Opinion ID: 179830
Heading Depth: 2
Heading Rank: 1

Heading: The Underlying Lawsuit and Judgment

Text: This case has its genesis in the Medicare and Medicaid fraud scheme that Rogan perpetrated through Edgewater Medical Center (EMC), a hospital on Chicago's north side, from at least 1993 to 2001. See United States v. Rogan, 459 F.Supp.2d 692 (N.D.Ill.2006) ( Rogan I ), aff'd United States v. Rogan, 517 F.3d 449 (7th Cir. 2008). In 1989, an entity that Rogan formed and controlled purchased EMC. The Rogan-controlled entity managed and administered EMC, and Rogan served as EMC's chief executive officer. In 1994, EMC was sold to Northside Operating Company. To finance the purchase, Rogan caused the Illinois Health Facilities Authority to issue approximately $41 million in bonds. Although he had sold EMC, Rogan retained control of the hospital after the sale through a series of transactions, and he then caused EMC to enter into management contracts with two entities that he also controlled, Braddock Management, L.P. and Bainbridge Management, Inc. In 1997, Rogan arranged to refinance the bond debt, and to this end, in June 1998, he secured a letter of credit from Dexia guaranteeing EMC's repayment of the bonds. Eventually EMC's fraud was discovered, and the government stopped Medicare and Medicaid payments to EMC. This caused financial distress to EMC and, eventually, required Dexia to pay $55 million on EMC's behalf to satisfy obligations to bondholders. Dexia was unable to obtain reimbursement from EMC. In November 2002, Dexia sued Rogan and his management company partners for fraud, conspiracy, and other torts. Dexia alleged that, during the due diligence process that led to its issuance of the letter of credit and after Dexia issued the letter of credit, Rogan defrauded Dexia by concealing that a significant portion of EMC's revenue was obtained through Medicare and Medicaid fraud. Rogan vigorously defended against the lawsuit for numerous years, but then moved to Canada and abandoned his defense. In May 2007, Dexia obtained a default judgment against Rogan and his partner companies for $124 million.