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Case 1:06-cv-00648-RCL Document 41-6 Filed 07/29/2008 Page 2 of 8

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Page 1

U.S. ex rel. Pogue v. Diabetes Treatment Centers of
America
D.D.C.,2004.
Only the Westlaw citation is currently available.
United States District Court,District of Columbia.
UNITED STATES, ex rel. Scott Pogue Plaintiffs,

v.

DIABETES TREATMENT CENTERS OF AMER-

ICA, et al. Defendants.

No. Civ.99-3298, 01-MS-50(MDL)(RCL).

filed Dec. 13, 1999.

May 17, 2004.

last filing Aug. 12, 2004.

John G. Despriet, Smith, Gambrell & Russell,
L.L.P., Promenade II, Atlanta, GA, Lead Attorney,
Attorney to be Noticed, for Anthony E. Karpas,
(Defendant).
Mark S. Hardiman, Hooper, Lundy & Bookman,
Inc., Los Angeles, CA, Attorney to be Noticed, for
Diabetes Treatment Centers of America,
Inc.,
(Defendant).
John R. Hellow, Hooper, Lundy & Bookman, Inc.,
Los Angeles, CA, Attorney to be Noticed, for Dia-
betes Treatment Centers
Inc,
(Defendant).
Bryan E. Larson, Base, Berry & Sims, P.L.C.,
Nashville, TN, Lead Attorney, Attorney to be No-
ticed, for Diabetes Treatment Centers of America,
Inc, (Defendant).
Don P. McKenna, Hare, Wynn, Newell & Newton,
Birmingham, AL, Attorney to be Noticed, for A.
Scott Pogue, (Plaintiff).

of America,

OPINION AND ORDER

LAMBERTH, J.
*1 Before the Court is the Motion of Defendants
Paul C. Davidson, M.D., Bruce W. Bode, M.D.,
Judson G. Black, M.D., Robert D. Steed, M .D. and
Anthony E. Karpas, M.D.
(“the Atlanta Physi-
cians”) to Compel Production of Documents in

Compliance with Subpoenas Duces Tecum [823]
and Motion for a Hearing with Notice to All Parties
on Proposed Partial Settlement [834]. Specifically,
the Atlanta Physicians move the court to order Re-
altor Pogue to produce documents pertaining to the
terms of a proposed settlement agreement between
HCA, the parent company of West Paces Medical
Center, and the United States, and for a hearing on
the issue.

Upon review of the motion papers, the applicable
law and the record in this case, the Court will deny
the Atlanta Physicians' motions.

BACKGROUND

In December 2002, HCA/West Paces offered to
settle several of the claims against them for $631
million. Attorneys for the Department of Justice
(“DOJ”) agreed to recommend that the settlement
offer be accepted, and sought approval from other
officials at the DOJ. The United States has also in-
tervened in the multi-district litigation action, and
government attorneys have spoken with the relators
in an effort to obtain their consent to the settlement
“as fair, adequate, and reasonable.” In February and
March 2003, government attorneys and counsel for
Relator Pogue had several telephone conversations
during which they discussed the proposed settle-
ment. Both the government and Relator Pogue
maintain that these phone conversations were con-
ducted pursuant to an explicit “joint-interest priv-
ilege agreement.” The proposed settlement was an-
nounced in the February 2003 status report.

On February 28, 2003,
the Atlanta Physicians
served a Rule 45 subpoena upon Helmer, Martins &
Morgan Co. L.P.A., one of the law firms represent-
ing Relator Pogue. The subpoena seeks
legal
memoranda, correspondence and memoranda of
conversations between Relator Pogue's counsel and
government attorneys related to the terms of a pro-
posed settlement between HCA/West Paces and the

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United States. On March 5, 2003, Relator Pogue's
counsel objected pursuant
to Fed.R.Civ.P. 45,
maintaining that the documents sought were protec-
ted by attorney-client, work product, joint prosecu-
tion, and common interest privileges. In response,
the Atlanta Physicians filed the instant motion to
compel.

The Atlanta Physicians maintain that they are en-
titled to discovery of documents pertaining to the
proposed settlement agreement between HCA/West
Paces and the United States because they have
standing to object to any partial settlement, even
one that does not include them, that may prejudice
their legal position. The Atlanta Physicians main-
tain that the only way to determine whether the set-
tlement will prejudice them is to view the docu-
ments related to the settlement negotiations. The
Atlanta Physicians also maintain that they are en-
titled to this discovery as a means of gathering in-
formation regarding Relator Pogue's theory of dam-
ages. The Atlanta Physicians contend that the attor-
ney-client, work product, common interest and joint
prosecution privileges asserted by Relator Pogue
and the United States do not shield the documents
that they are requesting because Relator Pogue and
the United States waived any attorney-client and
work product privileges that may have applied by
sharing and disclosing information with one anoth-
er. The Atlanta Physicians further argue that the
joint prosecution and common interest privileges do
not apply because Relator Pogue and the United
States' prior common interests in prosecuting the
defendants were eviscerated by the proposed settle-
ment, which now pits Relator Pogue and the United
States against one another as they each vie for a
percentage of the settlement amount.

*2 Relator Pogue maintains that
the documents
sought, which were prepared by counsel for the
purposes of the instant litigation, are protected by
attorney-client, work product,
joint prosecution,
and common interest privileges. Specifically, Relat-
or Pogue maintains that communications between
himself and his counsel are shielded from discovery

by the attorney-client privilege, and that his coun-
sel's notes, legal memoranda, memorializations of
conversations with government counsel, legal re-
search, and correspondence drafted by his counsel
are protected by the opinion work product doctrine.
Relator Pogue also maintains that none of the priv-
ileges have been waived because the documents
have not been viewed by anyone other than him and
his counsel. Relator Pogue further maintains that
his counsel's conversations with government attor-
neys are also protected by the joint prosecution and
common interest privilege. Relator Pogue alternat-
ively argues that even if the privileges did not ap-
ply, the Atlanta Physicians, as non-settling defend-
ants in a False Claims Act (“FCA”) case, do not
have standing to object to a proposed settlement
with another defendant and have not otherwise
demonstrated need for the documents as required
by Fed.R.Civ.P. 26(b)(3). Lastly, Relator Pogue
maintains that the instant motion to compel was
filed in violation of Rules 1 and 45 of the Federal
Rules of Civil Procedure, for failure to exhaust ex-
trajudicial means pursuant to Southern District of
Ohio Local Rules 37.1, before filing the instant mo-
tion. As such, Relator Pogue also requests the
award of expenses for the cost of litigating the in-
stant motion.

The United States maintains that, as a real party in
interest, it has standing to oppose the instant mo-
tion. In doing so, the United States contends that
the motion should be denied because the Atlanta
Physicians lack standing to oppose the proposed
settlement. In the alternative, the United States ar-
gues that even if the Atlanta Physicians had stand-
ing, it would only apply to a final settlement agree-
ment and not
the instant proposal. The United
States also maintains that the subpoena is being
used as a tool of harassment, is not reasonably cal-
culated to lead to the discovery of admissible evid-
ence, and that the proper manner for gathering in-
formation to assess Relator Pogue's damages theory
is to serve an interrogatory upon Relator Pogue, not
to complain about Relator Pogue's answer to anoth-
er party's
the United

interrogatory. Moreover,

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States maintains that the comminications sought are
protected by the attorney-client, opinion work
product,
joint prosecution, and common interest
privileges.

APPLICABLE LAW

I. Local Rules

This Court has previously stated that “if a court is
sitting as a court of another district, and the purpose
of doing so is to preserve uniformity within that
district and circuit, a court acting under § 1407 is
bound by the rules and law of the district in which
he is sitting as a judge, and the parties are likewise
bound.”United States ex rel. Pogue v. Diabetes
Treatment Centers of America, Inc., 238 F.Supp.2d
270, 276 (D.D.C.2002) (citing Corrugated Contain-
er DC, 662 F.2d 875, 881 n. 11 (D.C.Cir.1981)).
Furthermore, the Court specifically instructed that
“Relator is advised that if he asks this Court to ex-
ercise its § 1407 powers in connection with other
matters in this litigation he must comply with the
local rules of the district from which the subpoena
issued.”SeePogue, 238 F.Supp.2d at 275 n. 5. The
footnoted admonishment was relator-specific be-
cause of the nature of the issue before the court.
But, this footnote in conjunction with the textual in-
struction that the parties comply with the local rules
of the Southern District of Ohio more than suffi-
ciently notifies all parties that this Court expects
that they do so. Being that the subpoena at issue
was issued by the United States District Court for
the Southern District of Ohio, the appropriate local
rules of that court should be applied.

IV. Privileges

A. Attorney-Client and Work Product Privileges

*3 Parties may not obtain discovery of privileged
information unless the privilege has been waived.
SeeFed.R.Civ.P. 26(b).SeealsoUnited States ex rel.
Purcell v. MWI Corp. et al., 209 F.R.D. 21, 24

(D.D.C.2002). Attorney-client and work product
are two such privileges. SeeIn re Sealed Case, 676
F.2d 793, 808 (D.C.Cir.1982).

Pursuant to Fed.R.Civ.P. 26(b)(1), the attorney-cli-
ent privilege protects all confidential communica-
tions between a client and the client's attorney that
occur in connection with legal representation or in
the process of obtaining legal representation. SeeIn
1268
re Bruce
(D.C.Cir.1998). The party who asserts the privilege
bears the burden of establishing that
it exists.
SeeMWI Corp., 209 F.R.D. at 24. The attorney-cli-
ent privilege may be waived by disclosing priv-
ileged material to another person.

Lindsey,

1263,

158

F.3d

Pursuant to Fed. R. Civ. Pro. 26(b)(3), the work-
product privilege protects not only communications
but also materials obtained or prepared by counsel.
SeeIn re Sealed Case, 676 F.3d at 808-09;Hickman
v. Taylor, 329 U.S. 495, 511, 67 S.Ct. 385, 91 L.Ed.
451 (1947). The work product doctrine extends the
privilege to both “fact” and “opinion” work
product. SeeDirector, Office of Thrift Supervision v.
Vinson Elkins LLP, et al., 124 F.3d 1304, 1308
(D.C.Cir.1997). Opinion work product, information
revealing the mental impressions and legal evalu-
ations of counsel,
is virtually undiscoverable.
SeeDirector, Office of Thrift Supervision, 124 F.3d
at 1308. However, a party may discover factual
work product upon a showing of need and an undue
hardship in acquiring the information any other
way. SeeFed.R.Civ.P. 26(b)(3); Director, Office of
Thrift Supervision, 124 F.3d at 1308. While the
party who asserts the work product privilege has
the burden of proof of demonstrating its applicabil-
ity, the party who seeks the work product has the
burden of showing necessity for the requested doc-
uments. Normally, the work product privileged is
waived by disclosing the privileged information to
another party. SeeIn re Sealed Case, 29 F.3d 715,
719 (D.C.Cir.1994).

B. Joint Prosecution and Common Interest Priv-
ileges

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In complex litigation situations, such as those
presented by multi-district litigation, courts recog-
nize and apply the joint prosecution FN1 and com-
mon interest privileges, which broaden the attorney
client and work product privileges so as to protect
communications made to third parties under certain
circumstances. SeeIn re Lindsey, 158 F.3d at 1282
(stating that “when a third party is a lawyer whose
client shares an overlapping common interest with
the primary client, the privileges may remain in
tact.”).

FN1. Several courts have applied the rules
governing the joint defense privilege to
joint prosecution agreements so as to cre-
ate a joint-prosecution privilege under the
same grants and strictures. SeePurcell, 209
F.R.D. at 25. (stating that “[e]xtending the
principle underpinning the joint-defense
privilege, several courts have recognized
the joint-prosecutorial privilege as a paral-
lel privilege.” and citing In re Grand Jury
Subpoenas, 902 F.2d at 249;United States
ex rel. Burroughs v. DeNardi Corp., 167
F.R.D. 680, 685-86 (S.D.Cal.1996) (citing
In re Grand Jury Subpoenas, 902 F.2d at
249);Loustalet v. Refco Inc., 154 F.R.D.
243, 247 (C.D.Cal.1993); Sedlacek v. Mor-
gan Whitney Trading Group, 795 F.Supp.
329, 331 (C.D.Cal.1992).

The joint prosecution privilege protects disclosures
between two or more parties and their respective
counsel if their communications are conducted un-
der a joint prosecution agreement. SeeIn re sealed
Case, 29 F.3d at 719 n. 5;Purcell, 209 F.R.D. at
25;In re Grand Jury Subpoenas, 902 F.2d 244, 249
(4th Cir.1990). Application of the joint prosecution
privilege depends on a successful showing that: 1)
the communications occurred in the course of a
joint prosecution effort; 2) that communications
were designed to further the effort; and 3) the priv-
ilege has not been waived. SeeIn re Sealed Case, 29
F.3d at 719.

*4 The common interest privilege protects disclos-

ures between a lawyer and two or more clients re-
garding a matter of common interest or common in-
terests. SeeIn re sealed Case, 29 F.3d at 719;United
States v. AT & T Co., 642 F.2d 1285, 1300
(D.C.Cir.1980); United States v. McPartlin, 595
F.2d 1321, 1336 (7th Cir.1979) (holding that parties
need only have a common interest, not complete
commonality of interests); Griffith v. Davis, 161
F.R.D. 687, 692 n. 6 (C.D.Cal.1995) (same); Eisen-
berg v. Gagnon, 766 F.2d 770, 787-88 (3rd
Cir.1985) (same); In re Grand Jury Subpoenas, 902
F.2d at 249. Parties may successfully operate under
the common interest privilege if the communica-
tion: 1) is prompted by actual or anticipated litiga-
tion; 2) for the purpose of furthering a common in-
terest; and 3) in a manner that is consistent with
maintaining confidentiality against adverse parties.
The existence of a common interest is determined
at the time that the confidential information is dis-
closed. SeeIn re UMWA Employee Benefits Plan
Litigation, 159 F.R.D. 307, 314 (D.D.C.1994). The
purpose of the joint prosecution and common in-
terest privileges is to ensure that attorneys feel free
to fully and completely prepare for trial by assuring
that their legal preparations will not be accessible
to an adversary. SeeAT & T Co., 642 F.2d at 1300.

ANALYSIS

I. Applicability of Local Rules

The Court will not deny the instant motion for fail-
ure to comply with Southern District of Ohio Local
Rule 37.1 for the following reasons.

Whether Southern District of Ohio Local Rule 37.1
applies to motions to compel ostensibly filed under
Fed.R.Civ.P. 45 is an unsettled question in Ohio
including the Southern District of Ohio.
courts,
Inc. v. Yi, 2001 WL
SeeMeridian Diagnostics,
1842463, *2 (S.D. Ohio Mar 9, 2001).Southern
District of Ohio Local Rule 37.1 instructs that be-
fore a motion to compel can be filed under
Fed.R.Civ.P. 37, the parties must exhaust all ex-

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trajudicial means for resolving the dispute. SeeS.D.
Ohio Local Rule 37. Failure to do so results in
denial of
the motion on this ground alone.
However, courts of the Southern District of Ohio
acknowledge that “[r]ule 37 of the Federal Rules of
Civil Procedure does not provide for an award of
sanctions for a violation of [Federal] Rule 45(b)(1),
[and] Rule 45 is silent with regard to the enforce-
ment of that provision.”SeeMeridian,2001 WL at
*2. Nevertheless,
the Southern District of Ohio
court in Meridian concluded that the defendants vi-
olated Southern District of Ohio Local Rule 37.1 by
filing their motion before exhausting extrajudicial
means for resolving their dispute, and denied the
motion to compel on that basis. Seeid.

This Court does not feel compelled to act in accord
with the Meridian court for the following reason.
Discovery disputes that arise in an MDL action are
appealed to the circuit in which the action origin-
ated. In this case, discovery disputes would be ap-
pealed to the Sixth Circuit. For the sake of uniform-
ity and intra-circuit consistency, this Court would
normally be bound to follow the local rules of the
Southern District of Ohio. However, it stands to
reason that an MDL judge is not bound under this
rationale in cases where the law on the issue is not
settled or not developed, for an MDL judge cannot
disrupt the consistency of law that does not yet ex-
ist in any useful form. Such is the case here, where,
even after noting that the question is unsettled in its
district and reprimanding counsel for citing to an-
other case that seems to act without authority, the
Meridian court merely notes the lack of law on the
issue before going on to deny the motion without
citing any authority itself or conducting any useful
analysis. Under these conditions, this Court finds
that is unfair to deny the Atlanta Physicians' motion
for
law.
Moreover, it seems to the Court, upon consideration
of the representations made in all of the motion pa-
pers, that Relator Pogue and the United States were
not prejudiced by the instant motion because the
dispute is such that resolution would require the
Court's intervention in any event, thereby substan-

to comply with discordant

failure

the instant

issue.
tially justifying litigation of
Therefore,
the Court will not deny the Atlanta
Physicians' motion on the grounds that it failed to
comply with Southern District of Ohio Local Rule
37.1.

II. Applicability of Privileges

*5 The Atlanta Physicians may not discover the in-
formation sought by the subpoena. The information
sought by the instant subpoena is privileged under
the attorney-client, work product, joint prosecution,
and common interest privileges, and these priv-
ileges have not been waived by the actions of Relat-
or Pogue and the United States. Moreover, even if
the documents sought were not protected under
these privileges, the Atlanta Physicians have not es-
tablished need as required by Rule 26(b)(3). There-
fore, the Atlanta Physicians motion to compel will
be denied.

communications

The documents requested by the subpoena are
shielded by the attorney client and work product
privileges. The
that occurred
between Relator Pogue and his counsel were in fur-
therance of Relator Pogue's legal representation and
for the purpose of obtaining legal advice regarding
the settlement proposed by HCA/West Paces. As
such, those communications are protected by the at-
torney-client privilege. The notes,
legal memor-
anda, legal research, and correspondence prepared
or obtained by Relator Pogue's counsel related to
the proposed settlement were generated in connec-
tion with Relator Pogue's legal representation and
procurement of legal advice from his counsel, and
are, as such, protected by the work product priv-
ilege, specifically, the opinion work product priv-
ilege as these documents reflect the mental impres-
sions and legal evaluations of counsel.

Neither privilege has been waived. Although it is
generally the case that a client/counsel sharing priv-
ileged information with a third person or party
waives the attorney-client and work product priv-
ileges, the instant documents remain undiscover-

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2004 WL 2009413 (D.D.C.)

able by application of the joint prosecution and
common interest privileges. Despite the informa-
tion-sharing that occurred between Relator Pogue
and the United States, the privileges are not waived
because their communications were conducted in
furtherance of joint prosecution and on the basis of
common interests.

The joint prosecution privilege, which protects dis-
closures between two or more parties and their re-
spective counsel when the communications are con-
ducted under a joint prosecution agreement, applies
to the instant case. Here, the communications oc-
curred in the course of Relator Pogue's and the
United States' attempt to prosecute the defendants
for violations of the FCA. In the course of that pro-
secution, HCA/West Paces offered Relator Pogue
and the United States a settlement of $631 million.
The purpose of the communications between Relat-
or Pogue and the United States, through their re-
spective counsel, was to determine whether the set-
tlement agreement was “fair, adequate and reason-
able,” in furtherance of the effort to hold the de-
fendants sufficiently accountable for violations of
the FCA. Moreover, Relator Pogue and the United
States have done nothing to otherwise waive the
privilege. As such, Relator Pogue's third party com-
munications with the United States do not destroy
the attorney-client or work product privileges.

*6 The communications between Relator Pogue and
the United States, through their respective counsel,
are further protected by the common interest priv-
ilege. Consistent with successful application of the
privilege,
the communications between Relator
Pogue and the United States were promoted by the
settlement offered in the instant litigation, for the
purpose of
in
holding the defendants legally responsible for viol-
ating the FCA, and involved a very closed universe
of participants pursuant to an explicit joint prosecu-
tion agreement. This is entirely consistent with
maintaining the confidentiality of the information.
As such, the common interest privilege is also ap-
plicable to this case, and Relator Pogue's third party

furthering their common interest

communication does not destroy the attorney-client
or work product privilege.

Contrary to the Atlanta Physicians' contention, Re-
lator Pogue and the United States do not lack a
common interest because of the eventual settlement
distribution. Rather, Relator Pogue's and the United
States' common interest in the prosecution of the
defendants and settlement negotiations that vindic-
ate the interests of both Relator Pogue and the
United States remain at
this stage. The point at
which the Atlanta Physicians' contention might
even be viable would be after the settlement agree-
ment was finalized, at which point it would be a
matter of public record, and a motion would be un-
necessary in any event.

Even if the documents requested by the subpoena
are not protected by these various privileges, the
material is still not discoverable because the At-
lanta Physicians' have failed to show “need” pursu-
ant to Rule 26(b)(3). The only information that the
Atlanta Physicians might conceivably have proper
access to is “factual” work product, which includes
facts known or gathered by counsel in the course of
legal representation. However, factual work product
is only discoverable upon a sufficient showing of
need, which requires a showing that there is no
reasonable alternative source for the same or sub-
stantially equivalent information, and that the party
has
information.
However, under the reasons proffered by the At-
lanta Physicians, they have shown neither a lack of
alternative resources nor substantial need.

substantial need for

the

a

First, the Atlanta Physicians have failed to show
that there are no alternative sources for the informa-
tion that is seeks. The United States is correct in
noting that if what the Atlanta Physicians seek is
information about Relator Pogue's damages theory,
then they should proceed with serving a proper in-
terrogatory and any necessary follow-up upon Re-
lator Pogue to obtain that information. The parties
currently dispute whether the Atlanta Physicians
have supplied Relator Pogue with the discovery ne-
cessary for Relator Pogue to make a damages calcu-

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2004 WL 2009413 (D.D.C.)

(M.D.Pa.1990); United States v. Kennedy, 431
F.Supp. 877, 878 (C.D.Cal.1977). The text FCA
seems to implicitly recognize this reality for while
it expressly and exclusively grants a relator the
right to object to a proposed settlement between the
government and a defendant, it does not afford this
same right
to a non-settling defendant. See31
U.S.C. 3730(c)(2)(b). Moreover, this court is not
aware of any court that has recognized the right of a
non-settling defendant to oppose settlement in an
FCA case. Not having a legally assertable right to
challenge the proposed settlement,
the Atlanta
Physician's obviously have no proper need, and def-
initely not a substantial one, to review the requested
documents.

Having found that the Atlanta Physicians, as non-
settling defendants, do not have standing under the
FCA to object to the proposed settlement between
Relator Pogue and the United States, the Court will
also deny The Atlanta Physicians' motion for a
hearing.

CONCLUSION

*8 For
DENIES the Atlanta Physicians' motions.

the aforementioned reasons,

the Court

SO ORDERED.

D.D.C.,2004.
U.S. ex rel. Pogue v. Diabetes Treatment Centers of
America
Not Reported in F.Supp.2d, 2004 WL 2009413
(D.D.C.)

END OF DOCUMENT

lation. The Court advises the parties to iron out this
issue before filing motions similar to the instant
motion on this point.

*7 Second, the Atlanta Physicians have failed to
show substantial need for the documents requested
by the subpoena. They maintain that they need to
review the requested documents so that they can
determine whether they have grounds for objecting
to the proposed settlement. But, this argument does
not demonstrate a legally cognizable substantial
need because, as non-settling defendants in an FCA
case, the Atlanta Physicians do not have standing to
oppose a settlement agreement.

In this jurisdiction, a non-settling defendant may
oppose a settlement to which he is not a party if the
settlement will cause him “plain legal prejudice,”
prejudice that may occur if the settlement strips the
party of a legal claim or cause of action. SeeMay-
field v. Barr, 985 F.2d 1090, 1093 (D.C.Cir.1993).
However, a non-settling party does not have stand-
ing to oppose a settlement when the settlement does
not affect the non-settling party's “right to litigate
[its] claims independently.”SeeMayfield, 985 F.2d
at 1093. No such legal prejudice results against a
defendant in a multi-defendant FCA case where the
Government and a Relator settle with one of the in-
dependently sued defendants. In an FCA case, a
non-settling defendant does not have a right to chal-
lenge a proposed settlement because a settlement
between one of the defendants and a Relator and
the United States does not affect the ability of other
defendants to litigate their claims independently.
On the defendants' own authority, they would not
be bound by a settlement agreement entered into by
the United States, Relator Pogue and HCA/West
Paces. SeeNew Mexico v. U.S. Dep't of Interior, 820
F.2d 441, 445 (D.C.Cir.1987). Moreover and con-
trary to the Atlanta Physicians' arguments, they do
not have any rights to indemnity or contribution un-
der the FCA, and, the proposed settlement agree-
ment, obviously, cannot adversely affect rights that
the defendants do not have under
the Act.
SeeUnited States v. Nardone, 782 F.Supp. 996, 999

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