O.C.-based Sovereign Health demands that FBI release document justifying raid on its treatment centers
The
Sovereign's filings, which include search warrants and subpoenas prepared by the government and marked "under seal," also indicate a criminal grand jury is gathering evidence that might be used against it.
Federal regulators wanted Sovereign to keep information about the raid away from the public, and at least one letter from the
The
Some operators have been criticized for, among other things, using charitable foundations to buy insurance for patients, or to pay premiums, copays or deductibles, then billing insurers millions.
The affidavit offering the justification for the raids, however, remains under seal by a court order. Sovereign questions the legality of the government's searches and seizures, and is demanding that the court produce the underlying affidavit.
"(T)he affidavit likely contains false and misleading information and omits other material information," Sovereign argues in a motion filed in federal court. Sovereign and its CEO need to sit it "in order to determine whether the searches were lawfully authorized, and to take appropriate action if they were not. The Fourth Amendment entitles them to do so."
Such silence is common during an ongoing investigation, where prosecutors might be probing other people or businesses not yet known to be under investigation and don't want to tip their hand, or to protect the identities of confidential informants. Legal scholars said requests such as Sovereign's also aren't unusual, as defense attorneys often want to find out what the government knows, or believes it knows, about their clients.
"They're looking for discovery," said
The raids have hurt business, Sovereign said, arguing that there's no justification for keeping the affidavit secret.
"The warrants have been executed, ensuring their disclosure will not frustrate their purpose. There is no genuine concern of evidence destruction or witness intimidation in what is, in essence, an insurance fraud investigation of a health care provider and executive with no criminal history, represented by experienced counsel," Sovereign's motion says.
A hearing is slated for
The raids came amid increased criticism of the drug treatment centers and sober living homes by local officials and the health insurance companies.
A recent
The paperwork filed by Sovereign repeats its assertion that the government is working on behalf of a large insurer, Health Net.
Last year, Sovereign and its affiliates sued Health Net, alleging the insurer failed to pay
In a countersuit filed in February, Health Net argued that Sovereign's companies are engaged in massive fraud that harms consumers and threatens the ongoing viability of health insurers. The scheme involved fraudulently obtaining insurance policies for people, then submitting thousands of false and fraudulent claims, Health Net alleged. Within the span of a single year, Sovereign's companies went from billing Health Net less than
Sovereign has denied Health Net's claims. Sovereign, in its motion seeking to unseal the affidavit supporting the search warrant, argues that its legal battle with the insurer is at the root of the
argued.
The company also argued in court filings that the
After the raids, the number of patients in Sovereign-related facilities fell from 280 to 165, said risk management specialist
"In some cases, Sovereign's operations have been disrupted or slowed as clinical staff treating patients have been without necessary files and documents and have had to secure replacements for their seized laptops and cell phones, or find ways to work without them," Sovereign's filings said.
"Given the extraordinary effect of a search warrant on a subject's privacy rights, the subject has a right to know the basis for such an invasion of privacy," it said. "If the warrants were unlawfully obtained, Sovereign will have a substantial claim for damages, as well as a right to demand immediate return of all items seized."
See Sovereign's filings here:
2017.08.15 Dec. of S. Baxter ISO Combined Motion to Unseal Search Warran...
Memorandum of Points & Authorities ISO Combined Motion to Unseal Warrant...
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