South Florida Eye Doctor Gets 17 Years for Medicare Fraud

(CN) – Dr. Salomon Melgen, a retinal specialist in Palm Beach County, Florida, was sentenced Thursday to 17 years in prison and ordered to pay $42.6 million on charges he bilked Medicare out of $73 million by administering unneeded diagnostic tests, laser treatments and eye injections.

A small courtroom in the West Palm Beach federal courthouse was packed to capacity, and when the sentence was handed down government agents seated in the rear benches let out subdued groans. Melgen meanwhile appeared stoic, as he has through much of the proceedings.

The sentence was significantly less than the 30 years sought by prosecutors. They characterized Melgen as “the highest billing ophthalmologist in the United States,” and said he lived a “lifestyle of the rich and famous off money looted” from Medicare, garnering massive profits from the excessive use of the injectable eye drug Lucentis.

In handing down Melgen’s sentence, U.S. District Judge Kenneth Marra rejected attempts by the doctor’s attorneys Matthew Menchel and Kirk Ogrosky, to minimize their client’s misdeeds. And while he said Melgen deserved a “significant incarcerative sentence,” he factored in Melgen’s age, clean record before the conviction, and his impression that Melgen is unlikely to be a recurrent offender.

Marra rejected the defense’s central argument that, for the purpose of the fraud loss calculation, Melgen should get credit for supposedly legitimate treatments he administered to patients who he billed under the wrong diagnosis.

“The mere fact that defendant’s treatment could have possibly benefited another condition his patients may have had, but which he did not indicate he was treating, is insufficient to rebut the government’s proof,” Marra said in an order issued the day before sentencing. “It is pure speculation that any of defendant’s patients who were improperly diagnosed and treated . . . actually benefited from the treatments.”

Melgen was the subject of national headlines last month after he and his associate, Senator Bob Menendez, D-N.J., dodged bribery charges in a separate criminal case.

After a nearly three-month trial in the fall, a jury deadlocked over whether Melgen had given the senator campaign contributions and free trips in exchange for the lawmaker’s assistance with federal health regulators and other matters.

In January, federal prosecutors announced they would not retry Menendez and Melgen on charges of operating what they had characterized as a bribery scheme. Melgen’s supporters have long claimed the doctor was being prosecuted for Medicare fraud in an attempt to get him to testify against the senator.

Melgen’s wife, daughter and extended family stood shoulder-to-shoulder outside the federal courthouse Thursday as defense attorneys Matthew Menchel and Kirk Ogrosky said they would appeal Melgen’s health care fraud conviction to the 11th Circuit.

“The family is very supportive. They’re certainly shell shocked,” Ogrosky said. “We’re looking forward to getting our day in front of the circuit court.”

Ogrosky once characterized the case as the most complicated health care fraud action he’d ever seen.

Judge Marra agreed to the defense’s request to recommend classifying Melgen as a low-risk prisoner. The defense team had asked for the recommendation so Melgen can be housed in a minimum security facility despite the length of his sentence, an important factor in prison allocation.

“I think the Bureau of Prisons needs to work on that assessment. They can give whatever weight they want to my recommendation,” the judge said in court.

Marra noted the $42.6 million restitution to Medicare is a preliminary figure. Prosecutors stated they may pursue additional restitution on behalf of private insurers and patients.

The government’s  sentencing memorandum noted much of the money Melgen earned has been spent or cordoned off from collection efforts.

“Although the defendant had received close to $200 million from his medical practice in the seven years prior to his arrest, almost all of it has now been dissipated by the defendant and his family or protected for their benefit through trusts and other asset protection measures,” the memorandum states. “While the government intends to vigorously follow all possible avenues for collection of restitution on behalf of the defendant’s victims, recovery of any significant amount will be difficult at best.”

Throughout the sentencing hearings, the battle to preserve some sliver of Melgen’s reputation as a physician persisted, with opposing attorneys debating about whether, in addition to reaping undue profits from unneeded diagnostic tests and treatments, Melgen injured patients.

Assistant U.S. Attorney Roger Stefin claimed some of Melgen’s patients developed serious eye infections from unnecessary Lucentis injections administered on the basis of bogus macular degeneration diagnoses. Stefin further alleged Melgen often used an outdated, destructive laser treatment that can damage patients’ ocular tissue.

Citing a long list of commendation letters from Melgen’s patients, the defense bit back at every turn, maintaining the doctor was aggressive in his treatment but did not employ practices that were reckless or harmful. Although his treatments were often inaccurately billed under macular-degeneration diagnosis codes,  the defense claimed the treatments were justified and in many cases given to patients with severe diabetic eye conditions needing treatments similar to those used for macular degeneration.

Menchel argued Melgen’s use of low-intensity laser therapy was mischaracterized by the government as the old, high-intensity type of laser treatment that can leave patients with permanent blind spots.

The defense during a December sentencing hearing pointed to one Sam Belcher as an example of a diabetic patient whom Melgen properly treated but inaccurately billed under a macular degeneration diagnosis. This prompted Assistant U.S. Attorney Alexandra Chase to remind the court that Belcher purportedly developed an eye infection that he attributed to a contaminated Lucentis eye injection he received in Melgen’s office.

Belcher was one of a slew of plaintiffs who sued Melgen’s medical practice in state court, alleging that Melgen’s habit  of compounding Lucentis vials — to milk multiple doses from them — caused bacterial contamination and eye infections in patients. Melgen’s liability insurer at one point asserted that the pharmacy that compounded the Lucentis for Melgen was responsible for the contamination. Several of the lawsuits have been settled, though Belcher’s is still pending.

After months of wrangling in the criminal case over whether Melgen harmed patients, the Florida judge distilled the debate down to one line in the sentencing order, in which he considered the government’s request for a sentencing guideline enhancement meant for defendants who expose victims to a conscious or reckless “risk of death or bodily injury.”

“The court finds that the treatments provided by defendant to his patients, although unnecessary, do not meet the definition under the [sentencing] guideline,” Marra wrote.

The doctor was convicted in April 2017 of 67 counts including health care fraud, falsifying medical records and submitting fictitious Medicare claims.

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