The Fifth Circuit created a new avenue to protect privileged materials in Harbor Healthcare Systems LP v. United States – Federal Rule of Civil Procedure 41(g).

Harbor Healthcare Systems (“Harbor Healthcare”) was the subject of two qui tam investigations.  Following responses to several Civil Investigative Demands, the Department of Justice executed a search warrant at Harbor Healthcare’s offices.  The search warrant was broad, and agents seized over 3 terabytes of electronic records in addition to paper documents.  Among the items seized was the computer of Harbor Healthcare’s compliance officer.  Harbor Healthcare advised the government that a wealth of privileged materials were contained on the compliance officer’s computer.  The government created a filter team to review the documents for privilege, but never alerted the magistrate that privileged materials were seized.

When the government failed to confer with Harbor Healthcare attorneys to discuss a taint team protocol, Harbor Healthcare filed a motion under Rule 41(g) seeking the return of the privileged materials. The government moved to dismiss the motion on the grounds that it was untimely.  While the parties litigated the Rule 41(g) motion and the government’s motion to dismiss, Harbor Healthcare learned that the government had already reviewed and transferred several privileged items to the civil and criminal investigative teams.  The district court ultimately granted the government’s motion to dismiss.

On appeal, the Fifth Circuit found that the government had failed to respect Harbor Healthcare’s privacy rights during the taint team’s search and review of the privileged materials.  Particularly, the Court found that the government showed a callous disregard for Harbor Healthcare’s rights by failing to “seek express prior authorization from the issuing magistrate judge for the seizure of attorney-client privileged materials,” despite knowing that the searches would result in the seizure of attorney-client privileged materials.  The Court further held that the government had disregarded Harbor Healthcare’s privacy rights by failing to return and/or destroy materials identified as privileged.  In addition, the Court found that the government’s retention of privileged documents for over 4 years caused an ongoing injury even though the government provided Harbor Healthcare with copies of the documents.  The Court explained that the government’s retention of the documents caused a continued intrusion of privacy, which could not be cured by providing copies.

The Harbor Healthcare opinion paves the way for new protocols for the government when seeking a search warrant from a magistrate.  In fact, the case provides that the government should inform the magistrate when it knows that the intended search will, or is likely to, result in the seizure of privileged materials.  Failure to seek such judicial preauthorization may result in a court ordering the return of records seized.

In light of this ruling, defense practitioners should consider whether it is appropriate to seek relief under Rule 41(g) when the search of a client’s premises results in the seizure of privileged materials.

The opinion can be found HERE.

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