An Atlanta businessman whose cancer detection laboratory was driven into the ground during an eight-year battle with the federal government has asked a judge to stop his insurers from settling a defamation case brought by the man behind the FTC probe. 

Michael Daugherty and his defunct company, LabMD, are seeking an emergency temporary restraining order to stop his insurer, Sentinel Insurance Co. and its parent, The Hartford, from paying $750,000 to Robert Boback in what Daugherty claims is an illegal attempt to settle without his consent a 2013 lawsuit arising from Daugherty's self-published book, "The Devil Inside the Beltway."

The book is Daugherty's personal account of his battle with the U.S. Federal Trade Commission over a 2008 data breach at LabMD, and Boback's role in the federal investigation. Boback's now defunct cybersecurity firm, Tiversa, gained access to LabMD medical files and then sought to use those vulnerabilities and the resulting FTC investigation as leverage to market its cyber-protection services, according to court documents detailing the legal fight.

The emergency TRO request, filed Feb. 11 in U.S. District Court of the Northern District of Georgia, claims that Hartford "refused to adequately investigate" Boback's "sham lawsuit" or review the extensive public court and congressional records Daugherty said prove that Boback's defamation claims are bogus. 

The case has been assigned to U.S. District Judge J.P. Boulee of the Northern District of Georgia.

The motion also contends that Hartford also refused to adequately pay for Daugherty's defense, pay his lawyers prevailing hourly rates, or pay for their investigators. Instead, Hartford opened "secret negotiations" with Boback's counsel, despite correspondence from Daugherty lawyers that "even reaching out to Boback about settlement … would prejudice the litigation," the TRO pleadings said.

"No case or public policy stands for the unsustainable position that settlement of retaliatory sham claims designed to injure the defendants and chill their First Amendment free speech right is in the interests of public policy or, frankly, of anyone," the pleadings said. "If this settlement is finalized, the immediate and irreparable damage to LabMD and Daugherty cannot be undone."

Calling Hartford's actions "a textbook case of bad faith," Daugherty's counsel also claimed in court pleadings that the insurance company is prohibited from subordinating Daugherty's interests to its own. "No reasonable insurer would settle … a suit brought by a man whose reputation has been publicly decimated" the motion said, "particularly where the statements that he alleges are defamatory have been validated as true."

Boback filed the defamation action that prompted the settlement in U.S. District Court in the Western District of Pennsylvania in 2013. He later refiled the suit in the Court of Common Pleas in Allegheny County after his attempts to stop publication of Daugherty's book failed, according to the pleadings.

Sentinel's counsel, Frank Ing-Jye Chao at Wilson Elser couldn't be reached for comment. A Hartford spokesperson also couldn't be reached.

Boback's attorney, Robert Ridge of Pennsylvania firm Clark Hill, couldn't be reached for comment. Boback is not named a party in the TRO action.

Daugherty's attorney, Holly Anne Pierson of Atlanta's Pierson Law, also couldn't be reached.

The TRO contends that if Hartford's "breakneck settlement effort" succeeds, it will preclude Daugherty from ever clearing his name.

"Throughout the litigation, LabMD and Daugherty and their counsel told Hartford that, because this was a defamation case, the only way to mitigate the damage to their reputations and their First Amendment rights was to obtain a favorable verdict or a settlement that obtained an admission by Boback … that the lawsuit was baseless," the pleadings said. "Without a judgment to confirm that no defamation took place, the stain of public defamation accusations could not be removed."