IRS Seizes Medical Records Without Warrant

[White Haven]

A lawsuit filed in California accuses the Internal Revenue Service of illegal seizure of 60 million electronic health care records belonging to 10 million Americans.

The suit filed in the Superior Court of San Diego by Robert Barnes, a Malibu lawyer representing a corporate client named John Doe Co., charged that IRS agents raided the company on March 11, 2011, in a tax case and seized the medical records.

Barnes alleged in the suit -- which was filed March 11, 2013, and surfaced Wednesday -- that the “medical records contained intimate and private information of more than 10,000,000 Americans, information that by its nature includes information about treatment for any kind of medical concern, including psychological counseling, gynecological counseling, sexual or drug treatment, and a wide range of medical matters covering the most intimate and private of concerns.”

The suit said the 15 IRS agents involved in the raid did not have a search warrant or subpoena for the medical records which “may concern the intimate medical records of every state judge in California, every state court employee in California, leading and politically controversial members of the Screen Actors Guild and the Directors Guild, and prominent citizens in the world of entertainment, business and government, from all walks of life."

Barnes said the record seizure at the John Doe Company was so massive it affects "roughly one out of every twenty-five adult American citizens.”

This seizure, the suit charged, violated privacy rules enshrined in the 1996 Health Insurance Portability and Accountability Act, known as HIPAA.

Barnes said in his suit that IRS agents “stole” the medical records in an investigation into a "tax matter involving a former employee of the [unnamed] company.”

The suit makes it clear that the seized medical records were in an electronic format. "Despite knowing that these medical records were not within the scope of the warrant, defendants threatened to 'rip' the servers containing the medical data out of the building if IT [information technology] personnel would not voluntarily hand them over,” Barnes alleged.

Even though the agents knew that the records they were seizing were not included within the scope of the search warrant, they “searched and seized the records without making any attempt to segregate the files from those that could possibly be related to the search warrant. In fact, no effort was made at all to even try maintaining the illusion of legitimacy and legality,” Barnes said in his suit.

Barnes said executives of the company and IT personnel warned the IRS agents that the medical records were “privileged” under HIPAA. He said the IRS agents “ignored and discarded each of these warnings, ignored their own published and public-reliant rules and governing ethical requirements, and ignored the limitations of the court's search warrant authorization, seizing the records under threat of destroying company property."

Barnes said the IRS search warrant only “authorized the seizure of financial records related principally to a former employee of the company; it did not authorize any seizure of any health care or medical record of any persons, least of all third parties completely unrelated to the matter.”

Despite this stricture, Barnes charged the agents “seized personal mobile phones, including all the data and information on those phones, without any employing the proper and procedurally correct screening methods to protect private and privileged information, all of which was completely unapproved by the search warrant."

When the agents finished their raid, Barnes said they then used the John Doe Company facilities to relax, eat and watch sports on television. “Adding insult to injury, after unlawfully seizing the records and searching their intimate parts, defendants decided to use John Doe Company's media system to watch basketball, ordering pizza and Coca-Cola, to take in part of the NCAA tournament, illustrating their complete disregard of the court's order and the Plaintiffs' Fourth Amendment rights,” the suit said.

The suit said the IRS refused to disclose which agents participated in the raid, who saw the medical records, and where the records are today. It seeks $25,000 in damages "per violation per individual" whose records were compromised.

The suit also asked the court to order the IRS to return the records and expunge them from any government databases. The IRS, reeling this week after revelations that it had targeted Tea Party conservative organizations for scrutiny, has not yet replied to a request for a comment by Nextgov on the medical record seizure lawsuit.

This...really is a bad week for the IRS, if this is true. Unlike the IRS being uneven in its attempts to crucify a vast array of unjustly tax-exempt organizations, we've got some actual wrongdoing this time instead of just bad PR surrounding resource-allocation.

[aerius]

Looks like the IRS was getting some early practice in its new role of auditing & enforcing the Obamacare bill.

[Broomstick]

More like, for many years now any entity searching/auditing records for wrong-doing has simply confiscated hard drives and other media storage to sort out the data later. This has been a problem with law enforcement as well. Since the courts have largely allowed simply grabbing the media storage this sort of thing was inevitable sooner or later.

[Simon_Jester]

So now the problem becomes: how do you search computer records at all? Having a team go through every file on a modern computer could take weeks. If you do that in place you're creating a very complex and costly problem for the records-sorters. But if you try to confiscate the hardware, you're walking away with all sorts of other records, because it's not like you can take the owner's word for it when you ask "which computer contains the incriminating evidence?

[aerius]

My employer recently had 2 securities & financial regulation agencies going through our records in connection with a money laundering investigation. They more or less told us "these are records we need, this is what we're looking for, where do we find them? Co-operate or else" If we choose not to co-operate they'd then come back with court orders to make us do so, and if we don't we end up in a giant pile of shit. Now, if they tried to seize all our records including stuff that's completely unrelated to the investigation, we can tie it up in court and tell them to stuff it because it's then a violation of various laws & constitutional rights.

[Broomstick]

So now the problem becomes: how do you search computer records at all? Having a team go through every file on a modern computer could take weeks.

It's been a few years since I had to deal with the HIPAA rules, but my recollection is that the records that those rules apply to are supposed to be kept separate from any other records. In the old days that meant separate filing cabinets, often in completely separate rooms.

Really, if it's not required already, the computerized records should likewise be readily separable from any other records.

[Solauren]

There is the possibility that the Medical Records are considered business related and/or accounting/financial related.

For example, if you were going to audit them services listed in them.

i.e "Patient had a vasectomy, billed insurance company $3000"
You'd have to call the patient to verify that yes, they had a vasectomy.

Without knowing what the IRS was looking for, and what they'd done prior to that, there is no way to know if their seizure order covered it. I know that here in Canada, the CRA has the right to ask for medical documentation if it's related to the collection or administration of a tax debt. I don't think we've (yes, I work for the CRA), have ever sent a legal demand to a doctor for proof, but I wouldn't dismiss the possibility.

[TimothyC]

Without knowing what the IRS was looking for, and what they'd done prior to that, there is no way to know if their seizure order covered it.

Barnes said in his suit that IRS agents “stole” the medical records in an investigation into a "tax matter involving a former employee of the [unnamed] company.”

The systems for internal tax/employment records should be totally separate from any and all medical records. Presuming they were, there is no way that the IRS seizure order should cover any medical records.

[Alyeska]

The systems for internal tax/employment records should be totally separate from any and all medical records. Presuming they were, there is no way that the IRS seizure order should cover any medical records.

It could be sheer fucking laziness. A lot of law enforcement agencies or organizations with the power to seize just automatically take every single hard drive they can find, period.

[Kamakazie Sith]

So now the problem becomes: how do you search computer records at all? Having a team go through every file on a modern computer could take weeks. If you do that in place you're creating a very complex and costly problem for the records-sorters. But if you try to confiscate the hardware, you're walking away with all sorts of other records, because it's not like you can take the owner's word for it when you ask "which computer contains the incriminating evidence?

Exactly. In these type of investigations there should be some type of oversight which ensures that the non-relevant information is either returned or destroyed and that no copies are created of that information.

It could be sheer fucking laziness. A lot of law enforcement agencies or organizations with the power to seize just automatically take every single hard drive they can find, period.

It's very rare that the exact location of the evidence is known regardless of the type of investigation. This is why most search warrant contain phrases such as "search any place which could contain [insert evidence]" so if you're searching for a firearm you can search any place that could contain the firearm. In this case the evidence is data. It still could be laziness but we'd need to know more about the company and how many storage devices were located.

[Simon_Jester]

If the company did keep its medical records segregated from its own internal financial recordsk, and told the IRS so, that would be relevant- I'm not sure how to handle that, though, since it wouldn't be the first time someone lied about the location of something the cops were looking for, hoping they'd overlook it so it could be destroyed or altered later.