Brillantes v. Superior Court

Page 770

58 Cal.Rptr.2d 770

51 Cal.App.4th 323, 96 Cal. Daily Op. Serv. 8661,

96 Daily Journal D.A.R. 14,264

Macario C. BRILLANTES, Petitioner, v. SUPERIOR COURT of Los Angeles County, Respondent The PEOPLE of the State of California, Real Party in Interest.

No. B100434.

Court of Appeal, Second District, Division 3, California.

Nov. 27, 1996.

Review Denied March 12, 1997.

Marks & Brooklier, Donald B. Marks and Raymond B. Kim, Los Angeles, for Petitioner.

No appearance for Respondent.

Daniel E. Lungren, Attorney General, George Williamson, Chief Assistant Attorney General, Thomas A. Temmerman, Senior Assistant Attorney General and Malcolm Venolia, Supervising Deputy Attorney General, for Real Party in Interest.

KITCHING, Associate Justice.

In this action for mandamus relief, we consider whether a physician suspected of Medi-Cal fraud should be afforded, as a matter of right under People v. Superior Court (Bauman & Rose) (1995) 37 Cal.App.4th 1757, 44 Cal.Rptr.2d 734 (hereafter Bauman & Rose ), a Penal Code section 1524, subdivision (c) hearing ¹ to determine the applicability of the physician-patient privilege to patient files seized from his office pursuant to a search warrant. ²

Bauman & Rose recognized the trial court's authority to hold an in camera hearing to determine the validity of the assertion of the attorney-client privilege by an attorney regarding documents seized from his office, even though the attorney was suspected of criminal activity. Bauman & Rose, however, did not determine the trial court was required to provide such an in camera hearing.

Under the facts of this case, we decline to apply Bauman & Rose to a physician suspected of Medi-Cal fraud and decide that the trial court was not required to provide him an in camera hearing and file review. We find that a trial court has the inherent authority to determine the applicability of the physician-patient privilege, and also has the discretion to fashion an appropriate remedy to protect the interests and confidentiality of the Medi-Cal patients.

The trial court did not abuse its discretion in denying the physician's motion for a sealing order. The petition is denied. The stay imposed by this court shall remain in effect until issuance of the remittitur.

FACTUAL AND PROCEDURAL BACKGROUND

Dr. Macario C. Brillantes (Brillantes), a physician enrolled as a provider under California's Medi-Cal statutes (Welf. & Inst.Code, §§ 14000, et seq.), is suspected of engaging "in a criminal scheme that defrauded the Medi-Cal program by receiving payment for false and fraudulent claims ... submitted to an agent of the state, Electronic Data Systems (EDS), the fiscal intermediary, in violation of Welfare & Institutions Code section 14107 (Submission of False Claims), Welfare & Institutions Code section 14107.2 (Kickbacks) and Penal Code section 487.1 (Grand Theft)." ³

Attorney General Investigators from the Bureau of Medi-Cal Fraud served a search warrant on Brillantes' residence and medical offices. The warrant was issued on the basis of a 60-page affidavit signed by Fraud Unit Investigator Harry Blair (Blair). According to the affidavit, informants told investigators Brillantes' clinic was established to bill Medi-Cal for services provided to "ghost patients" who never actually visited the clinic. The clinic would pay "drivers" a fee for each Medi-Cal card or beneficiary name and number they brought to the clinic. Unlicensed medical staff would prepare false medical histories for the "ghost patients" and the clinic would then submit false bills to the State of California for the alleged services. Seventeen investigative surveillances corroborated the informant's statements. The affidavit reflects that on each surveillance date, billings from Brillantes' clinic substantially exceeded the number of potential patients observed entering the clinic. Blair concluded Brillantes had billed Medi-Cal for medical services he did not perform and had received payments from the state.

During the search, the investigators seized, among other items, billing and payment records and Medi-Cal patient files from January 1, 1994 to the present. These documents reflected health-care services provided Medi-Cal beneficiaries, and were relevant to the possibility that Brillantes defrauded Medi-Cal. ⁴ No special master had been appointed or had participated in the search.

Brillantes filed an objection to the search and seizure and a motion for a sealing order. The premise of the physician's argument was that even though he was a suspect in a criminal investigation, Bauman & Rose gave him the right to an in camera review of patient files to determine the applicability of the physician-patient privilege. In opposition, the People argued the physician-patient privilege was inapplicable and an in camera hearing was not a matter of right. The People also argued that patient confidentiality in the seized files was best determined, not by assertion of the physician-patient privilege, but by consideration of the privacy interests of the Medi-Cal beneficiaries in their medical records.

After a series of hearings, the trial court denied Brillantes' motion and issued a protective order controlling dissemination of information from the seized documents, but sealed the patients' files for 30 days to allow Brilliantes to request mandamus relief in this court. To support its ruling, the trial court determined: (1) Bauman & Rose involved attorney-client privilege, which afforded greater protections than did the physician-patient privilege; (2) the physician-patient privilege had questionable applicability at this preliminary stage of the proceedings; and (3) while the patients' constitutional privacy rights protected their records, their participation in the Medi-Cal program circumscribed that privacy. ⁵

Brillantes filed a petition for writ of mandate and request for an extension of the trial court's stay order. This court issued an alternative writ and extended the trial court's stay order "until disposition of this petition or further order of this court." We then heard oral argument.

DISCUSSION

The Trial Court is Not Required to Provide a Section 1524(c) Hearing to a Physician Suspected of Medi-Cal Fraud.

The heart of Brillantes' argument is that even though he is suspected of criminal activity, Bauman & Rose provides him an absolute right to a hearing to assert the physician-patient privilege and an in camera review of the seized files. Brillantes' argument, however, erroneously assumes the law requires the trial court to ensure patient confidentiality by these procedures, even in cases where a physician is suspected of Medi-Cal fraud. Such a requirement would negate the court's discretion to determine the applicability of the privilege and its ability to fashion the appropriate remedy to best protect the interests of the patients.

For reasons explained below, we conclude that Bauman & Rose does not require the trial court to provide Brillantes a section 1524, subdivision (c) hearing. Instead, Bauman & Rose merely grants the trial court authority to conduct such a hearing when and if, under the circumstances of the case, the court determines that procedural safeguard to be the best means to control dissemination of privileged materials and to ensure patient confidentiality.

a. Brillantes Has No Statutory Right to a Hearing Under Section 1524.

In 1979, as the result of a search warrant executed on a law firm and concomitant concerns regarding violation of the attorney-client privilege, "attorneys sought legislation to protect the confidentiality of their files.... [p] In recognition of the valid and sometimes crucial role search warrants serve in the continuing struggle against sophisticated white-collar crime and the basic need to protect privileged material in the possession of attorneys, among others, and by compromising and balancing these strong competing societal interests, the Legislature filled the existing void with procedural protections. [p] The Legislature's vanguard efforts are reflected in significant amendments to the statutory scheme governing search warrants, found in Penal Code sections 1523 to 1542, and to the Evidence Code section dealing with privileges. [p] Effective January 1, 1980, and as amended, Penal Code section 1524 [provided for] specified procedures to be followed in the issuance and execution of warrants relating to the offices and files of lawyers and others who claim statutory privileges." (Deukmejian v. Superior Court (1980) 103 Cal.App.3d 253, 258, 162 Cal.Rptr. 857; see also People v. Blasquez (1985) 165 Cal.App.3d 408, 412, 211 Cal.Rptr. 335.) ⁶

Section 1524, subdivision (c) specifically provides if the attorney, physician, psychiatrist, or clergyman "is reasonably suspected of engaging or having engaged in criminal activity related to the documentary evidence for which a warrant is requested, the protection of having the search conducted by a special master and the holding of a hearing in superior court is not provided." (People v. Blasquez, supra, 165 Cal.App.3d at p. 410, 211 Cal.Rptr. 335.) The legislative intent, shown by the language of the statute, was to limit the special master and hearing protections only to those members of the enumerated professions not suspected of criminal activity. These mechanisms would "protect the privacy of privileged communications and of other records of persons not suspected of criminal activities." (Sen. Com. on Judiciary, Assem. Bill No. 1609 (1979-1980 Reg. Sess.) as amended August 20, p. 2.)

In our case, "the seized records were under the control of [Brillantes] who was reasonably suspected of having engaged in criminal activity related to the documentary evidence for which the warrant was requested." (People v. Blasquez, supra, 165 Cal.App.3d at p. 410, 211 Cal.Rptr. 335.) Under the plain language of 1524, subdivision (c), Brillantes does not have a statutory right to either a...