Medicare patients files would have been excluded from the warrant had the supporting affidavits made explicit mention of the existence of Medicare patients at Wetselaar's practice.[4] Such an assertion is plainly and purely irrelevant to the claim that a general search was executed by the Government. Further, the Court disagrees. Where a physician engages in illegal prescription practices, there is no reason to suppose that he or she would tend to exclude Medicare recipients from his or her dealings.

Although Defendants express no interest in the normal remedy of partial suppression, they are keenly interested in the extraordinary remedy of total suppression (#138 at 3 ll. 22-23). This remedy requires that the officers flagrantly disregard the terms of the warrant in order to engage in "indiscriminate fishing" rather than for "considerations of practicality." Chen , 979 F.2d at 717 (discussing the extraordinary nature of the remedy of total suppression); Tamura , 694 F.2d at 597 (allowing for "wholesale seizures" when motivated by "considerations of practicality" and not a desire to engage in "indiscriminate fishing"). Defendants implicitly concede that Wetselaar's practice was primarily "pain management" (#65 at ll. 21-23). Given the nature of the practice, Task Force Officer Still's testimony is wholly credible when she recounts the following:

Still: He [meaning Wetselaar] asked what we were going to be seizing, and that's when I told him we would take, uh, medical files that - in which, uh, ...

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