Palm Beach dermatologist pleads guilty to health care fraud, obstruction

Updated Dec 13, 2017
Dr. Gary Marder, left, and his attorney Richard Lubin walk out of federal courthouse, after Marder pleaded guilty to healthcare fraud and obstruction of a healthcare investigation related to his dermatology clinics in St. Lucie and Okeechobee counties, Wednesday December 13, 2017 in West Palm Beach. (Jane Musgrave / The Palm Beach Post)

Palm Beach dermatologist on Wednesday pleaded guilty to federal charges of health care fraud and obstruction of a criminal health care investigation in connection with his operations of clinics in Port St. Lucie and Okeechobee.

Dr. Gary Marder faces a maximum 15-year prison term and $500,000 fine in connection with what federal prosecutors described as a scheme to defraud government insurers out of $250,000 to $550,000. As part of the plea deal, the 61-year-old osteopathic dermatologist agreed to give up his medical license. Marder, who lives in a $27 million oceanfront mansion, will remain free on a $1 million bond until he is sentenced on Feb. 20.

Both Marder and his attorney, Richard Lubin, declined comment as they left the federal courthouse after a roughly hour-long hearing before U.S. District Judge Robin Rosenberg.

In a soft voice, with his wife and children looking on, Marder told Rosenberg he understood the nature of the allegations against him. Assistant U.S. Attorney Ellen Cohen said that Marder was admitting that he billed government insurers for the work of a radiation specialist, knowing the nuclear physicist didn’t review patient files as required under health care regulations.

Cohen also said that Marder, after receiving a grand jury subpoena, ordered staff to insert records into more than two dozen patient files.

She said Marder would not be ordered to make restitution because he has already paid the government $5.2 million to resolve allegations in a civil lawsuit, which claimed he “massively overbilled” Medicare. The civil lawsuit, filed against him by U.S. Attorney’s Office, grew out of a whistle-blower’s lawsuit.

In the whistle-blower’s lawsuit, Dr. Ted Schiff, a Palm Beach County dermatologist who operates Water’s Edge Dermatology clinics throughout the state, claimed he filed the suit after noticing a disturbing trend among patients who came to him after seeing Marder.

Many of the patients had been diagnosed by Marder with squamous cell cancer and received radiation treatments, Schiff said in the lawsuit. But, he said, when he examined the same patients, he discovered the so-called cancerous skin lesions were as benign as freckles or warts.

The government didn’t pursue those claims, focusing instead on Marder’s billing practices. At a previous court hearing, Cohen said there was no evidence that any patients were harmed.

To settle the lawsuit filed by the U.S. Attorney’s Office, Marder agreed to pay $5.2 million plus hand over the deed to a vacant lot, valued at $688,000, on Hutchinson Island in Martin County. Had he failed to pay, the amount of the settlement would have skyrocketed to $41 million, according to the agreement.

For filing the whistle-blower’s lawsuit, Schiff is to receive 22 percent of Marder’s payment to the federal government.