Medicare fraud or ‘honest mistakes’? Eye doctor Melgen’s trial begins

March 10--WEST PALM BEACH -- John Brockman worked as a celery picker among other jobs out in the Glades where he raised his family. A deacon of his church, his health took a turn for the worse about a decade ago when he was diagnosed with diabetes. He then lost sight.

This is how Brockman ended up in the care of Dr. Salomon Melgen, the wealthy prominent ophthalmologist and political donor now tied to a bribery scandal involving Democratic U.S. Sen. Bob Menendez, of New Jersey. Brockman scraped up enough money in order to take Palm Tran for treatments, hoping he could regain back a little bit of his eyesight, maybe make out a shadow of his waving grandchild.

A federal prosecutor said Thursday he was just one of many seniors -- some poor minorities -- who were pawns in the doctor's scheme to defraud the federal medical insurance program for the elderly and disabled. It was the opening shot by the government in Melgen's $108 million Medicare fraud trial on Thursday.

Assistant U.S. Attorney Carolyn Bell, in a powerful opening statement, painted a picture of a Medicare fraud factory at Melgen's practice where patients were diagnosed, before even being seen by the doctor, with age-related macular degeneration, a condition that causes blindness. Staff would color in drawings of the patient's eye for medical charts in order to back up Melgen's "superbill" to Medicare before patients were ever examined.

Invasive procedures

The prosecutor said the government culled about 30 cases from 2008-13 as a sample of Melgen's practice and found incidents of patients diagnosed with macular degeneration who did not have the disease. Almost every one of his patients underwent repeated invasive procedures -- injections and laser treatment.

"This highly trained, Harvard- and Yale-educated specialist would falsely diagnose patients to justify injecting eyes that did not need it and lied to Medicare about it," Bell said.

And while Melgen could have used a "state-of-the-art" machine to diagnose macular degeneration, such a painless procedure would have resulted in only a $50 payment from Medicare. Instead, he used outdated, incomplete and invasive diagnostic tests that amounted to tens of thousands of dollars in Medicare billing for each patient, Bell said.

Melgen's attorney, though, told jurors that prosecutors cherry-picked honest billing mistakes in order to paint them as fraudulent. He said even the government's own experts disagree when looking at Melgen's patient files, saying this area of medicine is often more art than science.

"Doctors don't become doctors to become scribes," Melgen's defense attorney, Matthew Menchel, told the jurors. "Doctors become doctors to practice medicine, and at the same time the paperwork can be overwhelming." The opening statement by his attorney was the first time Melgen has publicly addressed the more than 70 fraud counts filed against him.

Melgen's attorneys have said in court documents that the FBI used a criminal investigation into the doctor's practice to cull material for the bribery case. Menchel didn't mention the Menendez bribery scandal to the jury but he again targeted the FBI, saying agents manipulated the doctor's patients to turn against him and change their stories.

Loved physician?

"Many of Dr. Melgen's patients didn't just like him. They loved him," Menchel said.

The government will call former patients and employees to testify against the doctor. The first patient to testify laid the foundation for Melgen charging Medicare for treatments in West Palm Beach she didn't receive.

Menchel said some of the patients who will testify are not credible, such as one who is expected to say that Melgen treated his prosthetic eye with a laser. The attorney said it was preposterous that a Harvard-trained retinal surgeon would put a laser into such an oculus.

He said many of the government's own witnesses will admit their eyesight got better under the doctor's care. As for filling out paperwork or the diagnosis before seeing a patient, the attorney said that was pro forma for most busy medical practices to move along information for the next appointment and that Melgen's use of dyes for diagnostic tests was the gold standard -- not some machine as promoted by the prosecution.

Menchel told the jury that he found it interesting that in such a big scheme to defraud that not one of the doctor's former staffers had been charged with fraud. "There will not be a shred of evidence that he told technicians or staff to commit fraud," the attorney said.

The trial is expected to take several weeks.

Bribery scandal

Melgen also faces 13 additional charges in a separate case in connection with allegedly showering gifts upon Menendez in exchange for helping the physician in a billing dispute with the Centers for Medicare & Medicaid Services, among other favors.

Menendez has tried to have his corruption case thrown out, unsuccessfully so far, but promises to appeal to U.S. Supreme Court if necessary.

Menendez used his pull to influence Medicare's reimbursement policy, which netted Melgen "tens of millions of dollars" for his practice, prosecutors say. The senator also intervened on his behalf in a dispute in the doctor's native Dominican Republic and helped obtain visas for Melgen's numerous girlfriends, prosecutors say.

The quid pro quo, prosecutors say, was that Menendez received gifts from his friend worth close to $1 million. The doctor provided plane trips and vacations to Paris and to the doctor's Caribbean villa in the Dominican Republic, they say.

Melgen also contributed $800,000 in contributions to a legal defense fund and his election campaigns, according to the indictment in New Jersey.

As previewed by the opening statements, a good portion of the trial will center on Melgen's use of the pricey eye drug called Lucentis, using single-dose vials on multiple patients and then separately billing Medicare and other health care providers for the full rate. Medicare reimburses doctors their wholesale cost of $1,900 per vial plus a 6 percent surcharge, $114.

The doctor claimed in court documents that the government doesn't explicitly prohibit multi-dosing of Lucentis and that the government would have ended up paying full price for each dose anyway. His lawyers also accuse the government of overcharging the doctor with corresponding statutes for the same allegation -- an issue that won't be addressed until the later in the trial.

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