Lawyers tussle over whether Melgen’s misdeeds cost $64K or $136 million

How much time Dr. Salomon Melgen should spend behind bars for billing government and private insurers for treating hundreds of elderly patients for eye ailments they didn’t have is now a $136 million question.

Saying the Palm Beach County retinal specialist’s practice was “permeated by fraud” federal prosecutors on Thursday argued that that the entire $136 million Melgen sought from insurers and patients over six years could be considered ill-gotten gains.

Underscoring their wide difference of opinion with prosecutors, Melgen’s defense attorneys offered U.S. District Judge Kenneth Marra a far lower figure to use to account for the physician’s misdeeds — $64,269 to be precise.

Unable to fully explain their disparate views during three days of hearings, the two sides are to return to court again, possibly before the year ends if Marra can find a free day in his schedule.

The hearing, that began Tuesday, has turned into a mini version of a seven-week trial that ended in April when the wildly successful, politically connected physician was convicted of 67 counts of health care fraud.

In the meantime, the 63-year-old doctor has been tried on influence-peddling charges in New Jersey with his longtime friend, U.S. Sen. Robert Menendez, D-New Jersey. That trial ended last month with a hung jury when jurors couldn’t agree if the two engaged in what prosecutors described as a mutually beneficial bribery scheme.

Despite their differences, prosecutors and defense attorneys agreed that the health care fraud case is among the most complicated of their decades-long careers. Further, they agreed, putting a dollar amount on Melgen’s fraud is key to Marra’s sentencing decision because, under federal sentencing guidelines, the greater the loss, the greater the punishment.

While Melgen attorney Matthew Menchel declined to say what he believes is an appropriate punishment, in court papers he has made it clear it is far less than the 30-year sentence prosecutors are seeking.

Unlike other fraud cases, where the entire operation is a scam, even prosecutors acknowledged that Marra could decide that Melgen properly treated some of the roughly 2,000 patients who streamed into clinics he operated in West Palm Beach, Wellington, Delray Beach and Port St. Lucie from 2008 through 2013.

As a result, Assistant U.S. Attorney Alexandra Chase offered Marra three options he could use to determine the amount of the fraud. If Marra rejects her claims that his entire practice was a sham, Marra could opt to include only the $98 million Melgen sought for treating patients he falsely claimed had age-related wet macular degeneration, a disease that slowly robs victims of their sight.

Under another scenario she offered, based on calculations that 77 percent of patients received false diagnoses, the amount would drop to $97.3 million.

However, defense attorney Josh Sheptow claimed Melgen should get “credit” for helping patients. While Melgen may have billed Medicare under the wrong codes, his treatment helped patients, he argued. Look at the letters dozens of patients wrote, describing Melgen as a good doctor who helped restore their sight, he told Marra.

Recognizing that Medicare wouldn’t pay for injections he gave patients to treat diabetes-related eye diseases, Melgen claimed they had wet macular degeneration, Sheptow said. But, he insisted, that doesn’t mean the treatments were bogus.

“These patients had sick eyes independent of whether they had wet macular degeneration,” he said.

Marra voiced skepticism about Sheptow’s claims. “So your argument is … a doctor can do whatever he thinks is appropriate and if it turns out it has some benefit, there’s no loss to Medicare?” he asked.

But, Sheptow insisted, Melgen was a victim of his own skills. Years later, Medicare approved the injections for treatment of eye diseases associated with diabetes. Melgen, he said, helped people who were losing their vision. That, he insisted, is key to determining the loss amount.

Attorney Kirk Ogrosky, who also represents Melgen, agreed. “Was it his intent to provide treatment these people didn’t need?” he asked. The answer, he said, was no.

Treating as many as 140 patients a day, Melgen’s entire operation was set up to “maximize billing at the expense of patient treatment,” Chase countered. Charts were filled out by technicians, complete with drawings of eye ailments and diagnoses of wet macular degeneration, before Melgen examined the patients, she said.

Nearly all patients were given the same diagnostic tests, which were performed quickly before accurate results could be recorded, she said. Further, most patients received identical treatment that included zaps from potentially harmful lasers and painful eye injections. In some cases, he billed Medicare for treatment of prosthetic eyes.

“This was a protocol and a pattern of treatment rather than treatment tailored to an individual patient,” she said. “He devised it to take advantage of the Medicare population.”

Ogrosky acknowledged that some of Melgen’s procedures were ill-advised. “The pre-prepping process was flawed,” he said, referring to the practice of filling out patient charts in advance. “The testing protocol that was set up may have been too much.”

But, he insisted, Melgen meant no harm. His patients loved him. Some turned on him only after prosecutors told them they had been victims of a fraud and could be eligible for restitution.

Melgen, who is expected to appeal the verdict and whatever sentence he receives, watched impassively as the attorneys argued his fate. He occasionally wrote notes to his lawyers. He smiled wanly at his wife, Flor, and others who gathered to support him and watched as he was led out of the courtroom in shackles, headed back to jail to await the next hearing.

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