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The IRS and medical records, Part 2

May 28, 2013|By Jon Healey
  • The Internal Revenue Service is at the center of an inquiry over the granting of tax-exempt status to certain groups.
The Internal Revenue Service is at the center of an inquiry over the granting… (Susan Walsh / Associated…)

My last post, which attempted to rebut claims that Obamacare would have the Internal Revenue Service reviewing personal medical records, wasn't as reassuring to some readers as I'd hoped. In fact, several said the proof of the agency's interest in medical records was already out there, in the form of a class-action lawsuit filed this year that claims the IRS seized "at least 6 million identifiable medical records" belonging to about 10 million Americans.

Reader "GIJay" asked, "Healy[sic], haven't you been paying attention to the news? The IRS has already collected millions of medical records and are being sued for it. Your article is blatantly false."

I'd thought last week about including the lawsuit in my post. But after reading the Superior Court complaint filed in San Diego, as well as this account by Rebekah Kearn of Courthouse News Service, it struck me as more of a red herring than proof of any IRS plan to hoover up medical records.

The complaint alleges -- and remember, these are just accusations -- that unnamed IRS agents seized mobile phones and several servers from an unnamed company's corporate headquarters during a raid in March 2011. The agents had a warrant authorizing them to seize "financial records related principally to a former employee of the company" who was being investigated on a "tax matter." This former employee was not named, but I wouldn't be surprised if he was being defended by the attorney who filed the class action: Robert E. Barnes of Malibu, a tax specialist who has defended such high-profile accused tax evaders as Wesley Snipes and Joe Francis (the man behind the "Girls Gone Wild" videos).

Barnes has made a name for himself by aggressively challenging the conduct of the IRS and government agents. In this case, he's focusing on the fact that the servers seized by the agents were loaded with personal medical records (either 6 million or 60 million; the complaint uses both figures). The agents were warned about the presence of those records on the servers but insisted on taking them "without making any attempt to segregate the files from those that could possibly be related to the search warrant," the complaint alleges.

Although the complaint accuses the agents of searching the records, it doesn't say they actually read any of them. Instead, it paints the agents' actions as a worst-case scenario of abusive, intrusive government:

"After being put on notice of the illicit seizure, the IRS agents refused to return the records, continued to keep the records for the prying eyes of IRS peeping toms, and keep the records to this very day," the complaint alleges. "The records may concern the intimate medical records of every state judge in California, every state court employee in California, leading and politically controversial members of the Screen Actors Guild and the Directors Guild, and prominent citizens in the world of entertainment, business and government, from all walks of life."

I've sought to fill in some of the blanks with more details from Barnes, but I haven't heard back from him.

If the complaint accurately depicts what happened at the company, it's an unnerving portrayal of agents abusing power. But it still raises the question of why the IRS would want the medical records of a somewhat random assortment of individuals. The agency doesn't need them to have leverage over taxpayers, considering the sensitive financial data it amasses and the penalties it can impose. And if it wanted to check whether people were deducting nonexistent medical expenses, it could simply demand to see the bills for the expenses they were deducting.

Nevertheless, Barnes' lawsuit amplifies the scandal over the IRS' handling of many "tea party" groups' applications for tax-exempt status. It fits the narrative of an IRS (and, by extension, an executive branch) run amok.

I'm bothered by all the unknowns in the complaint. And where some readers see the lawsuit as yet more proof of the culture of intrusion and intimidation in Washington, I'm more inclined to see it as a tale of investigators taking shortcuts and arrogantly dismissing concerns about what they might do with the data they seized.

Again, when you see a lawsuit like this, you have to ask yourself: What's the point in the IRS collecting medical records? And if it really wanted them, would this be the way it would go about getting them? Really?

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Follow Jon Healey on Twitter @jcahealey

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