United States v. SDI Future Health, Inc.

SDI Future Health, Inc. (SDI) (defendant) conducted sleep studies. The Internal Revenue Service (IRS) began investigating SDI and two part-owners, Todd Kaplan and Jack Brunk, for Medicare fraud and tax fraud. An IRS special agent obtained a warrant to search SDI’s premises. The search warrant was executed, and subsequently SDI, Kaplan, and Brunk were indicted on various healthcare-fraud charges, and Kaplan and Brunk were indicted on tax-fraud charges. Kaplan and Brunk moved to suppress evidence obtained from the search warrant, arguing it was vague and overbroad in violation of the Fourth Amendment. The district court granted the motion to suppress. The court found Kaplan and Brunk had standing to challenge the search of SDI’s premises because they had significant ownership in SDI, exercised high levels of authority over SDI including setting security policies for records and computers, maintained offices at SDI’s headquarters, and were present during the execution of the warrant, and because SDI’s security and confidentiality practices regarding premises and records were expected for a healthcare business. Kaplan and Brunk conceded they did not have exclusive use of the entire SDI office. The district court agreed the warrant was overbroad. The government appealed, arguing Kaplan and Brunk had no standing to challenge the search and seizure of materials from SDI.