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United States of America v. Dan Desfosses

September 13, 2011


The opinion of the court was delivered by: Honorable Edward J. Lodge U. S. District Judge



Pending before the Court in the above-entitled matter are Defendant's Motion to Exclude Testimony of Government Agent, Motion to Dismiss Count One, Motion to Dismiss Counts 17-22, Motion to Dismiss Allegations Outside the Time Frame for Counts 2-22, and Motion in Limine. The Government has filed a response to the Motions and the Defendant has filed replies. Having fully reviewed the record herein, the Court finds that the facts and legal arguments are adequately presented in the briefs and record. Accordingly, in the interest of avoiding further delay, and because the Court conclusively finds that the decisional process would not be significantly aided by oral argument, the Motions shall be decided on the record before this Court without oral argument. This Order is intended to give the parties direction on the evidentiary issues that have been raised in the Motions as the Court will set forth its views on those matters. The Court's ruling stated herein is preliminary and may be subject to revision upon consideration of a particular evidentiary issue presented within the context of the trial.


The Superseding Indictment in this Case charges the Defendant, Dan DesFosses, with one count of Obstruction of a Federal Audit, fifteen counts of Execution of a Scheme to Defraud Heath Care Benefit Programs, to-wit Medicare, Blue Cross of Idaho, and Employers Insurance Company of Nevada ("EICN"), and six counts of Executing a Scheme to Defraud Blue Cross of Idaho. (Dkt. 20.) The charges relate to the billings done by Pocatello Physical Therapy Clinic, P.A. ("PPT") which is owned by Mr. DesFosses and another individual.

The charge in Count One relates to records sent by PPT to Western Integrity Center ("WIC"), who is responsible for detecting and preventing Medicare fraud and abuse. On March 6, 2006, WIC issued a notice to PPT requesting copies of certain patient files and related documentation for purpose of a billing audit. The Superseding Indictment alleges Mr. DesFosses "falsified some of the requested patient medical files by altering progress notes...for services previously billed to Medicare...." (Dkt. 20 at ¶ 5.) The files were then sent to WIC on March 31, 2006.

The charges in Counts 2 through 16 allege Mr. DesFosses billed Medicare, Blue Cross of Idaho, and EICN for a covered service when a non-covered service was actually provided. (Dkt. 20 at ¶ 21.) The Government alleges Mr. DesFosses billed for neuromuscular re-education (CPT code 97112) or myofascial release (CPT code 97140) when he actually had treated patients with a low-level cold laser device that was not a reimbursable treatment. (Dkt. 39 at 2.)

Counts 17 through 22 allege Mr. DesFosses billed Blue Cross of Idaho for services he performed on his wife using his partner's provider number. The provider agreement with Blue Cross of Idaho does not allow for reimbursement for any service provided to an individual related to the provider by blood or marriage and who ordinarily dwells in the provider's household. Finally, Counts One and 17 through 22 also charge Mr. DesFosses with aiding and abetting. (Dkt. 20.)


1. Motion to Exclude Testimony of Government Witness

Mr. DesFosses seeks to preclude the Government from offering the testimony of Kathy Millyard, PPT's office manager during the time of the investigation in this case. (Dkt. 31.) It appears Ms. Millyard cooperated with the Government's investigation of PPT in some fashion by obtaining audio and video recordings inside the PPT office and providing documents to the Government. The Motion argues because Ms. Millyard was an employee of PPT, the Government's use of her as its own agent was in breach of her fiduciary duties owed to PPT and in violation of Mr. DesFosses' Fourth Amendment rights. In response, the Government states it intends to introduce evidence obtained from Ms. Millyard including: video and audio tape recordings made on May 24, 2007; unaltered copies of PPT patient files requested for the WIC audits; copies of Medicare rules Ms. Millyard provided to Mr. DesFosses and his partner in the early spring of 2007; and a copy of a PPT billing sheet. (Dkt. 39.)

A. Fiduciary Duty

In support of his breach of fiduciary duty argument, Mr. DesFosses cites to Idaho civil cases discussing the fiduciary relationship that exists between an employer and employee. (Dkt. 31 at 5-7.) None of these cases, however, support the position that any evidence Ms. Millyard provided to the Government must be excluded in this criminal case. Whether or not Ms. Millyard breached a fiduciary duty does not serve as a basis for excluding evidence here and the Motion is denied as to this argument.

B. Fourth Amendment

"[T]he Fourth Amendment protects people, not places. What a person knowingly exposes to the public, even in his own home or office, is not a subject of Fourth Amendment protection.... But what he seeks to preserve as private, even in an area accessible to the public, may be constitutionally protected." Katz v. United States, 389 U.S. 347, 351 (1967). "The Fourth Amendment is a vital safeguard of the right of the citizen to be free from unreasonable governmental intrusions into any area in which he has a reasonable expectation of privacy." United States v. Monghur, 588 F.3d 975, 978 (9th Cir. 2009) (quoting Winston v. Lee, 470 U.S. 753, 767 (1985)). Where evidence is obtained in a fashion that ...

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