including grand jury transcripts. Accordingly, it was not an abuse of discretion to proceed ex parte.
See in re United States, 398 F.3d at 619 (finding that “it is understandable” that the Chief Judge
would grant ex parte application when the grand jury materials are already in the possession of its
adversary).
Orders Made in Connection With a Judicial Proceeding

Lastly, Rogan argues that the 1999 and 2000 orders were not issued preliminary to, or in
connection with, a judicial proceeding, as required by Federal Rule of Criminal Procedure
6(eX(3)(EXi). Rogan contends that the Government could not use the grand jury materials only in
investigating whether to bring civil claims.

Federal Rute of Criminal Procedure 6(e)(3)(E)(i) —

contemplates only uses related fairly directly to some identifiable litigation, pending

or anticipated. Thus, it is not enough to show that some litigation may emerge from

the matter in which the material is to be used, or even that litigation is factually likely

to emerge. The focus is on the actual use to be made of the material. If the primary

purpose of the disclosure is not to assist in preparation or conduct of a judicial

proceeding, disclosure under [(E)(i)] is not permitted.
In re Baggot, 463 U.S. 476, 480 (1983). As discussed above, the Government sought the grand jury
material to determine whether to bring civil claims against Rogan or others, Accordingly, the orders

were made in connection with a judicial proceeding. See John Doe, 481 U.S. at 105; Jn re Baggot,

463 U.S. at 480.

14



connection with a judicial proceeding, as required by Federal Rule of Criminal Procedure
6(e)(3)(E)G). The Government challenges these assertions and also argues that the 1999 and 2000
disclosure orders do not contain grand jury materials.

Under Federal Rule of Criminal Procedure 6(e)(2\(B), “a matter occurring before the grand
jury” may not be disclosed, except for the limited provisions of Rule 6(e) (3). See also United States
v. Sells Eng’g, Inc, 463 U.S. 418, 424-25 (1983) (Sells). Federal Ru le of Criminal Procedure
6(e)(3)(E)G) provides that “[t]he court may authorize disclosure — at a time, in a manner, and subject
to any other conditions that it directs — ofa grand jury matter: (i) preliminary to or in connection with
a judicial proceeding ....”

It must first be determined: (1) whether the orders disclosed matters that occurred before the
grand jury; if not, then there was no abuse of discretion in entering the orders, In re Special March
1981 Grand Jury, 753 F.2d $75, 378 (7th Cir. 1985) {Almond Pharmacy), and, if so, (2) whether the
Government made showing of a particularized need for the disclosure of. grand jury materials, Sells,
463 U.S. at 443. Ifthe orders are found to have properly disclosed matters before the grand jury, it
must be determined if the ex parte nature of the orders constituted an abuse of discretion — whether
notice should have been provided. Zn re United States, 398 F.3d at 619.

Matters Occurring Before a Grand Jury

“Ifa third party document has intrinsic value and a usefulness for other le gitimate purposes
and would not breach grand jury secrecy, it may be released for those purposes outside of Rule 6(e).”
in re Special February, 1975 Grand Jury, 662 F.2d 1232, 1244 (7th Cir. 1981); see also Almond
Pharmacy, 753 F.2d at 578. However, if a document production would reveal the pattern of the

grand jury’s investigation, then the production would violate Rule 6(e). In re Sulfuric Acid Antitrust



strong public interest of investigating possible frauds, the involvement of the Government, and the
lack of grand jury transcript disclosure as to the 1999 and 2000 orders and accessability of the
material requested to Rogan as to the 2003 order, the availability of other discovery methods does
not outweigh disclosure. See John Doe, 481 U.S. at 116-17.

Furthermore, the cases cited by Rogan on this issue are distinguishable. In Operation
Gateway, Government civil attorneys were already in possession of materials for several years when
it sought the same materials from a grand jury for convenience and to avoid delay; therefore, the civil
attorneys did not have a particularized need to obtain the same information from prosecutors.
Operation Gateway, 877 F.2d at 634. In both Hernly and Lucas, the party who sought disclosure
of the grand jury material was not the Goverment. Hernly, 832 F.2d at 985; Lucas, 725 F.2d at
1096-97; cf. John Doe, 481 U.S. at 112 (“the concerns that underlie the policy of grand jury secrecy
are implicated to a much lesser extent when the disclosure merely involves Government attorneys”).

Based on the above, the disclosure of the grand jury materials in the 1999, 2000, and 2003
orders was in the public interest and necessary to prevent an injustice in a separate proceeding.
Need for Disclosure is Greater Than the Need for Continued Secrecy

The policies underlying grand jury secrecy include: (1) prevention of escape of those whose
indictment may be contemplated; (2) to insure the grand jury with the utmost freedom in its
deliberations; (3) prevention of subordination of perjury or witness tampering of those that may
appear before the grand jury and later appear at the trial of those indicted; (4) encouragement of free
and untrammeled disclosures by individuals who have information about the commission of crimes;
and (5) the protection of innocent individuals who are exonerated from disclosure of the fact that

they were under investigation and from the expense of standing trial where there was no probability

10



than the need for continued secrecy, and that their request is
structured to cover only material so needed.

Douglas Oil Co. v. Petrol Stops Northwest, 441 U.S. 211, 222 (1979) (footnote omitted). This
standard, though, is flexible, and

accommodates any relevant considerations, peculiar to Government movants, that

weigh for or against disclosure in a given case. For example, a district court might

reasonably consider that disclosure to Justice Department attorneys poses less risk

of further leakage or improper use than would disclosure to private pasties or the

general public... . And under the particularized need standard, the district court may

weigh any public interest, ifany, served by disclosure to a governmental body. On

the other hand, for example, in weighing the need for disclosure, the court could take

into account any alternative discovery tools available by statute or regulation to the

agency seeking disclosure.
Sells, 463 U.S. at 445 (internal quotations and citations omitted); see also See United States v. John
Doe, fnc., 481 U.S. 102, 105-06, 112 (1987) (John Doe) (“[w]e made it clear that the concerns that
underline the policy of grand jury secrecy are implicated to a much lesser extent when the disclosure
merely involves Government attomeys.”).
Avoidance of a Possible Injustice in Another Judicial Proceeding

The petitions for the 1999 and 2000 orders stated that disclosure was necessary to avoid
injustice in another proceeding, i.e, to enable the Government to evaluate whether or not to bring
civil actions and to settle claims with possible defendants without duplicating the extensive prior
investigation and incurring additional expenditures of time and money by the Government, the State
of Illinois, the parties and witnesses. In particular, the Government noted that the investigators’

work product was crucial in this regard, especially in light of the heightened pleading standard of

Federal Rule of Civil Procedure 9(b).



Litig., No. 1536, 2004 WL 769376, at *3 (N.D. IIL. Apr. 9, 2004) (in re Sulfuric Acid). Therefore,
“{a] general request for all documents collected or received in connection with the

investigation . .. would be in effect a disclosure of the grand jury proceedings; the documents are
significant because they were before the grand jury.” United States v. Stanford, 589 F.2d 285, 291
n.6 (7th Cir. 1978); accord In re Sulfuric Acid, 2004 WL 769376, at * 4-5. Production of grand jury
transcripts is a disclosure of matters occurring before the grand jury. See, e.g., In re Sulfuric Acid,
2004 WL 769376, at *3.

‘As discussed above, the 1999 and 2000 orders disclosed documents obtained by the grand
jury relating to the investigation of Edgewater, as well as the reports, analyses, summaries,
workpapers, records, and witness interview notes of all the federal investigators and attorneys
relating to the investigation of Edgewater. While no grand jury transcripts were disclosed, the
material produced could possibly reveal the pattern of the grand jury’s investigation, The
Government does not dispute that the 2003 order disclosed matters before the grand jury because
grand jury transcripts were produced. Therefore, the 1999, 2000, and 2003 orders disclosed matters
that occurred before the grand jury.

Showing of a Particularized Need

Before any disclosure is made pursuant to Rule 6(¢), the moving party is required to
demonstrate a “strong showing of particularized need” for the grand jury materials. See Sells,
463 U.S. at 443, The particularized need standard consists of three factors that must be examined
by the court:

Parties seeking grand jury transcripts under Rule 6(e) must show that

the material they seek is needed to avoid a possible injustice in
another judicial proceeding, that the need for disclosure is greater



of the material requested were documents prepared for purposes other than the grand jury, the
Government here was the requesting party, no disclosures were to be made outside the judicial
proceedings, and the 1999 and 2000 orders did not permit disclosure of grand jury transcripts. Also,
it is undisputed the grand jury was dormant at the time of the entry of the 2003 order, which did
authorize disclosure of grand jury transcripts. Furthermore, at the time of the 2003 order, Rogan had
access to the grand jury materials, including the grand jury transcripts.

The effect on the integrity of the grand jury’s criminal investigatory powers — grand jury
abuse — is also minimal. The “concern [of grand jury abuse] is far less worrisome when the
attorneys seeking disclosure must go before a court. ..”, John Doe, 481 US. at 114, as in the instant
case. Furthermore, “the fear of abuse is minimal when the civil use contemplated is simply
consultation with various Government lawyers about the prudence of proceeding with a civil trial.”
John Doe, 481 U.S. at 115.

Furthermore, as to the 1999 and 2000 orders, the threat of the use of grand jury materials to
subvert the normal limitations placed on the Government’s discovery and investigatory powers “is
not seriously implicated when the Government simply wishes to use the material for consultation.”
John Doe, 481 U.S. at 115. Also, Peter Rogan already had access to the materials sought.

Regarding the alternative discovery methods available, it is possible the Government could
have obtained the requested grand jury material through a separate investigation; however, “[e]ven
if we assume that all of the relevant material could have been obtained through civil discovery tools
available to the Government, our precedents do not establish a per se rule against disclosure.”

John Doe, 481 US. at 116. Considering the investigatory nature of the requested disclosure, the



UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION
UNITED STATES GF AMERICA, }
Plaintiff, ‘
¥. } No: 02 C 3310
PETER ROGAN, Judge John W. Darrah
Defendant. ;

MEMORANDUM OPINION AND ORDER

Plaintiff, the United States of America, filed suit against the Defendant, Peter Rogan, for
allegedly falsifying annual reports submitted to Medicare. The suit was filed in 2002, following a
criminal investigation of Rogan and others employed at Edgewater Hospital and Medical Center.
The Government sought three ex parte orders, seeking disclosure of certain grand jury materials,
pursuant to Federal Rule of Criminal Procedure 6(e). These orders were granted, ex parte, on
November 3, 1999; June 26, 2000; and March 5, 2003. Presently before the Court is Rogan’s motion
to vacate these ex parte orders.!

LEGAL STANDARD

In determining whether a grand jury disclosure order was properly entered, an abuse of

discretion standard is applied. In re Grand Jury Proceedings, 942 F.2d 1195, 1198 (7th Cir. 1991)

(Blair); see also In re United States, 398 F.3d 615, 619 (7th Cir. 2005).

' The parties agree, and the Court has determined, that this Court is the proper forum to
hear this motion.



was made so that the Government would have access to the same materials that Rogan was able to
obtain. Moreover, that order restricted disclosure beyond the judicial proceedings.
improperly Ceding Judicial Authority

Rogan also argues that the 2000 and 2003 disclosures improperly ceded judicial authority to
determine particularized need to the Government, as the order permitted disclosures on a continuing
basis. This argument implicates the issue of preserving the integrity of the grand jury’s criminal
investigatory powers. In 2000, the grand jury was still on-going; allowing the Government to access
materials from the grand jury’s investigation could result in the type of “unfettered” disclosure that
is not permitted. See John Doe, 481 U.S. at 114. There has been no showing, however, that the
Government abused the grand jury process in this regard in conducting the civil investigation.
John Doe, 481 U.S. at 115. Moreover, as in this case, “the fear of abuse is minimal when the civil
use contemplated is simply consultation with various Government lawyers about the prudence of
proceeding with a civil action.” Join Doe, 481 U.S. at 115.

At the time of the 2003 disclosure, ne witness was brought before the grand jury regarding
Rogan in six months, and the grand jury investigation was dormant as to Rogan, Therefore,
disclosure was practically restricted.

Ex Parte Application

Under Federal Rule of Criminal Procedure 6(e)(3}{F), the Government may file an ex parte
application for the disclosure of grand jury materials. After the United States files an application for
the disclosure of grand jury materials ex parte, the court must determine whether to order an
interested private party to be notified. See in re United States, 398 F.3d at 619. The 1999 and 2000

applications stated that the Government sought materials for potential claims against Edgewater

12



of guilt. See United States v. Proctor & Gamble Co., 356 U.S. 677, 681 n. 6 (1958) (quoting United
v. Rose, 215 F.2d 617, 628-29 (3rd Cir. 1954).

Here, the Government sought grand jury materials, excluding transcripts, in the 1999 and
2000 petitions; and when the Government did seek grand jury transcripts in 2003, much of the
materials were already in Rogan’s possession. Furthermore, the Government was the party seeking
the materials; and it indicated it would not make disclosure to the public except through judicial
proceedings. See John Doe, 481 U.S. at 115-16. Therefore, the threat to the grand jury secrecy was
minimal; and, as discussed above, the Government established a need for the grand jury materials
to avoid an injustice in another proceeding that was in the public interest. See John Doe, 481 U.S.
at 116.

Request is Structured to Cover Only Material so Needed

The 1999 and 2000 petitions stated that the requests were structured to cover only material
needed because the Government was only seeking subpoenaed decuments, business records and
analyses and summaries thereof, investigation reports, and routine summaries of witness interviews
conducted outside the grand jury. Rogan argues this production is overly broad by permitting the
disclosure of grand jury materials “en masse.” Rogan once again cites Lucas, which held that the
disclosure of all transcripts and materials would be overly broad. See Lucas, 725 F.2d at 1108.
However, here, the Government did not request any transcripts in their 1999 and 2000 petitions.

The 2003 petition stated that the request was structured to cover only material needed by the
Government to evaluate and prosecute the civil action, including a decision as to whether to settle

civil claims. While the 2003 petition sought disclosure of grand jury transcripts, this request



Rogan - citing in Re Grand Jury Proceedings, 877 F.2d 632, 634 (7th Cir. 1989) (Operation
Gateway), Hernty v. United States, 832 F.3d 980, 985 (7th Cir, 1987) (Herniy); and Lucas v. Turner,
725 F.2d 1095, 1103 (7th Cir. 1984) (Lucas}— argues that this showing only demonstrates that grand
jury disclosure would be faster and cheaper and that these considerations are not sufficient to justify
a particularized need. A similar argument was addressed in John Doe, where the Court held that
disclosure of certain grand jury materials to the Government is proper to prevent injustice from
occurring in another proceeding when disclosure would be in favor of the public interest.

The public purposes served by this disclosure — efficient, effective, and evenhanded

enforcement of federal statutes — are certainly valid and were not questioned by the

Court of Appeals. Particularly because the contemplated use of the material was to

make a decision on whether to proceed with a civil action, the disclosure here could

have had the effect of saving the Government, the potential defendants, and witnesses

the pains of costly and time-consuming depositions and interrogatories which might

have later turned out to be wasted if the Government decided not to file a civil action

after all.

John Doe, 481 U.S. at 113. “The question that must be asked is whether the public benefits of the
disclosure . . . outweigh the dangers created by the limited disclosure requested.” John Doe, 481 U.S.
at 113. Accordingly, it is proper to balance the public interest in favor of disclosure against both the
alternative discovery methods and the dangers created by the disclosure, specifically: (1) the increase
in the number of persons having access to grand jury materials and the possible chilling effect on
grand jury witnesses, (2) the integrity of the grand jury’s criminal investigatory powers, and (3) the
use of grand jury materials to subvert the normal limitations placed on the Government’s discovery

and investigatory powers. John Doe, 481 U.S. at 113-15.

As to all three petitions, any disclosure would increase the number of persons having access

to the grand jury materials but would have no effect on the cooperation of future witnesses. Much



On March 26, 2003, the Government filed an Agreed Motion for an Entry of Protective Order
in this case, United States vy, Rogan, 02 C 3310. That motion stated:

1. The parties are engaged in discovery in this cause, including the exchange of

written materials. Most, if not all, of the materials produced by the United States

were obtained through grand jury subpoenas filed in the companion criminal

case....

2. In order to allow the United States to produce these documents to defendant,

Chief Judge Kocoras entered a disclosure order pursuant to Federal Rule of Criminal

Procedure (6)(e) on March 5, 2003. The proposed agreed protective order conforms

to the Rule 6(e) order and will allow the use of these materials, including grand jury

transcripts, in this civil proceeding.
This motion was granted. The agreed order limited disclosure to “[a]ll materials produced by the
United States to defendant Peter Rogan in preparation or in conjunction with any stage of the
proceedings in this case, including but not limited to grand jury transcripts, agency reports, witness
statements, memoranda of interviews, medical records, and any other documents, excluding
materials that become part of the public record in this case.”

No grand jury witness testified about Rogan since August 2002; and the grand jury was
dormant as to Rogan since January 2003 and was formally terminated as to Rogan in May 2004.

ANALYSIS

Rogan argues that the grand jury disclosure orders were improperly entered because: (1) the
orders were entered ex parte, (2) the Government failed to make the required showing of
particularized need for the disclosure of grand jury materials; (3) the 2000 and 2003 orders

improperly ceded to the Government judicial authority to determine particularized need by

permitting disclosures on a continuing basis; and (4) the 1999 and 2000 orders were not made in



CONCLUSION

For the foregoing reasons, Rogan’s motion to vacate the ex parte orders is denied.

Date: Alun 2805

Upited States District Court

15



In March 2003, pursuant to Federal Rule of Criminal Procedure 6(e)(3)(C)Ci) and (DY, the
Government obtained a third ex parte order for the disclosure of grand jury material for use in this
civil case, which permitted continuing disclosure to Assistant United States Attorneys in the civil
division, representatives of the IDPA, and representatives of the State of Illinois of the following:

(1) All documents subpoenaed or otherwise obtained by this grand jury and previous
grand juries relating to the investigation of Peter Rogan, and the Northside Operating
Co, d/b/a! Edgewater Hospital and Medical Center (“Edgewater”), as well as all
agents, representatives employees [sic], staff, and individuals who had admitting
privileges at Edgewater (hereinafter collectively referred to as “Edgewater Hospital”)
(which was controlled and operated by Peter Rogan), Doctors Hospital of Hyde Park
(“Doctors Hospital”), and the Desnick Eye Center, for submitting false and
fraudulent claims to Medicare, Medicaid and other health care benefit programs, and
for paying kickbacks for referrals of Medicare and Medicaid patients and other health
care benefit program patients; and

(2) The work product, including reports, analyses, summaries, workpapers and
records and witness interview notes, of the investigators, Assistant United States
Attorneys, and FBI agents, Postal Inspectors, HHS agents, and other federal agents
who have participated and/or are participating in the criminal investigation. The
United States is seeking disclosure of grand jury transcripts. (Emphasis added).

In its memorandum, the Government noted that:

Peter Rogan has already had access to grand jury materials, including grand jury
transcripts, which were produced as part of the criminal discovery process .... The
government has produced approximately 70 boxes of documents in that case, which
included numerous grand jury transcripts of individuals who worked at Edgewater
Hospital, Doctors Hospital, and the Desnick Eye Center, The attorneys representing
the United States in the pending civil case have not had access to any grand jury
transcripts, and therefore have fess information than Peter Rogan concerning prior
statements by potential witnesses.

2 Federal Rule of Criminal Procedure 6(e) was amended in 2002. Rule 6(e)(3)(C)(i) is
now contained in Rule 6(e)(3)(E){i) with no changes. Rule 6(e)(3}(D) is now contained in Rule
6{e)3KF).


BACKGROUND

A criminal investigation and grand jury proceeding were conducted involving health care
fraud at Edgewater Hospital and Medical Center. As part of this investigation, FBI Form 302
reports, analyses, summaries, and notes were presented to the grand jury. This evidence led to
several indictments but did not result in a criminal prosecution of Rogan.

In 1999, pursuant to Federal Rule of Criminal Procedure 6(e)(3)(C)(@i) and (D), the
Government sought, and received, an ex parte order from the Chief Judge of the Northern District
of IHinois, permitting the disclosure of certain grand jury information to Assistant United States
Attorneys in the civil division, representatives of the Illinois Department of Public Aid (“IDPA”),
and representatives of the State of Illinois. The disclosure was sought to use the materials “in the
investigation and litigation of any civil claims on behalf of the United States, IDPA, and/or the State
[of Illinois}... .” The Government requested disclosure of

(1) Documents subpoenaed or otherwise obtained by the grand jury relating to the

investigation of Edgewater Medical Hospital for submitting false and fraudulent

claims to Medicare, Medicaid, and other health care benefit programs, and for paying

kickbacks for referrals of Medicare and Medicaid patients; and

(2) The work product, including reports, analyses, summaries, workpapers and

records and witness interview notes, of the investigators, Assistant United States

Attorneys, and FBI agents, Postal Inspectors, and other federal agents who have

participated and/or are participating in the criminal investigation. The United States

is not seeking disclosure of grand jury transcripts. (Emphasis added).

In 2000, the Government obtained another ex parte order for the disclosure of certain grand

jury information. The 2000 order was identical to the 1999 order, except that the Government was

authorized to make these disclosures on a continuing basis.



Hospital, its agents, representatives, and employees. The 2003 application stated that it sought
materials in connection with Peter Rogan for the civil case pending before this Court.

Rogan argues that when the Government seeks to use the materials for its own benefit, the
use of an ex parte process may constitute an abuse of discretion and, to support this contention, cites
from Jn re United States: “[iJt is not hard to imagine circumstances in which lack of notice would
abuse the district judge’s discretion: for example, when the United States seeks to favor its own
interests by authorizing itself to use grand jury materials, the judge would be well advised to let the
civil defendant have an opportunity to oppose the motion.” fn re United States, 398 F. 3d at 619.
The Government argues that this statement is dicta. And moreover, the 1999 and 2000 orders were
issued before Peter Rogan was a defendant in the civil suit. Rogan counters that although he was
not then a defendant in a civil suit, he was a target at that time of the grand jury investigation and,
therefore, should have received notice of the Government's request for disclosure.

When the 1999 and 2000 ex parte orders were issued, Rogan was not then a defendant in a
civil trial. Instead, he and all other Edgewater Hospital agents, representatives, and employees were
targets of an investigation for possible civil law violations, including the Federal False Claims Act
and other state statutes and common law claims relating to the submission of false and fraudulent
bills and information. Accordingly, proceeding without providing notice to Rogan, or any of the
other numerous targets of the investigation, did not constitute an abuse of discretion. See John Doe,
481 U.S. at 105-06, 115-17 (upholding the ex parte disclosure of grand jury materials after a criminal
grand jury investigation targeted multiple persons). (Emphasis added).

As to the 2003 ex parte order, that application specifically identified Rogan, and he was a

defendant in a pending civil suit. However, Rogan already had access to the grand jury materials,

13