MIAMI (CN) — Fighting to seal a historic health care fraud conviction Friday, government lawyers reminded the 11th Circuit that, in his heyday as an eye doctor, Salomon Melgen had billed Medicare more than 90 times for diagnostic testing on a patient's prosthetic eye.
Melgen is appealing his $73 million Medicare fraud conviction for which he was handed a 17-year sentence at the low-security Miami Federal Correctional Institute.
Prosecutors at trial detailed a scheme whereby Melgen would charge Medicare for unneeded diagnostic tests and bill vast sums for treatments based on false diagnoses. The doctor's office purportedly billed Medicare for bilateral exams on patients who only had one eye.
At appellate arguments Friday in Miami, Melgen’s attorney Kirk Ogrosky took aim at the alleged failure by the government to use a statistician at trial when comparing Melgen's billing pattern to that of his peers.
Though U.S. District Judge Kenneth Marra had initially refused to admit the billing comparisons at trial, citing a federal rule governing expert testimony, he later decided to accept the billing comparisons as content-based evidence.
Ogrosky attempted to frame the trial judge's decision as self-contradictory and reflective of inconsistency in the handling of evidentiary matters at trial.
"These were not summary exhibits. ... They were testimonial in nature," Ogrosky told the panel Friday.
Assistant U.S. Attorney John Shipley retorted that Judge Marra's actions were being taken out of context. Shipley said the judge handled the trial "with incredible care under a pretty intense spotlight."
The prosecutor noted that, during the mid-2017 trial, the defense had "full opportunity to confront" the pertinent witness about the way she handled billing data.
Lawyers for Melgen and the government also clashed Friday over whether prosecutors had unfairly focused on Melgen's lucrative practice of drawing multiple doses from vials of the revolutionary macular-degeneration drug Lucentis. The pricey vials were designated for one-time use but contained enough of the drug to produce multiple doses.
Ogrosky told the panel that "there is nothing improper about multi-dosing," and that Melgen's dispute with Medicare over his use of Lucentis was a regulatory issue, not a criminal issue.
The defense team's brief to the 11th Circuit argues: "The jury may have convicted Melgen on the false belief that multi-dosing was a crime. This incurably tainted the general verdict, which affords no way to know which services the jury found fraudulent or why."
Shipley countered that Melgen's Lucentis multi-dosing violated Medicare policy and resulted in a windfall profit for the doctor.
Shipley conceded that Medicare's Lucentis payouts to Melgen would have been the same whether or not Melgen multi-dosed. But on the expense side, he argued, the practice saved Melgen millions.
The lawyer lambasted the defense team's stance that the doctor's false diagnoses were unintentional, the result of sloppily streamlined medical record keeping.
"On this scale, these weren't mistakes," Shipley told the panel.
Ogrosky claimed that if the jury had been properly instructed, it would have realized that the incorrect medical records were financially immaterial for many of the patients listed in the indictment. Those patients had severe eye disease, and Medicare would have paid Melgen comparable amounts if he had submitted the correct diagnoses, Ogrosky said.
Beyond what played out during oral arguments Friday, the 11th Circuit is reviewing Melgen's claims that the fraud-loss calculation during his sentencing was faulty, and that a prosecution expert witness made improper comments to defense expert witnesses outside court proceedings.
The panel consisted of U.S. Circuit Judge Beverly Martin, an Obama appointee, alongside Trump-appointed Judges Britt Grant and Barbara Lagoa.
Melgen's trial garnered widespread media attention in part due to the scope of the fraud, as well as because Melgen was accused in a separate criminal action of bribing U.S. Senator Bob Menendez of New Jersey into helping him in his long-running billing dispute with Medicare.
The bribery case was declared a mistrial due to a hung jury in November 2017. The Department of Justice abandoned a planned retrial of Menendez and Melgen on the bribery charges in early 2018 after a judge culled many of the counts against the men.
Melgen’s use of Lucentis played a central role in the bribery case. The doctor was charged with showering Senator Menendez with gifts and campaign contributions in exchange for political favors, including trying to persuade the acting administrator of the Centers for Medicare and Medicaid Services to see Melgen's side of the drug-billing dispute.
Before his conviction, Melgen was sued in Palm Beach County by several patients who claimed they developed infections from contaminated multi-dosed Lucentis injections administered to them at his medical offices. Melgen's malpractice insurer blamed the alleged contamination on a compounding pharmacy that had combined Lucentis vials for Melgen.
Subscribe to Closing Arguments
Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.