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The charges arose from an alleged scheme that defrauded the New York State


The defendant doctor was indicted for grand larceny in the second degree and conspiracy in the first degree. A man was also indicted and is a fugitive. The charges arose from an alleged scheme that defrauded the New York State medical aid system of over $500,000. The theory of the State’s case was that the defendant doctor helped cause the submission to the medical aid system of claims for payment that were based on false statements that sonograms had been taken and then read by the radiologists in connection with the diagnosis and treatment of thousands of medical aid system patients. In reliance on these false statements, the State paid the claims. The indictment asserted that the scheme to defraud was carried out by the defendant doctor and others who made multiple sonograms of the same person, attributed the names of real medical aid system patients to the sonograms of a person who was not a medical aid system patient, and used without permission physicians’ names as having referred patients for sonograms when no such referrals had been made.

On January 12, 1995, the State advised the Court that a key witness had changed his testimony and that the defendant’s participation in the criminal activities within the statute of limitations period could not be proven. The State requested that the case be dismissed and their motion was granted.

At the same proceeding, the prosecutor filed a motion asking that the records of the proceeding not be sealed. The basis of the prosecutor’s application was that the Civil Recovery Unit of the Office of the Special Prosecutor for the medical aid system fraud wants to use the records obtained by the State during its investigation and prosecution of the case to recover, through a civil action pending against the defendant, the money that the State allege was stolen by the defendant. The Court ordered that all sealing be stayed on January 12th and then extended the order on March 17, 1995.

The defendant had the opportunity to respond to the motion and on February 10, 1995, the Court heard argument on the State’s motion. During the February 10th argument, the defendant conceded that the Special Prosecutor for the medical aid system fraud may use all the records it obtained during its investigation of the codefendant to prosecute the codefendant and to prosecute any other person involved in the medical aid system fraud scheme who has not yet been indicted. Similarly, the State agreed to return the photographs and fingerprints of the defendant and to return the defendant’s handwriting exemplars. They also agreed that they would not release the transcript of the grand jury proceeding to the Civil Recovery Unit.

The records at issue do not come within the purview of Criminal Procedure Law (CPL) which authorizes the sealing of the record of an action against a defendant in instances in which the action was terminated favorably to the defendant. None of the documents that the prosecutor seeks to keep unsealed are official records and papers within the statute and for that reason they should not be sealed. Some of the documents of concern were obtained from at least seven banks. Other documents that the prosecutor seeks to keep unsealed are the medical aid system service provider records including sonograms, the remittance statements, sonogram request forms, tapes, reports of patients, and billing forms. These records were obtained from doctors, other service providers and companies that process the claims for payment and forward them the medical aid system.

None of these records are related to the defendant’s arrest or prosecution. They were not created as part of the investigation or for the litigation. Rather, they were created and kept as part of the business of banking, of providing services and seeking reimbursement under the medical aid system, and of providing health care to eligible patients. They are not records of the prosecutor, the police or the courts and are not official.

Many of these records in the possession of the prosecutor were obtained by subpoena from the doctors or banks or service providers. Indeed, the prosecutor testified that her office had issued 100 to 150 subpoenas in connection with the investigation of sonogram companies and the people associated with those companies. 6 If these records were considered official and consequently sealed under CPL, they would have to be made available to the defendant or his agent but could not be made available to any person or public or private agency except as set out in the CPL through, which concern limited law enforcement needs. If the defendant’s argument were to prevail, the banks, doctors, and other service providers, in other words third parties to the prosecution who gave up records in response to subpoenas, would be unable to regain their records. Instead, they would be given to the defendant who could then destroy them. The defendant’s interpretation of the statute would preclude the return of property or documents to any person or agency who in good faith responds to legal process to produce documents or property for a proceeding.

Aside from raising serious due process issues on behalf of the record or property owner, the reading of the statute jeopardizes the ability of the third party record or property owner to comply with legal requirements of business record keeping, to satisfy the demands of taxing officials, and, specifically in the medical aid system fraud cases, to have available records of treatment of or procedures done to patients.

Not only does the Court find that the records at issue are not subject to sealing, but it also finds that the interests of justice test of the CPL which justifies non-sealing.

The Court finds, based upon the prosecutor’s argument that the records obtained in the criminal investigation and prosecution are also necessary to prove in a civil case that the defendant wrongfully obtained funds from the New York’s medical aid system and that the State is entitled to reimbursement from the defendant. The failure of the criminal action against the defendant because of a time bar should not prevent reimbursement to New York if it can prove the fraud in a civil proceeding. The Legislature fully expected that one proceeding might continue although the other could not proceed; it enacted different statutes of limitations for criminal and civil actions. The criminal limitation period is five years and begins when the unlawful act is committed. The civil limitation period is six years and begins when the State discovers the facts to be relied upon.

The particular nature of the medical aid system makes the civil limitations period especially significant. It is difficult to root out fraudulent claims from the millions of claims made each year for the medical aid system payment. An extended period is often needed before regular audit procedures uncover a pattern of illegal behavior triggering a full scale investigation. The civil statute of limitations enables the State to seek to recover its losses even if the investigation is prolonged due to the complexities of the medical aid reimbursement system.

Further, the State has a very significant interest in pursuing the civil action in order to regain the money if it was wrongfully taken from the public coffers. This interest, while always important, has a particular poignancy at the present time because of the efforts to reduce the money available to the medical aid system and because of the impact of reductions upon the poor of the community. Money allocated must go to the care of those in the community, not into the pockets of those who defraud the system.

The prosecutor has asserted that the relevant bank records in the possession of the special prosecutor are the only remaining copies of those records because the original records have been destroyed. Her position is premised on the return to subpoenas issued in the civil case. The records are therefore essential to enable the State to meet its burden of proof in the civil case and should not be sealed for that reason. The same is true of the medical aid system records obtained by subpoena from third parties or found in the basement of a building. The sonograms attached to the billing forms cannot be duplicated. Further, the nature of the medical aid system billing is such that the sonogram and the form to which it is attached must be examined as a unit in order to understand the fraudulent nature of the claim.

Sound policy also supports the conclusion that these records should not be sealed. If the records were required to be sealed, the law would have the perverse effect of depriving the State of the opportunity to seek repayment in a civil suit because the prosecutor in this criminal case was efficient and thorough. Conversely, if the prosecutor had not carefully investigated the criminal case, sealing would not adversely affect the State. The quality of the criminal investigation should not determine whether the State can make itself whole.

In his argument, the defendant ignores the interests of justice clause in CPL and claims that the Court must determine the motion on the basis of CPL, which authorizes the unsealing of sealed records for limited purposes. He further argues that the limited purposes do not exist in this case.

The interests of justice test differs in CPL. After a sealing order issues, CPL authorizes a motion by any law enforcement agency but authorizes unsealing only if justice requires release of the documents to the very agency making the motion. To prevent sealing, under CPL the district attorney need show only that the interests of justice permit such relief without limitation as to the use of the file. This difference in language creates a substantial difference in the burden placed on the party making the request and demonstrates that the Legislature created two procedures with substantially different potential outcomes.

Further indication that two procedures are included in CPL is that the initial clause authorizes the prevention of the sealing only on notice to the defendant, but the unsealing can be requested in an ex parte application to the court. Accordingly, if this application had to be treated as an unsealing rather than a prevention of sealing, the Court could ignore all of the defendant’s arguments and not consider his arguments that the interests of justice should require sealing.

The difference in the interest of justice test in the two clauses also puts to rest another of the arguments made by the defense. The defense claimed that the Civil Division of the Attorney General’s office should make the application, but then argued that the Civil Division could not make such a motion because it was not a law enforcement agency. A motion to preclude sealing can be made under CPL for any reason in the interests of justice. Thus, the district attorney can make the request on behalf of any agency. Just as significant, the Attorney General of the State has authorized the Deputy Attorney General/Special Prosecutor for Nursing Homes Health and Social Services to take action by way of civil suits for the improper medical aid system payments. Accordingly, the Civil Recovery Unit could act under CPL if that procedure were relevant to the motion.

The motion to keep the records set out in the Appendix unsealed is granted.

Medical aid programs are designed to help those who could not afford health services in times of need. If some people would take advantage of it just to earn easy money, the needy would have nothing to run to. In Stephen Bilkis and Associates, the Bronx County Robbery Attorney can be at service to those who would legal advice. The Bronx County Grand Larceny Lawyer together with the Bronx County Criminal Attorney will make sure that those who take advantage of programs meant to help the poor will be punished at the utmost extent.

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