IRS seizes 60M medical records for massive tax fraud investigation

New case details emerge
By Erin McCann
03:22 PM
Photo: David Boeke, 2010
The healthcare entity that slapped the Internal Revenue Service with a class action lawsuit back in March over allegedly seizing the private medical records of 10 million Americans has now been identified. The company's founder, the subject of extensive investigation by the IRS, was indicted last summer on 13 counts of tax evasion, conspiracy and filing fraudulent tax returns.
Chula Vista, Calif.-based Three Rivers Provider Network's founder Blaine Pollock transferred millions of dollars from his companies' accounts to various domestic and offshore bank accounts to use for personal benefit, according to court documents. The funds were reportedly used to purchase or help purchase, among other things, two yachts at $1.7 million and four homes across the U.S. and the Philippines for more than $9.6 million.
Moreover, Pollock "caused" some $3.2 million to be deposited in various Three Rivers Provider Network accounts, money maintained off the books, according to the indictment, which charges that Pollock also transferred upwards of $7.1 million to various offshore bank accounts and nearly $2 million to domestic accounts for his personal benefits. 
The Internal Revenue Service launched an investigation into Pollock after three individuals with access to Pollock's financial books took these records to IRS. The agency subsequently opened a criminal investigation in May 2009. 
Resultantly, IRS agents executed four search warrants in March 2011, one being at Three Rivers Provider Network. One of the servers present at the facility reportedly contained 60 million medical records of 10 million Americans, data protected under HIPAA. 
However, in July 2013, U.S. Attorney Laura E. Duffy and David D. Leshner asked the court for authorization to access the server provided a "filter" attorney view its contents to determine whether the data were within the scope of the warrant, which was ultimately granted. 
Yet, according to Pollock's attorney, Robert E. Barnes, these records were taken in violation of the warrant. 
"The lawlessness of the government agents in this case" wrote Barnes in a July 22 opposition statement to the government's request to view the computer server, "endangers the privacy of millions of Americans." These Americans include, among others, California state judges, NBA and Screen Actors Guild employees, Barnes alleged. 
Added Barnes, "A computer is conceptually indistinct from a filing cabinet; the right to seize financial records from the filing cabinet does not give the right to seize the entire filing cabinet, given that personal, privileged and confidential non-financial records will likely exist in the filing cabinet. Yet, that is precisely what the government did do, and seeks to do again, here."
The U.S. government, however, argued on the contrary. "Only evidence on the (server) that is within the scope of the search warrant will be provided to the prosecution team," wrote Duffy and Leshner in support of a motion to grant access to the computer. 
Pollock pleaded not guilty to all 13 counts against him July 2013 and subsequently filed an appeal of the court's decision in September. 
Outside of this case, the Department of Health and Human Services recently stated the Affordable Care Act does not grant the IRS open access to Americans' medical records with no cause. "The Affordable Care Act maintains strict privacy controls to safeguard personal information. The IRS will not have access to personal health information,” said HHS spokesperson Erin Shields Britt, to Kaiser Health News. 
This story will be updated.