Ruling Narrows Executives' Fourth Amendment Rights

In January 2002, 42 federal agents entered the Westlake Village, Calif., headquarters of SDI Future Health Inc. to execute a search warrant that related to an ongoing investigation of the medical diagnostic test provider's practices. They were looking for evidence of Medicare and tax fraud. But their actions led to a 9th Circuit ruling that could make it easier for such agents to execute corporate searches unchallenged.

Present at the 2002 search were SDI President Todd Kaplan and Vice President Jack Brunk, who both were indicted on related charges in 2005, along with SDI Future Health as a corporate entity. Following the indictment, Kaplan, Brunk and SDI moved to suppress evidence from the 2002 search, and in 2007 the U.S. District Court in Nevada (SDI ran clinics in Nevada) agreed that the search warrant was overbroad.

Iffy Interpretation

The 9th Circuit weighed in on a similar standing issue in the 2005 case United States v. Gonzalez, in which it found that the directors of a business did have standing to challenge a wiretap in a company building. This would appear to apply to United States v. SDI Future Health, but Judge Diarmuid O'Scannlain wrote in her SDI opinion that that ruling was explicitly tied to the nature of the "small, family-run business housing only 25 employees at its peak." Specifically, she said that the defendants in Gonzalez exercised "managerial control over the day-to-day operations" and exercised "full access to the building." Kaplan and Brunk made no such claims.

Associate Editor

Melissa Maleske

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