The Akron Legal News

Specialty pharmacy that overbilled health insurers loses appeal

ANNIE YAMSON
Special to the Legal News
Published: November 20, 2014

In the 6th U. S. Circuit Court of Appeals, a woman who challenged the validity of police searches of her business and home recently lost her case.

The defendant, B. Elise Miller, owned and operated Three Rivers Infusion and Pharmacy Specialists, a specialty pharmacy that provided home health services, pharmaceutical supplies and drugs not typically carried by retail pharmacies.

In 2008, the FBI and the U.S. Department of Health and Human Services conducted a joint investigation into allegations that Three Rivers was overbilling various private and government health insurance providers for its services and drugs, particularly Synagis, a drug for infants with respiratory diseases.

Pursuant to the investigation, Special Agent Benjamin Unkefer authored an affidavit in support of a warrant for the search of Miller’s business premises.

The warrant was issued with an attachment that included a list of specific patient files that the authorities were looking for.

Agents conducted a search in August 2008 and seized several of the listed files but many of them were missing.

In December of that year, investigators made another attempt at recovering the files by serving Three Rivers with an administrative health care subpoena.

Three Rivers subsequently turned over 21 patient files but 90 files were still missing.

One year later, Miller’s housekeeper, Mary Richard, contacted FBI Special Agent Quentin Holmes with information about a garbage bag in Miller’s attic containing what appeared to be patient files.

Holmes asked Richard to look into the bag again and tell him some of the patient names on the file folders.

When it was discovered that the files in the attic matched those that were listed in the subpoena, agents applied for a warrant to search Miller’s residence and the files were subsequently seized.

Miller moved to suppress the evidence gathered from the two searches but her motion was denied by the U.S. District Court for the Northern District of Ohio following a hearing on the matter.

In her appeal to the 6th Circuit, Miller challenged the district court’s decision not to suppress the evidence, offering two arguments to support her claim.

First, Miller contended that when agents searched the two buildings that housed her business, they crossed into an adjoining building and therefore, exceeded the scope if their authorized search.

“The district court considered witness testimony and found it ‘far from certain’ that a third building was searched at all,” wrote Judge Eugene Siler for the court of appeals. “Even if a third building had been searched, the district court found that the agents acted in good faith because they had an objectively reasonable belief that they remained at all times in the locations delineated by the warrant.”

Miller also alleged that her housekeeper was acting as an agent of the government when she found the files in Miller’s attic which would render the discovery a unreasonable search in violation of the Fourth Amendment.

Miller claimed that, if the housekeeper’s statements were redacted from the warrant, there would be insufficient probable cause to search her house.

“We have no need to address this argument because Miller did not properly present it to the district court,” wrote Judge Siler. “Miller failed to raise this argument in her motions to suppress or their supporting memoranda. Miller waived closing arguments at the suppression hearing so the legal argument was never developed there.”

The appellate panel noted that the district court never addressed Miller’s “late-blooming” government agency argument and therefore deemed it waived.

Judges Alice Batchelder and Bernice Donald joined Judge Siler to affirm the judgment of the district court.

The case is cited United States v. B. Miller, Case No. 13-4236/4237.

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