McKirdy v. Superior Court

• Court: California Court of Appeals
• Writing for the Court: George Deukmejian, Atty. Gen., Margory Winston Parker, Asst. Atty. Gen., Medi-Cal Fraud Unit; SMITH; ROUSE, Acting P.J., and MILLER
• Citation: McKirdy v. Superior Court, 188 Cal.Rptr. 143, 138 Cal.App.3d 12 (Cal. App. 1982)
• Decision Date: 13 December 1982
• Parties: Archibald A. McKIRDY, M.D., Petitioner, v. SUPERIOR COURT FOR the CITY AND COUNTY OF SAN FRANCISCO, Respondent. PEOPLE of the State of California, Real Party in Interest. AO17222.

Page 143

188 Cal.Rptr. 143

138 Cal.App.3d 12

Archibald A. McKIRDY, M.D., Petitioner, v. SUPERIOR COURT FOR the CITY AND COUNTY OF SAN FRANCISCO, Respondent PEOPLE of the State of California, Real Party in Interest.

AO17222.

Court of Appeal, First District, Division 2, California.

Dec. 13, 1982.

Hearing Denied Feb. 16, 1983.

Kurt W. Melchior, Robert A. Spanner, Kenneth D. Noel, Severson, Werson, Berke & Melchior, San Francisco, for petitioner.

George Deukmejian, Atty. Gen., Margory Winston Parker, Asst. Atty. Gen., Medi-Cal Fraud Unit, J. Rodney Davis, Supervising Deputy Atty. Gen., Susan J. Orton, Deputy Atty. Gen., Sacramento, for respondent and real party in interest.

SMITH, Associate Justice.

The Attorney General's Medi-Cal Fraud Unit obtained from the San Francisco Municipal Court a search warrant for the office and home of Archibald A. McKirdy, M.D., a psychiatrist. Upon execution of the warrant at McKirdy's office Fraud Unit investigators seized 49 files labelled with the names of patients together with other materials. McKirdy promptly filed in the Municipal Court a "notice of petition to quash search warrant and for return of property." The Municipal Court granted McKirdy's petition. The Attorney General petitioned respondent Superior Court for a writ of mandate or prohibition. The Superior Court issued a peremptory writ of prohibition vacating the Municipal Court's order and thus, in practical effect, validating the search. McKirdy then petitioned this court for a writ of mandate or prohibition to vacate the Superior Court's order. We initially denied the petition. The Supreme Court granted a hearing and retransferred the cause to us with directions to issue the alternative writ. We have done so. Upon consideration of the written and oral arguments of the parties we conclude that the Superior Court's ruling was correct and that the Municipal Court should not have granted McKirdy's petition to quash the warrant. Accordingly, we deny the peremptory writ and discharge the alternative writ.

At relevant times, McKirdy was a licensed physician and an enrolled provider of publicly-funded health services under California's Medi-Cal statute (Welf. & Inst.Code, § 14000 et seq.). To obtain payment for services rendered to patients entitled to Medi-Cal benefits McKirdy was required to submit claims on specified forms accompanied by specified documentation, and itemizing services rendered. Itemization was to be accomplished by means of codes assigned to enumerated categories of psychotherapeutic treatment: 45-50 minute individual sessions, 25 minute individual sessions, 15 minute individual sessions, 90 minute group sessions, and an initial comprehensive history and examination. Per patient the highest payable Medi-Cal rate was for initial examination and the next highest was for 45-50 minute individual sessions. The rate payable for each individual patient in a group session was less than half the rate for a 45-50 minute individual session.

The search warrant was issued on the basis of a 30-page affidavit signed by Fraud Unit investigator Beall. The affidavit recites that to detect and prevent fraudulent claims the Medi-Cal program incorporated auditing procedures to identify providers who have billed Medi-Cal for more than 10 hours of health services in any single day. In 1981 the Fraud Unit concluded on the basis of these auditing procedures that in 1979 and 1980 McKirdy "had on numerous occasions billed the Medi-Cal Program for 10 to 15 45-50 minute patient sessions per day." According to the affidavit, follow-up investigation disclosed that McKirdy had received $76,392.31 in paid Medi-Cal claims during 1980 and that McKirdy had recently been subject to Board of Medical Quality Assurance proceedings in which he had been found to have prescribed drugs unnecessarily. The affidavit reflects that Beall identified the patients for whom McKirdy had submitted Medi-Cal claims and interviewed several of them. As described in the affidavit, the interviews supported inferences that McKirdy had on several occasions submitted claims for 45-50 minute sessions when the services rendered should instead have been itemized as shorter individual sessions or as group sessions compensable at lower rates. Beall concluded that McKirdy had billed Medi-Cal for services he had not performed. The search warrant was sought and issued to authorize seizure of additional evidence, including "[a]ll medical records that disclose the type and extent of services [McKirdy] billed the Medi-Cal Program for providing between January 15, 1979 and April 27, 1981," relevant to the possibility that McKirdy had defrauded Medi-Cal. A list of patients for whom McKirdy had submitted Medi-Cal claims was attached to the warrant and incorporated in the affidavit.

Unquestionably McKirdy was a psychotherapist within the meaning of subdivision (c) of Penal Code section 1524, which provides in pertinent part that "no search warrant shall issue for any documentary evidence in the possession or under the control of any person, who is ... a psychotherapist as defined in section 1010 of the Evidence Code ... and who is not reasonably suspected of engaging or having engaged in criminal activity related to the documentary evidence for which a warrant is requested" unless a special master is appointed to conduct the search and to take possession of any documents seized until a Superior Court hearing on search, seizure, and privilege issues can be held. ¹ No special master was appointed in this action. I. The special master procedure

In the Municipal Court McKirdy challenged the search on several grounds. The Municipal Court concluded that although the search warrant procedure had been proper in all other challenged respects, the warrant should be quashed for failure to comply with the special master procedure. The Superior Court vacated the Municipal Court's order on the sole stated ground that the special master procedure was inapplicable. Since McKirdy was a psychotherapist and the documents to be seized were in his possession, the narrow question initially presented to us is whether the exception for a document custodian reasonably suspected of relevant criminal activity could properly have been invoked in the circumstances of record. If (as McKirdy strenuously contends) the exception could not be invoked, then patently the special master procedure applied and should have been followed and we should issue the writ. We conclude, contrary to McKirdy's contentions, that the exception is valid and that McKirdy came within it.

McKirdy argues briefly that the Fraud Unit did not sufficiently show that its suspicion that McKirdy had engaged in relevant criminal activity was factually reasonable. Specifically, McKirdy asserts that Beall's interviews with less than all of the patients whose files were ultimately seized establishes neither that McKirdy might have been engaged in criminal activity related to the files of patients who had not been interviewed nor that the suspected criminal activity related to all of the documents in the files of patients who had been interviewed. We reject this argument. McKirdy himself has placed before us a copy of Beall's 76-page Report of Investigation which provides ample factual justification for the Fraud Unit's suspicion that McKirdy had been engaged in pervasive Medi-Cal fraud.

McKirdy's more thoroughly developed contention is that we must invalidate, or at least disregard, the statutory exception because it is unconstitutional. It is his position that the exception is in fatal conflict with his patients' inalienable constitutional right of privacy. (Cal. Const., art. I, § 1; cf. Griswold v. Connecticut (1965) 381 U.S. 479, 484, 85 S.Ct. 1678, 1681, 14 L.Ed.2d 510, and cognate cases under the federal constitution.)

We have recognized a nexus between the confidentiality of information derived from psychotherapist-patient communications and the constitutional right of privacy. (Smith v. Superior Court (1981) 118 Cal.App.3d 136, 140, 173 Cal.Rptr. 145; cf. also In re Lifschutz (1970) 2 Cal.3d 415, 431-432, 467 P.2d 557; Board of Medical Quality Assurance v. Gherardini (1979) 93 Cal.App.3d 669, 676-679, 156 Cal.Rptr. 55 (physician-patient privilege).) While the right of privacy is not absolute, it is well-established that the propriety of any governmental intrusion upon the right will depend upon a showing that the intrusion was justified by a state need which was compelling not only in the abstract but also when weighed against the privacy rights of the individual and that the scope of the intrusion was no greater than could be justified by the state's need in all the circumstances. (Cf. White v. Davis (1975) 13 Cal.3d 757, 775, 533 P.2d 222; Board of Trustees v. Superior Court (1981) 119 Cal.App.3d 516, 524-526, 174 Cal.Rptr. 160; Board of Medical Quality Assurance v. Gherardini, supra, at p. 680, 156 Cal.Rptr. 55.) McKirdy argues that the special master provisions of Penal Code section 1524 are a legislative response to this constitutional mandate, providing in circumstances to which section 1524 applies a procedure by which documents which may contain confidential communications will not be disclosed (to anyone other than the special master) until after a hearing at which interests can be weighed and alternatives explored. (Cf. Deukmejian v. Superior Court (1980) 103 Cal.App.3d 253, 258, 162 Cal.Rptr. 857.) It seems clear that the patient's constitutional right of privacy is wholly independent of any criminality which might be attributed to the psychotherapist; from this premise McKirdy argues that the purported statutory exception for instances in which the psychotherapist is suspected of criminality "would preclude the balancing of interests required under the California Constitution" and accordingly is inconsistent with the privacy clause. Citing Welton v. City of Los Angeles (1976) 18 Cal.3d 497, 506-507, ...