FEDERAL INVESTIGATION

Despite federal probe, patients of Palm Beach County eye doctor see him as ‘godsend’

 
Hector Gabino / AP

jweaver@MiamiHerald.com

As a child, Oscar Haza almost lost his left eye in a bike accident in the Dominican Republic. As an adult, he began losing vision in the same eye from retina damage.

But today, the Miami journalist is able to host TV and radio news shows, thanks to Lucentis, an injectable drug that has helped combat his macular degeneration. Haza considers the ophthalmologist who regularly sticks a needle into his left eye — Salomon Melgen — a miracle worker.

“He’s not a conservative eye doctor,” said the 61-year-old Haza. “He’s always been on the cutting edge.”

That’s not exactly how the FBI and the Department of Health and Human Services view the West Palm Beach ophthalmologist. Melgen, 59, has been under a federal grand jury investigation for alleged Medicare fraud for more than a year.

Perhaps best known for his close friendship with U.S. Sen. Bob Menendez, D-N.J., Melgen has seen his four clinics in Palm Beach and St. Lucie counties raided twice since January, as federal agents strive to build their criminal case against him.

Investigators believe he provided treatments for patients with “wet” macular degeneration — leaky blood vessels that damage the area of the eye responsible for central vision — that were often medically unnecessary, according to sources familiar with the criminal probe. Melgen has become Medicare’s top biller in the nation for Lucentis, a costly drug that effectively blocks new blood vessel growth and leakiness.

But Melgen, a multimillionaire who regularly travels in his private plane from Palm Beach County to his native Dominican Republic, is not taking it on the chin.

He’s fighting back in Miami federal court, suing Medicare to recover about $9 million that he asserts the taxpayer-funded program owes him for legitimate Lucentis claims. He has also hired two former federal prosecutors with high profiles in Washington and South Florida to defend him against potentially looming Medicare fraud charges.

“Dr. Melgen cares deeply about his patients and works tirelessly to improve their vision and quality of life,” said Kirk Ogrosky, with the Washington law firm Arnold & Porter, who is handling Melgen’s defense with Miami attorney Matthew Menchel.

“Dr. Melgen continues to cooperate with the government, and we hope that the investigation will be concluded soon so that the doctor can continue focusing on his patients’ care.”

Melgen has been on Medicare’s radar for years. In 2009, Medicare auditors investigated his billing practice for treating patients with Lucentis, which is manufactured by San Francisco-based Genentech, and concluded that his company, Vitreo-Retinal Consultants, was overpaid about $9 million over the previous two years.

According to the audit, the FDA-approved labeling for Lucentis stated that physicians should use one vial of the drug for each patient, at a cost of about $2,000. Each vial contained four doses, but the labeling stated that physicians should use only one dose for each patient and discard the excess amount, the audit said.

In 2007 and 2008, Melgen typically used each vial to treat four patients and billed Medicare for $8,000, according to the audit.

The Medicare auditiors accused him of improper billing based on his “multidosing” of Lucentis. During his appeal, Melgen returned the millions in payments that he had received from Medicare.

In June, Medicare officials concluded he should only have used one dose in each vial for every patient, and thrown away the rest. Melgen agreed to adopt that policy going forward.

In response, however, Melgen’s lawyers sued the Health and Human Serevices Secretary Kathleen Sebelius seeking to recover his Medicare payments. They asserted he broke no Medicare rules and had the discretion to multidose the drug.

In the end, Medicare’s cost would have been the same even if Melgen had used one vial of Lucentis to treat each patient and billed the program accordingly, they argued in court papers.

Of course, Melgen would have had to spend more of his own money to buy more Lucentis vials from the drug manufacturer to treat the same number of patients.

Medicare officials responded to the suit by suspending all reimbursements to Melgen’s company, based on “credible allegations of fraud” because the doctor “misrepresented services billed to” the program, according to court records. His lawyers sought an injunction, saying Medicare was simply retaliating to cripple his 30-employee practice. Then, in October, Medicare officials decided to lift the suspension to avoid that legal fight, records show.

After all that wrangling, Medicare’s case against Melgen now boils down to his multidose-billing practices in 2007 and 2008 — though he continued to submit claims for Lucentis treatments in the same manner for the next four and a half years.

Meanwhile, Melgen's legal dispute with Medicare has also become an area of interest to a federal grand jury in Miami that is examining the physician’s relationship with Menendez, the New Jersey lawmaker.

Justice Department prosecutors, along with the FBI, have investigated whether Menendez abused his official position to help Melgen while the physician made sizable campaign donations to the senator and provided him with free trips to the Dominican Republic, among other allegedly unreported gifts.

In 2009 and again in 2012, Menendez asked top Medicare officials to clarify the billing rules for administering Lucentis because the senator thought they were ambiguous, according to his aides.

A federal grand jury in Miami — unrelated to the criminal probe of Melgen’s Medicare billing activity — is investigating that matter, according to sources.

But the panel, convened by the Justice Department early this year, has decided not to file charges regarding Melgen’s travels with Menendez on the doctor’s private plane to his estate at the Casa de Campo resort in the Dominican Republic. According to sources, explosive allegations that the two men traveled to the island nation to have sex parties with prostitutes proved totally baseless. Those allegations were first reported by a right-wing blog before Menendez’s reelection in November 2012.

Melgen was thrust into the national spotlight — along with Menendez — when federal agents raided his West Palm Beach office in January and hauled away dozens of boxes of patient and financial records for the Medicare fraud case.

The news media reported on his medical practice and his multimillion-dollar investments in a variety of businesses, including a data company in Florida and a port security contract in Santo Domingo. Melgen, who is married, had also sued a former girlfriend to return almost $1 million that he said was for a retail clothing venture in the Dominican Republic.

His patients — several of whom agreed to talk with the Miami Herald after their names were provided by the doctor’s attorneys — said they were drawn to him because of his reputation as a skilled eye doctor.

For their part, four of Melgen’s patients said they had no clue about the federal investigation, but also said they didn’t understand why the government was targeting him. Collectively, they spoke of him as a “godsend” who has improved their vision with Lucentis injections along with other treatments for macular degeneration. It is a major cause of blindness among older adults.

Stephen Sax, a retired photojournalist who started suffering from vision loss in Los Angeles a few years ago, moved to the Fort Pierce area in 2012 to be closer to family. This year, he started seeing Melgen, who administers Lucentis injections and follows up with laser procedures to cauterize blood vessels to stem the bleeding.

“He stays right on top of it,” Sax, 75, said. “He’s not letting it get to a point where I’m regressing.

“What’s happened to me over the last two or three months is remarkable. I see the form of things if not the detail,” said Sax, who is able to travel to Melgen’s Port St. Lucie clinic because the doctor’s office provides transportation. “Without Dr. Melgen’s help — I want to make this clear — I wouldn’t be able to read anything. He gives me hope, he really does.”

Angel Pimentel, who used to drive a truck for a living, got involved in a car accident in 2005 that badly injured his eyes. He went through several surgeries, but nothing improved.

At a braille club a few years ago, several people with detached retinas recommended that he see Melgen, who encouraged him to change his lifestyle and lose weight. The doctor treats him with the combination of Lucentis injections and laser procedures.

“It was like a miracle,” said Pimentel, 45, of West Palm Beach. “Both of my eyes were blind. But when they put the light on my eyes now, I’m able to tell what it is.

“All I want right now is a little bit of eyesight,” he said, “and I’m closer than I’ve ever been.”

Another patient, Claudia Tewes, 63, from Palm Beach Gardens, said she couldn’t see or go anywhere five years ago because of broken blood vessels in her eyes, which developed after undergoing cataract surgery with another doctor. She started the combination Lucentis-laser treatments with Melgen two years ago, and her eyesight has dramatically improved, Tewes said.

“I was in darkness and he turned back on the light on life for me,” said the mother of three grown children. “Now I can read ... I can go anywhere.”

Haza, who hosts Spanish-language news shows on Z92.3 FM and MegaTV in Miami, said that while Melgen has built a lucrative practice, he still provides lots of free treatment for patients without insurance.

Said Haza: “I think he’s on a mission to help people.”

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