U.S. ex rel. Woodard v. Tynan

• Decision Date: 30 October 1985
• Docket Number: No. 83-1931,83-1931
• Citation: 776 F.2d 250
• Parties: UNITED STATES of America, ex rel. Duane WOODARD, Attorney General of the State of Colorado, and the State of Colorado, Plaintiffs-Appellants, v. Robert M. TYNAN; Arvada Nursing Home, Inc., a Colorado corporation; BTZ Incorporated, a Colorado corporation; Columbine Manor Incorporated, a Colorado corporation; Garden Manor Nursing Home, Inc., a Colorado corporation; Geri-Care, Inc., a Colorado corporation; Lake Manor, Inc., a Colorado corporation, and North Shore Manor, Inc., a Colorado corporation, Defendants-Appellees.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 250

776 F.2d 250

3 Fed.R.Serv.3d 105

UNITED STATES of America, ex rel. Duane WOODARD, Attorney General of the State of Colorado, and the State of Colorado, Plaintiffs-Appellants, v. Robert M. TYNAN; Arvada Nursing Home, Inc., a Colorado corporation; BTZ Incorporated, a Colorado corporation Columbine Manor Incorporated, a Colorado corporation Garden Manor Nursing Home, Inc., a Colorado corporation Geri-Care, Inc., a Colorado corporation; Lake Manor, Inc. a Colorado corporation, and North Shore Manor, Inc., a Colorado corporation, Defendants-Appellees.

No. 83-1931.

United States Court of Appeals, Tenth Circuit.

Oct. 30, 1985.

Gregory C. Smith, Deputy Atty. Gen. (Duane Woodard, Atty. Gen., Charles B. Howe, Deputy Atty. Gen., Richard H. Forman, Sol. Gen., and Valerie J. McNevin-Petersen, Asst. Atty. Gen., with him on brief), Denver, Colo., for plaintiffs-appellants.

Kenneth C. Groves (Philip A. Rouse, Jr., J. Lawrence Hamil and Joel D. Russman of Hamil P.C., with him on brief), Denver, Colo., for defendants-appellees.

Before HOLLOWAY, Chief Judge, and BARRETT, McKAY, LOGAN and SEYMOUR, Circuit Judges. ^*

Opinion on Rehearing En Banc

LOGAN, Circuit Judge.

We granted rehearing en banc because this case appeared to raise important questions under the Supremacy and Full Faith and Credit Clauses of the United States Constitution. It is established doctrine, however, that federal courts should avoid "unseemly conflict between two sovereignties, the unnecessary impairment of state functions, and the premature determination of constitutional questions." Martin v. Creasy, 360 U.S. 219, 224, 79 S.Ct. 1034, 1037, 3 L.Ed.2d 1186 (1959). Upon reflection, we believe the problems inherent in the instant case may be resolved by a course of action that does not require us to decide whether federal courts have the power to order a state court to release documents it has placed under seal. We therefore neither disavow nor affirm the prior panel opinion, 757 F.2d 1085, but choose to dispose of the case on the basis discussed herein.

This appeal arises out of a civil action brought by the State of Colorado, on behalf of itself and the United States, under the False Claims Act, 31 U.S.C. Secs. 3729-3731, seeking double damages and recovery of alleged overpayments under the Medicaid program financed by the United States and administered by the state. In the course of the proceedings it became apparent that, to make its case, plaintiffs required access to the ordinary business records of the defendant corporate entities.

In normal circumstances such business records would be discoverable under Fed.R.Civ.P. 34. The records here, however, had been seized from the defendants pursuant to a search warrant that a Colorado state court issued in connection with a criminal prosecution against defendant Robert Tynan and two other individuals in 1979. The defendants in the state court criminal proceeding moved to suppress the use of the records on constitutional grounds. A state district court granted the suppression motion and ordered the records sealed. The state court judge then sealed her order and forbade the attorneys from discussing any aspect of the proceedings. Nevertheless, there is some evidence before us that the state court judge sealed the records because she believed the search warrant used to seize these records was improperly based on grand jury testimony. The state court therefore apparently treated these records as "grand jury" records, cloaked with a veil of secrecy. R. I, 129.

Plaintiffs in the instant case have made eleven unsuccessful attempts to secure release of the records from the state court. They ultimately filed a motion with the federal district court to compel defendants to consent to the release of the records. The district court denied that motion. Defendants claim before us that they cannot provide those records for discovery because they too are bound by the state court order. But the Colorado Supreme Court has stated that "[d]ocuments produced for a grand jury remain the property of the person producing them." Granbery v. District Court, 187 Colo. 316, 531 P.2d 390, 394 (1975); see also United States v. Interstate Dress Carriers, Inc., 280 F.2d 52, 54 (2d Cir.1960). Normally the grand jury is required to return the records to their owner upon completion of its task. In re Doe, 537 F.Supp. 1038, 1041 (D.R.I.1982); see also In re Bendix Aviation Corp., 58 F.Supp. 953, 954 (D.N.Y.1945); 1 Wright, Federal Practice and Procedure Sec. 106, at 248-49 (2d ed. 1982 & Supp.1985). Because we do not have access to the state court's order or its reasoning, we do not know what its response would be if the defendants applied to secure return to themselves of those business records. ¹ Further, without knowledge of the state court's reasons, we do not understand why the United States and Colorado should be denied access to those documents necessary to make their civil case. Regardless, we do not see how an illegal seizure could give plaintiffs an advantage they did not already have. By participating in the Medicare and Medicaid programs defendants expressly...