The U.S. Court of Appeals for the Third Circuit, in In the Matter of Grand Jury Impaneled on May 9, 2014, recently held that a clinical blood laboratory in New Jersey which was charged with bribery could not avoid a Federal Subpoena for its lab records by invoking the Fifth Amendment privilege against self-incrimination. This was true even though the director of the laboratory had fired all of his staff and was essentially conducting business as a sole proprietorship. Instead, the Court focused on the fact that the blood laboratory was an incorporated business entity known as a professional association. The Court noted that such an entity is a type of corporation which doctors are permitted to form under New Jersey law. The defendant in the case operated his practice through that corporate entity even after he had laid off his entire staff of six individuals.
The Court further ruled that the size of the corporation made no difference regarding whether or not the target of the subpoena could lawfully invoke his Fifth Amendment privilege in producing documents.
This case reaffirms the strict limitations that the Courts place on individuals who attempt to invoke their Fifth Amendment privilege in connection with a Federal Grand Jury subpoena for documents. The act of production privilege seems strictly limited to production of documents by individuals who are not in any way acting as the custodian of records for any type of business entity or association.
Professional clinical laboratories as well as physicians, physical therapists, and any other type of professional licensee need to think hard and clearly about how they wish to structure their business entity for purposes including the production of records.
The experienced federal criminal defense lawyers of Schwartz & Posnock appear in all Federal Courts of New Jersey, as well as the State and Municipal Criminal Courts in New Jersey, and have convenient locations in Monmouth County (Eatontown), Essex County (Livingston), Union County (Linden), and Middlesex County (East Brunswick). Call us at 732-544-1460 or email us at info@schwartzposnock.com to schedule an appointment. We look forward to obtaining a positive outcome in your case.