Play Live Radio
Next Up:
0:00 0:00
Available On Air Stations

Prosecutors Insist Eye Doctor Stole $136 Million From Medicaid


Either Dr. Salomon Melgen is one of the biggest Medicare swindlers ever, stealing more than $100 million from the federal health care program, or a penny ante thief who walked off with $64,000.

Those were the widely contrasting arguments made Thursday by prosecutors and Melgen's defense attorneys as they tried to persuade U.S. District Judge Kenneth A. Marra to sentence the Dominican-born, Harvard-trained doctor to 30 years or something significantly less.

Prosecutors are seeking 30 years. They say the doctor subjected elderly patients to painful tests and treatments they didn't need, for diseases they didn't have, to support a vacation home in his native Dominican Republic, lavish trips to Europe and outside business interests. The government also says he bribed New Jersey Democratic Sen. Bob Menendez.

Assistant U.S. Attorney Alexandra Chase told Marra that Melgen's practice was so "permeated" with fraud that the judge should accept the government's estimate. Chase said even if the 63-year-old Melgen stole just $65 million — about half as much — he would be eligible for a life sentence.  She pointed to Melgen often seeing more than 100 patients a day, and his employees performing in seconds tests that normally take 10 minutes or more, making them useless for diagnosis but allowing the doctor to bill Medicare for them.

"The system was set up to maximize fraud," she said.

Melgen's attorneys argued that the government only proved Melgen stole about $64,000, the amount they will concede was falsely charged for 30 patients who stood in during the trial as a representative sample of the more than 2,000 Melgen saw between 2008 and 2013, most of them numerous times. They say the selection of those patients came from a larger sample of 310 that wasn't random but cherry-picked and any extrapolation from those samples should be thrown out. They want a short sentence, perhaps even time served.

Josh Sheptow portrayed his client as ahead of his time, injecting patients with then-experimental drugs that are now approved. Medicare does not pay for experimental treatments, noted Sheptow, who suggested Melgen may have falsified billing statements to get around those restrictions. That would still be fraud, Sheptow said, but he said the treatments were legitimate and therefore the government didn't lose anything with many of his patients.

A jury found Melgen guilty of 67 counts last April after a two-month trial, including health care fraud, submitting false claims and falsifying records in patients' files.

He is charged separately with bribing Menendez in exchange for interceding with the Medicare officials investigating his practice and other favors, including getting visas for his foreign mistresses. A federal jury in New Jersey hung on that case last month, and prosecutors there have not said whether they will retry them.

Melgen's attorneys rested much of their sentencing argument on the doctor's use of the drug Lucentis between 2008 and 2013. During most of that time, Medicare approved its use only for wet age-related macular degeneration or ARMD, a retinal disease that can cause blindness.

Lucentis is injected in tiny doses — 0.5 milliliters, or a sixty-fourth of a teaspoon. It comes in single-use vials that contain four times that amount — a sixteenth of a teaspoon. The manufacturer's instructions say doctors should pull the vial's entire contents into the syringe and then squeeze out and dispose of the excess — about a thirtieth of a teaspoon — before administering the injection. Medicare reimburses doctors their wholesale cost of $1,900 per vial plus a 6 percent surcharge, $114.

Melgen used each vial for three or four injections, charging Medicare $2,014 each time. Prosecutors say the two or three extra injections were theft. Melgen's attorneys argue that he cost the Medicare program no extra money by avoiding what he would have spent buying more vials.

Melgen also administered the drug to patients who did not have wet ARMD, although he told Medicare they did. Sheptow suggested that the patients had diabetic-related sight loss, types of which Lucentis is now authorized for. He said Melgen and other eye doctors knew Lucentis worked on those diseases and suggested Melgen gave a false diagnosis to Medicare to be reimbursed for a treatment he knew was effective, even if it wasn't yet approved. That might be fraud, he said, but Medicare lost no money because its mission of providing medical care to the elderly was met.

What had been a scheduled as a three-day hearing that started Tuesday will now need a fourth, possibly later this month or in January, as the sides did not finish their presentations.  Marra has said he will then need time to process the information before pronouncing sentence.