A South Florida eye surgeon who’s a friend of a U.S. senator is under federal criminal investigation for billing Medicare millions of dollars to treat elderly patients for services they may not have needed, The Miami Herald has learned.
Federal agents began investigating Dr. Salomon Melgen last year, sources say, after investigators suspected he overbilled the taxpayer-funded health program by overprescribing a high-priced drug called Lucentis, which is injected into patients’ eyes.
Several sources familiar with the doctor’s practice said he used the drug, which costs $2,000 a vial, to treat patients with macular degeneration more than any other ophthalmologist in Florida and possibly the country. His high patient volume also raised red flags for investigators, the sources said.
Under Medicare policies, a doctor may only prescribe treatment that is “reasonable” and “necessary.” To make a case, federal prosecutors would have to prove that Melgen needlessly treated patients simply to run up sky-high Medicare bills.
Melgen, whose lawyers have denied any wrongdoing, finds himself in the middle of two federal investigations: His Vitreo-Retinal eye clinics in West Palm Beach and two other South Florida sites were raided last week by agents with the FBI and the Department of Health and Human Services, who are investigating possible Medicare fraud. A separate FBI investigation revolves around the doctor’s relationship with U.S. Sen. Robert Menendez, D-N.J., and the trips they took on his private plane to Melgen’s villa at a resort in the Dominican Republic.
Lisa Strelec, a technician who has worked for Melgen for about 20 years, said the doctor’s West Palm Beach office was only closed for two days after the raid, when agents carted away boxes of financial records, patient charts and computer equipment. She vociferously defended Melgen as a dedicated, “wonderful” doctor who works 60 to 80 hours a week.
Strelec said that about 20 employees including herself readily gave the FBI interviews. She said FBI agents did not ask her any questions about Melgen’s personal life or other business ventures and investments. She said the agents only asked questions about Melgen’s practice, including the number of patients, insurance coverage and medical charts.
She said he treats patients -- mostly with diabetes, macular degeneration or retinal detachment -- on high-end plans and those who are poor. “He sees patients on Medicare, Medicaid, private,” she said. “He sees Spanish, white, black. The doctor sees every patient.”
State records show five patients have filed medical malpractice claims against Melgen, resulting in three settlements totaling $575,000. The remaining two claims were not settled, according to the Florida Office of Insurance Regulation.
Melgen donated more than $750,000 last year to Menendez’s reelection campaign and other political committees and candidates.
Menendez has insisted that he only took two personal trips on the doctor’s plane and recently reimbursed him $58,500 for the travel expense — but only after an ethics complaint was filed against him in New Jersey last year.
Of late, Menendez also has drawn media coverage for contacting Medicare officials to help resolve Melgen’s nearly $9 million billing dispute stemming from a 2008 audit. The administrative dispute revolves around claims filed by Melgen for his patients who received Lucentis.
Menendez also advocated on his friend’s behalf to the U.S. State Department and at a Senate hearing, where he pushed for enforcement of a $500 million port security contract in the Dominican Republic that would directly benefit Melgen. The doctor owns half of a company that won the contract from the Dominican government a decade ago, but is now stalled.
On Thursday, Menendez acknowledged that his office contacted Medicare officials to help Melgen, but the senator denied he sought to intervene improperly in billing disputes between the doctor and the government.
Menendez said he contacted the U.S. Centers for Medicare & Medicaid Services to ask generally about billing practices and policies. “The bottom line is, we raised concerns with CMS over policy and over ambiguities that are difficult for medical providers to understand and to seek a clarification,” Menendez told The Associated Press.
The senator called federal health officials in 2009 and met with them again in 2012, each time urging them to change what he called an unfair payment policy. Medicare ordered Melgen to repay the government program $8.9 million, and he complied, but he is appealing the decision.
Melgen’s lawyers assert he did not bill Medicare fraudulently. They contend the doctor differed with the program over its reimbursement policy for Lucentis.
Medicare reimburses $2,000 for each vial of the drug used to treat macular degeneration. The policy is that one vial is used for each patient. But Melgen is suspected of using one vial for as many as four patients, while submitting claims of up to $8,000, as if he had used separate vials for each, according to sources familiar with the billing dispute.
In a 2012 report by the Health and Human Services’ inspector general, the agency recommended that Medicare officials stop using the drug because it was so costly, noting there was a cheaper and equally effective alternative called Avastin. In 2010, Medicare approved $1.1 billion in reimbursements for Lucentis, a drug manufactured by Genentech.
When Menendez contacted federal officials in 2009 and 2012, Melgen was dealing with several financial setbacks. In 2008, the Internal Revenue Service filed a $6 million tax lien against Melgen’s Palm Beach estate. Melgen satisfied that lien in 2011, but the IRS slapped a new $11.1 million tax lien on Melgen that same year.
Richard Dansoh, Melgen’s Miami lawyer, told The Herald Thursday that Melgen has satisfied all his tax obligations, although public court records do not reflect that.
Over the years, Melgen has steered more of his campaign money to Menendez — at least $655,700 — than any other politician. That’s far more than all the money the Florida doctor has contributed to Florida members of Congress.
The sums of campaign cash have invited extra scrutiny, as has the fact that the New Jersey senator isn’t Melgen’s elected official in Congress. Usually in Washington, a constituent’s interests are represented by their home-state congress member or senator.
Sources told The Herald that the doctor has asked various members of Congress over the years for help with one of his lawsuits, his port deal, Medicare and a tax issue. For the tax issue, a consulting company wrote Menendez and four Florida lawmakers on Melgen’s behalf after the November election.
Miami Republican Rep. Ileana Ros-Lehtinen’s interests as Committee on Foreign Affairs chair also dovetailed with the business interests of Melgen, who has crusaded for the Dominican Republic port-security contract to X-ray cargo.
A month after contributing $5,000 to Ros-Lehtinen, the congresswoman on April 10 wrote Aníbal de Castro, the Dominican Republic’s ambassador to the United States, a letter asking about “what specific steps your administration has taken to improve cargo security and reducing the flow of drugs to the United States and how we can work together towards achieving this goal.”
Ros-Lehtinen said she was writing the note because her committee was increasingly concerned that “the illicit drug trade and the presence of drug cartels may shift towards the Dominican Republic.’’
Over the years, Melgen has attracted both friends and enemies in his profession, mainly because of his high profile and wealth.
HAD MET MELGEN
Dr. Richard Shugarman, an ophthalmologist in West Palm Beach, said he met Melgen about 20 years ago when Melgen first came to the community after finishing training in Boston. Shugarman said he reached out to Melgen to learn about the new treatments he was using.
Shugarman said he helped Melgen on many surgeries in Palm Beach County.
Between surgeries, “he was frequently on the phone talking to people about business deals and stock, things other than medicine,” Shugarman said.
The two doctors sometimes socialized together with their families. Melgen would sometimes mention his political connections.
“I do know he was friendly with Gov. Chiles — he operated on him while he was governor,” Shugarman said.
“There was no question to me he liked his political connections but he never flaunted them or threatened anyone with them, not that I have ever heard of.”
El Nuevo Herald staff writer Melissa Sanchez contributed to this report.