Palm Beach doctor agrees to pay $18M to settle Medicare suit

Feb. 08--A dermatologist who lives in a sprawling oceanfront mansion in Palm Beach has agreed to pay $18 million to reimburse the federal government for money he received from Medicare for radiation and biopsies that weren't medically necessary.

If Dr. Gary Marder doesn't pay up by Feb. 24, the amount will swell to $41 million, according to papers filed in U.S. District Court late Monday.

But, as part of a separate agreement with the government, Marder can pay $5.2 million before that date to satisfy the $18 million accord. He also will have to deed to the government a vacant lot, valued at $650,000, he owns on Hutchinson Island in Martin County, the agreement says.

Sources said the $5.2 million is the amount the government can reasonably expect Marder to pay. Although his 12,700-square-foot home is valued at $28 million, it can't be seized under laws that protect homesteads.

Dr. Robert Kendall, a Coral Gables pathologist who worked with Marder in what an FBI agent described as a kickback scheme, also agreed to pay $250,000 for his role in the scheme.

Dr. Ted Schiff, a Palm Beach County dermatologist who spurred the lawsuit, said the settlement is a sad commentary on health care abuse.

"It is rampant in South Florida, and if it continues to go unreported, it will continue to undermine the trust our patients place in us, as well as the reputation of the healthcare community as a whole," he said in a statement.

The lawsuit began in 2013 when Schiff noticed an alarming trend in patients that came to him after seeing Marder at his offices in Port St. Lucie or Okeechobee. Told by Marder that they had squamous cell carcinoma, Schiff discovered many had no serious skin ailments.

Instead, he said in a whistleblower's lawsuit that was ultimately pursued by the U.S. Attorney's Office, people with conditions as benign as freckles, warts or even irritated skin were told by Marder that they had skin cancer.

Under the terms of the federal whistleblower act, Schiff would be eligible for 15 percent to 25 percent of any money the government recovers. A settlement agreement shows he is to get 22 percent. If Marder pays $5.2 million, that would be about $1.1 million. Attorney Jeffrey Sloman, who represents Marder, declined comment on the agreement.

When federal attorneys took over the lawsuit that attorneys Larry Klitzman and Daniel Miller had filed on Schiff's behalf, they focused on Marder's billing practices to Medicare and Tricare, a federal health insurance program for active and retired members of the military and their families.

When interviewed as part of that lawsuit, Marder and Kendall often invoked their constitutional rights against self-incrimination because federal prosecutors were also looking at the operation. It is not known whether a criminal case is still being pursued.

The lawsuit settlement included this sentence: "This Agreement is neither an admission of liability by the Marder Defendants nor a concession by the United States that its claims are not well founded."

Assistant U.S. Attorney Mark Lavine discovered Marder was working with Kendall. From about January 2008 to May 2014, Marder sent 35,000 Medicare biopsy specimens to Kendall for testing. Instead of billing the federal agency himself, Kendall sent the bills to Marder, who would give him a cut, Lavine claimed.

Kendall's attorney, Jared Dwyer said Kendall was satisfied with the agreement. "Dr. Kendall looks forward to getting back to serving his clients on a full time basis going forward," Dwyer said.

No action has been taken against either Marder or Kendall and both continue to be licensed to practice medicine, according to records from the Florida Department of Health.

In the complex litigation, Lavine claimed Marder billed the federal insurance plans for treating patients with sophisticated equipment he didn't own. An FBI agent, who participated in a 2015 raid of Marder's Port St. Lucie office, said she saw a small piece of equipment, describing it as similar to machines dentists use to take X-rays.

In bills to Medicare, Marder instead claimed he used machines that deliver so much radiation they are typically housed in separate buildings. Given the power and expense of such equipment, the reimbursement rate for it is roughly seven times more than the machines he actually used, Lavine wrote. That alone accounted for $6 million Medicare paid to Marder over four years.

Combing through Marder's appointment calendars, Lavine and other federal attorneys said they also discovered Marder billed Medicare more than $2.7 million for 8,000 radiation treatments on 256 days that he was out of the country. According to Medicare rules, a physician must be on site when such treatments are administered. Marder, who claimed he was available by phone to physician assistants would were giving the treatment, was paid more than $830,000 for those claims, Lavine wrote in the lawsuit.

Schiff said he hopes the agreement spurs other doctors to act. "I can only hope that more health care providers will take the time and effort to report fraud and abuse," he said.

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