State v. DeSmidt

• Decision Date: 10 May 1990
• Docket Number: No. 88-1356-CR,88-1356-CR
• Citation: 454 N.W.2d 780,155 Wis.2d 119
• Parties: STATE of Wisconsin, Plaintiff-Appellant-Cross Respondent-Petitioner, v. Woodrow A. DeSMIDT, Defendant-Respondent-Cross Appellant.
• Court: Wisconsin Supreme Court

Page 780

454 N.W.2d 780

155 Wis.2d 119

STATE of Wisconsin, Plaintiff-Appellant-Cross Respondent-Petitioner, v. Woodrow A. DeSMIDT, Defendant-Respondent-Cross Appellant.

No. 88-1356-CR.

Supreme Court of Wisconsin.

Argued Jan. 26, 1990.

Decided May 10, 1990.

Barry M. Levenson, Asst. Atty. Gen., argued, with whom was Donald J. Hanaway, Atty. Gen., on brief, for plaintiff-appellant-cross respondent-petitioner.

Steven L. Miller, argued and Zuidmulder, Gazeley & Appel, S.C., Green Bay, for defendant-respondent-cross appellant.

DAY, Justice.

This is a review of a decision of the court of appeals, State v. DeSmidt, 151 Wis.2d 324, 444 N.W.2d 420 (Ct.App.1989), which affirmed the order of the circuit court for Brown county, the Honorable John P. Hoffmann, Judge, suppressing all evidence, except Medicaid provider handbooks, seized in a warrant-authorized search of

Dr. DeSmidt's dental offices. The first question is whether the search of Dr. DeSmidt's dental offices and seizure of his dental and business records violated either Art. I, Sec. 11 of the Wisconsin Constitution or the Fourth Amendment of the United States Constitution. If the search and seizure was constitutionally infirm, the second question is whether this court should adopt the "good faith" exception to the exclusionary rule established by the United States Supreme Court in United States v. Leon, 468 U.S. 897, 104 S.Ct. 3405, 82 L.Ed.2d 677 (1984). We conclude the search and seizure was constitutional and reverse. We therefore do not reach the Leon issue.

An investigation of Dr. DeSmidt's dental practice in Green Bay arose in late August of 1985 after a former employee of Dr. DeSmidt's, Ms. Harriet Berger, contacted the Wisconsin Department of Justice alleging that Dr. DeSmidt was submitting fraudulent Medicaid and insurance claim forms. The matter was investigated by Mr. John P. Isely, an investigator with the Medicaid Fraud Control Unit of the Wisconsin Department of Justice. Investigator Isely interviewed Ms. Berger on several occasions. On September 24, 1985, Investigator Isely filed a Complaint for Search Warrant, drafted by an Assistant Attorney General, and a supporting affidavit detailing the interviews with Ms. Berger and her allegations. The affidavit, which is appended in full to the court of appeals' decision, provided in pertinent part that Ms. Berger had been employed by Dr. DeSmidt from early June of 1985 through mid-August of that same year. Ms. Berger's duties included preparing third party claim forms, and she had access to all of Dr. DeSmidt's business records and files. Ms. Berger alleged that Dr. DeSmidt was engaged in a series of illegal activities. Ms. Berger alleged and gave specific examples of claim forms that had been filed seeking Medicaid assistance for services performed on one date when patient records and other documents disclosed that in fact the services had been performed on another date when the patient was ineligible to receive Medicaid assistance. Ms. Berger alleged that similar practices were being utilized in filing claim forms with private insurance companies and gave specific examples of such cases. Ms. Berger also stated that Dr. DeSmidt adjusted some bills to private insurance companies so as to receive his full customary fee for a particular service even though the policy provided coverage for only a percentage of the fee. Ms. Berger also alleged that Dr. DeSmidt routinely submitted Medicaid claim forms for periapical x-rays when in fact bite wing x-rays had been performed. Bite wing x-rays are only covered by Medicaid assistance if authorization is received prior to treatment. Ms. Berger stated she believed that Dr. DeSmidt's associate, Dr. McClain, was being trained to conduct her business in a similar illegal fashion. Ms. Berger alleged that Dr. McClain had stated to her that Medicaid eligibility dates presented no problem inasmuch as the service could be backdated on the claim forms to fall within the eligibility period. Ms. Berger stated that an examination of the business records of Dr. DeSmidt and Dr. McClain would disclose other instances in which claim forms containing false information were filed for Medicaid assistance or with private insurance companies. Ms. Berger stated that when she confronted

Dr. DeSmidt with the fact that he was engaging in activities which were illegal, he merely smiled and said that it was his office. Shortly after this confrontation,

Dr. DeSmidt terminated Ms. Berger's employment.

A search warrant was issued on September 25, 1985, by the circuit court for Brown county, the Honorable Alexander R. Grant, Judge. The warrant authorized the search for and seizure of the following items:

Patient charts and dental records, recording, among other things, services actually performed, dates of service; x-ray negatives in envelopes attached to the individual patient dental records; business records including but not limited to, appointment book or books, copies of patient statements, receipt book or books, fee schedule, ledgers, daily business summaries, remittance forms; Medicaid provider handbooks.

On September 25, 1985, Investigator Isely and three other Wisconsin Department of Justice agents entered Dr. DeSmidt's dental offices in Green Bay to execute the search warrant. Dr. DeSmidt was served with a copy of the search warrant, but not a copy of the affidavit. The search lasted approximately two hours and ten minutes. Investigator Isely directed the agents to seize all business records and all patient files dated from 1979. While the other agents were conducting the search, Investigator Isely questioned Dr. DeSmidt in his office. The questioning ceased after approximately one hour when Dr. DeSmidt asked to speak to an attorney. The agents seized twenty-two boxes of materials, including all "active patient" files, financial records, accounting ledgers, business and personal bank statements, appointment books, day sheets recording the daily work performed, and payroll and expense check stubs. Dr. DeSmidt was allowed to retain blank business checks and to photocopy the charts of those patients expected in the next day as well as several days of the appointment book. Investigator Isely and the agents transported the materials to their offices in Madison.

In an amended complaint filed on July 3, 1986, the State charged Dr. DeSmidt with nine counts of medical assistance fraud, in violation of sec. 49.49(1)(a), Stats. (1983-84), and four counts of insurance fraud, in violation of sec. 943.395, Stats. (1983-84). A preliminary examination was held and on January 23, 1987, the circuit court bound Dr. DeSmidt over for trial. On February 23, 1987, the State filed an information against Dr. DeSmidt charging eleven counts of medical assistance fraud, in violation of sec. 49.49(1)(a).

On March 31, 1987, Dr. DeSmidt moved to suppress all evidence seized during the search of his offices, alleging the search and seizure violated Art. I, Sec. 11 of the Wisconsin Constitution and the Fourth Amendment of the United States Constitution because the warrant was issued without probable cause, the warrant was not sufficiently particular in describing the items to be seized, and the execution of the search was overbroad. On March 1, 1988, the circuit court issued a memorandum decision holding that the warrant was not sufficiently particular, except for the description of Medicaid provider handbooks. The circuit court also found that there was not probable cause to support seizing all of Dr. DeSmidt's records. On May 31, 1988, the circuit court entered an order suppressing all evidence obtained in the search, with the exception of the Medicaid provider handbooks.

The State appealed the circuit court's order pursuant to sec. 974.05(1)(d)2, Stats. (1983-84). A majority of the court of appeals concluded that the warrant described the items to be seized, which amounted to all of Dr. DeSmidt's dental and business records, with sufficient particularity.

DeSmidt, 151 Wis.2d at 330, 444 N.W.2d 420. The majority held, however, that there was not probable cause to support seizing all of Dr. DeSmidt's records. Id. at 333, 444 N.W.2d 420. The dissent in the court of appeals, noting that the affidavit made reference to Ms. Berger's allegations that filing false claim forms was a "common practice" and "done routinely" at Dr.

DeSmidt's offices, disagreed that probable cause to support seizing all of Dr.

DeSmidt's records was lacking. Id. at 341-42, 444 N.W.2d 420 (Myse, J., dissenting). The dissent reasoned:

[Ms. Berger's] allegations clearly indicate that a pattern of fraudulent practice existed in the office at the time Berger started her employment. [Because she was not aware of the exact date this practice commenced], it was necessary for the state to obtain sufficient records to demonstrate the difference between the amounts billed depending on the method of payment and the way claims were processed in order to prove the alleged fraudulent practice. Because no accurate starting date of this practice was available to the state, they were unable to limit the seizure of records to a specific time period.

Id. at 342, 444 N.W.2d 420.

The State petitioned this court for review, which was granted. We conclude that because there was probable cause to believe Dr. DeSmidt's dental practice was "permeated with fraud," the search for and seizure of all of Dr. DeSmidt's dental and business records was reasonable and therefore constitutional, and accordingly we reverse.

As this court has previously recognized, Art. I, Sec. 11 of the Wisconsin Constitution and the Fourth Amendment of the United States Constitution are substantially the same. See State v. Anderson, 138 Wis.2d 451, 461, 406 N.W.2d 398 (1987); State v. Fry, 131 Wis.2d 153, 172, 388 N.W.2d 565 (1986), cert. denied, 479 U.S. 989, 107 S.Ct. 583, 93 L.Ed.2d 586 (1986). Art. I, Sec. 11 provides:

Searches and seizures ... The right of the people to...