Palm Beach dermatologist gets 3 years in prison for health-care fraud

Feb 22, 2018
Dr. Gary Marder, right, arrives for his sentencing hearing for charges of health care fraud and obstruction of a criminal health care investigation at United States District Court Southern District of Florida Friday February 16, 2018 in West Palm Beach. (Meghan McCarthy / The Palm Beach Post)

A Palm Beach dermatologist who overcame an abusive childhood as the son of a Holocaust survivor and gave mightily to Jewish causes was sentenced Thursday to three years in prison in connection with what federal prosecutors described as an $18 million health care fraud scheme.

In sentencing Dr. Gary Marder, U.S. District Judge Robin Rosenberg acknowledged the challenges the 61-year-old osteopathic physician faced in his youth and applauded his charity. But she told him and his roughly 50 supporters who crowded into the courtroom that a prison term was necessary not only to punish Marder but to prevent other doctors from ripping off Medicare and other federal insurers.

“One of the primary objectives of the sentence is to send a message to other health-care providers that billing fraud is a serious crime that carries with it a correspondingly serious punishment,” she said, quoting an appellate court ruling in a similar case.

One of Marder’s six children sobbed openly as Rosenberg announced her decision.

The sentence was less than the minimum recommended under federal guidelines of nearly four years in prison. Marder, however, had sought house arrest, pledging to do fund-raising and other volunteer work at the South Florida Learning Academy, a special needs school in Coconut Creek that is also known as the South Florida Jewish Academy.

Over objections from a federal prosecutor, Rosenberg allowed Marder to remain free until April 28, when he is required to turn himself in to begin serving his sentence on charges of health-care fraud and obstructing a criminal health-care investigation. She also ordered him to pay a $200,000 fine. He has been stripped of his medical license and has paid $368,000 in restitution, she said.

That amount is in addition to the roughly $6 million Marder has already paid to settle a civil lawsuit government lawyers filed against him in connection with phony bills he submitted while treating patients at his offices in Port St. Lucie and Okeechobee.

The government’s case began as a whistleblower’s lawsuit filed by fellow Palm Beach County dermatologist Dr. Ted Schiff, who operates Water’s Edge Dermatology clinics throughout the state. Schiff claimed he noticed a disturbing trend among patients who came to him after seeing Marder. They had been told at Marder’s clinics that they had squamous cell cancer, but Schiff claimed many of their skin ailments were as benign as freckles or warts.

But when government attorneys took over the whistleblower lawsuit, they instead focused on Marder’s billing practices. They claimed they discovered $18 million in fraud, including bills for sophisticated radiation equipment Marder didn’t own and ones for treating patients on days when his office calendars showed he was out of the country.

When Marder settled the lawsuit, without admitting wrongdoing, Schiff, under a federal whistleblowers lawsuit law, was rewarded for his tip by getting about $1.1 million of the settlement.

Assistant U.S. Attorney Ellen Cohen said the criminal case against Marder was built on “a small slice” of the fraud uncovered in the civil lawsuit. As part of a plea deal, Marder admitted he falsely billed federal insurers for a radiation specialist and added bogus paperwork to patient files to mislead investigators.

In a voice that could barely be heard, Marder tearfully apologized to his family and Jewish leaders, including several rabbis, who came to support him. His attorneys, Richard Lubin and Fritz Scheller, said Marder bears the same scars as the children of many Holocaust survivors who never recovered from the horror of concentration camps and took it out on their families.

Marder was haunted by his past and tried to rise above it by becoming a doctor and a philanthropist, Scheller said. “He’s a man, who despite his criminal conduct, has accomplished so much good in the world,” he said.