Doctor Convicted of Massive Health Care Fraud

WEST PALM BEACH, Fla. (CN) — Eye doctor Salomon Melgen was convicted of health care fraud Friday after a seven-week trial for bilking Medicare for tens of millions of dollars while administering unnecessary and obsolete medical procedures.

Melgen was taken into federal custody immediately after the jury delivered its verdicts on their third day of deliberations. He was found guilty of all 67 counts, including healthcare fraud, falsifying medical records and submitting fictitious Medicare claims.

He and his medical practice Vitreo-Retinal Consultants of the Palm Beaches billed Medicare more than $190 million between 2008 and the end of 2013. The practice received more than $105 million from Medicare, much of it through bogus diagnoses and unjustified medical procedures, according to the indictment.

Melgen’s daughter wept as she and her mother made their way out of the federal courthouse in West Palm Beach Friday afternoon. The two had attended the trial together nearly every day and sat through weeks of deprecating testimony from prosecutors’ medical experts.

Melgen appeared consistently expressionless and subdued throughout the trial, though he became more animated during closing arguments, when the courtroom benches were filled with friends and family. He remained stoic when the jury returned the verdict Friday.

The doctor still faces a separate criminal trial, accused of bribing New Jersey Senator Robert Menendez to help him with his Dominican business interests and lobby for him in his billing dispute with Medicare, which dates back more than eight years.

Defense attorney Kirk Ogrosky said outside the courthouse Friday that Melgen and his attorneys will review the trial transcripts and decide what course to take.

“We will look at all of our options,” Ogrosky said.

He said Melgen “cares very deeply about his patients and … tried very hard to help them.”

In the nearly two-month-long trial, Melgen stood accused of falsely diagnosing patients with wet macular degeneration, a potentially blinding disease, as part of the scheme to defraud Medicare.

One of the prosecution’s experts, Julia Haller, testified that medical notes in Melgen’s patient charts were “pure fantasy,” and said his diagnostic basis for administering treatments was fabricated in the files she reviewed.

Another medical expert, Robert Bergen, said the amount Melgen billed Medicare was “in the next galaxy.”

Melgen’s attorneys put together an aggressive defense, saying that while Melgen and Vitreo-Retinal Consultants may have made insurance coding errors and allowed his medical charts to become inaccurate, he did not act with the intent to commit fraud.

His attorney Matthew Menchel conceded that Melgen’s office used a faulty medical records system, whereby his staff filled out boilerplate diagnoses and retinal drawings before patients were evaluated.

“[The prosecutors] want you to think that doctors’ files are pristine and perfect,” Menchel told the jury during his closing argument. “That’s not the real world.”

Melgen’s attorneys said the onslaught of testimony from the prosecution’s experts unfairly vilified him.

“[These] are expert witnesses. They’re not victims of robberies,” Menchel said in the midst of Bergen’s testimony.

Haller’s damning depiction of the doctor, as a man blinding his patients to line his pockets, was a “miscarriage of justice,” Menchel said in his closing argument.

“[Melgen’s patients] weren’t fooled. They weren’t duped. They were helped,” Menchel said, adding that many of them had improved vision under Melgen’s care.

Assistant U.S. Attorney Alexandra Chase told the jury it was not plausible that the doctor’s abnormal billing patterns and admittedly inaccurate medical charts were an accident.

“Mistakes happen once or twice,” Chase said in her closing argument. “When it happens over and over and over again, you know it’s deliberate.”

Caring Doctor or Medical Profiteer?
Throughout the trial, the jury was presented with strikingly disparate portrayals of the doctor. Prosecutors painted him as a profit-driven physician who used outdated, harmful laser treatments, while the defense team and several of his patients said he was a caring and innovative physician.

Prosecutors claimed that Melgen for years had applied laser treatments and pricey injections of the ocular drug Lucentis to patients whom he had falsely diagnosed with wet macular degeneration.

Prosecutors’ senior expert Stuart Fine, along with Haller, a renowned retina specialist, both said that Melgen applied macular degeneration treatments to patients whose maculae appeared completely normal, based on the diagnostic images they reviewed.

Haller testified that Melgen’s use of thermal laser regimens was inappropriate and damaging, given the advent of newer, less destructive treatments for wet macular degeneration, such as Lucentis. She called Melgen’s use of laser on a patient who had only one functioning eye “unconscionable.”

Her comments sparked a two-week-long tug-of-war over whether Melgen was reckless in his use of thermal lasers.

Menchel appeared incensed that the prosecution would, as he saw it, mislead the jury to think that the doctor was hurting patients. He said that when Haller scoffed on the stand upon seeing Melgen’s medical files, she was putting on a show, as she had seen the files numerous times before while working with the prosecution.

“That was an act … to sway you emotionally against this man,” Menchel told the jury.

Menchel presented a 2010 survey indicating the laser treatments at issue were still employed by many ophthalmologists.

He said that for many patients, Melgen used a very low-level laser, which does not leave blind spots or badly scar ocular tissue, as would traditional use. Defense experts said this “subthreshold” laser administration has novel medical applications and can be applied in conjunction with Lucentis or other anti-VEGF drugs.

The prosecution argued that even if Melgen did administer laser treatment at a low setting, he didn’t have the right to bill Medicare for it, since the billing code he frequently used entails voluntary obliteration of diseased ocular tissue, which could not be achieved at the low setting.

The jury had to absorb even more medical nuance, as they were asked to differentiate between treatment indications for thermal lasers, which have been used by ophthalmologists to address several diseases that cause macular edema (fluid in the macula), including both wet macular degeneration and diabetic retinopathy.

Menchel contended that for some patients listed in the indictment, Melgen used the laser to treat them for diabetic disease, though the medical charts may have contained incorrect diagnoses of wet macular degeneration. Menchel challenged the jury to question why Melgen would intentionally misdiagnose a patient with macular degeneration if he would get the same amount of money for treating the patient for diabetic eye disease.

Patients Praised Him
A handful of Melgen’s former patients, some of whom were called to the stand by the prosecution, gave testimony favorable to Melgen.

One 79-year-old former patient, called to the stand by the prosecution, testified that his vision improved after Melgen treated him for visual artifacts. According to prosecutors, Melgen fraudulently billed Medicare for treatments given to the patient using a bogus diagnosis of macular degeneration.

The patient said his vision is “20/20,” noting that he has undergone cataract surgery by another doctor.

Another patient called by the prosecution said that Melgen gave him hope that his vision could be restored, though he never recovered his sight and remains blind.

“If he was still in business … I still would go to him,” the patient testified.

Maggie Bronson, an elderly woman who visited Melgen’s medical practice for roughly a decade, said she believed Melgen was a “patient” and “kind” doctor, and that he helped improve her vision.

Bronson, confined to a wheelchair, testified that prosecutors met with her before the trial and tried to get her to say something negative about him. She said they tried “to put words in [her] mouth to hurt him.”

Prosecutors said these patients did not see what Melgen was doing on the billing side of the practice, and did not realize he was needlessly subjecting them to medical procedures.

Diagnostic Testing Dispute
The health care fraud charges focused on Melgen’s repeated billing for allegedly unnecessary diagnostic tests.

Prosecutors said Melgen’s office, at his direction, performed excessive amounts of angiographies as quickly as possible, often wrapping up the tests before achieving critical “late phase” images that would help in diagnosing patients.

Over the six-year-period cited in the case, Melgen raked in $16 million for indocyanine green (ICG) angiography tests, which prosecutors said are seldom used by other doctors.

Melgen and his medical practice knew the limited types of diagnoses necessary to justify billing Medicare for the relatively rare test, prosecutors said. They said Melgen listed those diagnoses (such as pigment epithelial detachment) with undue frequency, so he could repeatedly bill for ICGs.

In some cases, Melgen billed for diagnostic tests for patients’ prosthetic eyes, according to the indictment.

For one patient, according to the indictment, over a roughly two-year period, Melgen’s office billed Medicare for more than 90 diagnostic tests on the man’s prosthetic eye. Another $18,000 was billed for exams and tests on the prosthetic eye of another patient, the indictment stated.

To avoid cutting into his angiography profits, prosecutors said, Melgen held off on switching over to a new OCT machine, a diagnostic device that generates less money than angiography due to lower per-test insurance reimbursement rates. The OCT is the primary device for diagnosing macular edema in modern retinal specialist offices, and according to the prosecution, Melgen’s decision not to switch over was highly unusual.

The defense team fought day after day to poke holes in prosecutors’ claims of excessive diagnostic-test billing. Menchel contended that the government attorneys were trying to “have it both ways”: citing unreadable angiographies as evidence of fraudulent billing, but using those same sets of images in their medical experts’ tally of whether Melgen’s diagnoses were accurate or not.

Menchel insisted Melgen was an aggressive, “out of the box” thinker who performed frequent diagnostic tests not to inflate his income, but to ensure patients were comprehensively evaluated.

As for the prosecution’s contention that Melgen held off on switching to an OCT machine, Menchel offered up an analogy about a physician who prefers to read old-school X-rays rather than MRIs. Using old technology, Menchel said, is not a crime as the prosecution would have the jury believe.

Menchel also challenged the jury to ask why Melgen would make notes of eye prostheses in his office documents if he were intentionally trying to milk more money out of Medicare for diagnostic tests on those fake eyes.

“People make mistakes, especially at practices that are super busy,” Menchel said in his closing argument.

“This … has been tried like a medical malpractice [case],” Menchel told the jury. “That’s not this case.”

Defense attorneys also challenged the prosecution experts’ interpretation of angiography images from Melgen’s medical charts. They claimed interpretation of angiographies is subjective, and that academic experts like Fine would naturally read the tests differently than Melgen.

$57 Million
In six years, Melgen allegedly received more than $57 million in payments from Medicare for his use of Lucentis injections, though the figure does not factor in the cost of acquiring the drug. His practice of multi-dosing — drawing more than one dose from a Lucentis vial —padded his profits in disregard of the drug manufacturer’s dosing guidelines, prosecutors said.
Melgen battled with Medicare for years over his Lucentis multi-dosing. In 2009, he was subjected to an $8.9 million civil clawback from Medicare, sparking a long legal battle that ended up in federal appellate court.

Melgen lost the civil case against Medicare and agreed to return the money, but his willingness to challenge the government “put a target on his back,” Menchel said.

“It’s not a crime to appeal,” Menchel said in his closing argument. He called Medicare’s multi-dosing policy poorly articulated and said it made “zero sense,” as other drugs, such as Avastin or Kenalog, are commonly multi-dosed by doctors.

Complicating matters, Lucentis vials didn’t contain just a small amount of extra medicine in case of spillage, like some other injectable drug containers. The vials had enough Lucentis for multiple doses, leading Melgen to question why, after a single injection dose was drawn, the large amount of leftover vial contents should be tossed out and wasted.

Pulling more than one dose from single-use drug vials that don’t have a dedicated preservative nonetheless remains controversial, given that it has been associated with an increased risk of infections. The CDC has warned that multi-dosing medicines that are meant for onetime administration can result in bacterial contamination.

Several former patients have pending civil lawsuits against Melgen in Palm Beach County Court, alleging that their vision was severely damaged after they developed infections from contaminated batches of Lucentis or Avastin injected into their eyes at Melgen’s offices. The plaintiffs claim his practice of multidosing Lucentis resulted in widespread bacterial contamination.

Melgen maintains that if those plaintiffs developed an infection, it was due to lax sterility control at the compounding pharmacy that recombined Lucentis vials for him.

Melgen’s use of Lucentis plays a role in the pending criminal case. He is charged with showering Sen. Menendez with gifts and campaign contributions in exchange for political favors, including lobbying for Melgen in his dispute with Medicare over his use of Lucentis.

Menendez allegedly advocated for Melgen in conversations with top officials from the Centers for Medicare and Medicaid Services (CMS) between 2009 and 2013. Meanwhile, he was taking trips on Melgen’s private jet and vacationing at the doctor’s villa in the Dominican Republic, prosecutors say.  He discussed Melgen’s Lucentis billing dispute in meetings with the acting administrator of CMS in June 2012 and with the head of the Department of Health and Human Services in August 2012, according to the bribery-charge indictment.

Both men have pleaded not guilty in that case.

Melgen already faces a lengthy sentence in the health care fraud case and could spend the rest of his life behind bars. He is to be sentenced in July.

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