White Collar Crime News

How to deal with a demand for inspection August 3, 2009

As a white collar crime defense attorney in New Jersey, you will eventually encounter an administrative demand to inspect if you represent enough clients in the medical field. Since this isn’t exactly a criminal defense issue, most attorneys may be confused by this demand and how to handle it. Hopefully, this article can provide a little guidance.

 A demand for inspection, usually issued by the Department of Consumer Affairs is essentially a request to come into a place of business for the purposes of gathering evidence that the person has violated a regulation. While the agents for the Department cannot force their way in, the person must comply or face various sanctions. The key case that fully addresses this issue is Medical Soc’y v. Robins, 321 N.J. Super. 586 (App.Div. 1999).

 The first question that any attorney handling this issue may have is “is this even legal and if so, why?”. You have to understand that different rules apply to highly regulated industries. In Robins the Appellate Division found that there can be no doubt that the medical profession is highly regulated. This is because, licensure to practice medicine is required, it follows extensive education, and is subject to the rules and regulations of the Board of Medical Examiners. Thus, an administrative search as part of a comprehensive statutory scheme to assure compliance with specific regulations governing the profession is authorized by New York v. Burger, 482 U.S. 691 (1987). In Burger, the Court held that there is a significantly reduced expectation of privacy in a closely regulated business.

 The good news here is that the Department of Consumer Affairs cannot go on a witch hunt. In order for their demand for inspection to be valid there has to be sufficient evidence before the Board of a violation of a regulation or there has to be a factual basis in the public interest to inquire whether any such violation may exist. In addition, its findings have to be sufficiently made of record and the administrative demand must be sufficiently tailored in terms of time, place and scope.

 I know your primary concern is keeping your client out of prison, but you have to realize that this demand for inspection will probably lead to criminal charges at some point. Law enforcement should not be involved in a demand for inspection. Instead, the Appellate Division stated that the Division of Consumer Affairs or Attorney General enforcement officers should conduct the inspection. While the Appellate Division views this warrantless search to be conducted to assure compliance of laws and regulations and not to gather evidence of crime they also recognize that the discovery of evidence of crime during an otherwise valid administrative inspection need not necessarily be suppressed. This is incredibly important since the Attorney General will likely be the same entity that may eventually use evidence of criminal activity to prosecute your client.

 Maybe I’m cynical but I think you have to assume that criminal charges are coming and that the Attorney General’s office is using the administrative process to get evidence on your client. Even if you eventually have to give in to the demand, you at least have to try to bring out as much information in the process. This will allow you to prepare for trial before any criminal charges are even filed.

 In order to challenge the demand, you should first file with the administrative agency, in this case, the Board of Licensing and not with your local superior court. Your challenge will be primarily directed to making sure that they have at least some information of wrong doing on behalf of your client and that this is not a witch hunt. You also want to make sure that the inspection is limited as discussed above. Your challenge should also be made before the date for the demand for inspection. Of course, this is impossible where there is no advance notice. While I see no law on the issue, I cannot see how any sanctions would be lawful if your client was not given any opportunity to challenge it before the scheduled inspection. If you are not satisfied with the result, you have to file an appeal with the Appellate Division.

 As I indicated before, you must assume that your client will be facing criminal charges at some point. At the end of this process, you should have gathered enough information to figure out where this case is going. Thus, you must start to conduct your own investigation in order to nail down the statements of potential witnesses and to photocopy documents that may eventually be taken during a search warrant. Early preparation will always pay dividends later on in the case.