Palm Beach doctor settles massive Medicare fraud lawsuit

The worrisome blotches that drove elderly patients to Dr. Gary Marder’s offices in Okeechobee and Port St. Lucie could have been anything.

But whether they were warts, irritated skin or even freckles, the diagnosis from the dermatologist, who lives in a sprawling $28 million oceanfront mansion in Palm Beach, was typically the same: skin cancer.

The allegations, first made in a whistleblower lawsuit filed in U.S. District Court by a competing Palm Beach County dermatologist, were investigated by federal attorneys who used them to build a multi-million-dollar health-care fraud case against Marder.

In court papers, Assistant U.S. Attorney Mark Lavine accuses Marder of operating a sophisticated scheme to defraud tens of millions of dollars from Medicare and Tricare, a federal health program for active and retired members of the military. From January 2008 to May 2014, Marder billed the two programs over $49 million.

The key to such an eye-popping amount was simple, Lavine wrote. Marder “massively overbilled” the two programs, mainly by charging for unnecessary biopsies and radiation treatments that either were not rendered, were not properly supervised or were given by physician assistants who weren’t qualified. In many cases, Marder wasn’t even in the country when the patients were treated, Lavine said.

Last month, on the eve trial, Marder and government attorneys reached an accord. The settlement came after a federal judge, in a stinging opinion, upheld many of Lavine’s allegations. While the terms have yet to be made public, such settlements often include the defendant paying a sum while maintaining he did nothing wrong, according to those familiar with such lawsuits.

Jeffrey Sloman, an attorney for Marder, once a leader in Palm Beach’s Jewish community whose father survived the Holocaust, said he was barred by federal court rules from discussing the case. But, in court papers, Marder’s legal team maintained that federal attorneys were confused by often-obtuse Medicare billing rules and unfamiliar with Marder’s unique practice, which relies on radiation, instead of disfiguring surgery, to help patients.

On his website, Marder, who is certified by the American Osteopathic Board of Dermatology, claims he has cured “over 45,000 non melanoma skin cancers with radiation therapy for the past 30 years.”

Lavine countered that Marder lacks the necessary training to perform radiation oncology.

Even with the civil lawsuit settled, Marder’s troubles may not be over. Throughout the litigation, which began three years ago, Marder refused to answer questions about his lucrative practice because he was also under criminal investigation by the FBI, which raided his offices in 2015. Any statements he made could be used against him, his attorneys said last year while directing him to invoke his Fifth Amendment privilege against self-incrimination.

While West Palm Beach criminal defense attorney Jack Goldberger said he is representing Marder, neither he nor the U.S. Attorney’s Office would say whether the investigation is ongoing.

The federal government’s civil case grew out of a whistleblower’s complaint filed by Dr. Ted Schiff, who lives near Palm Beach Gardens and operates Water’s Edge Dermatology. Schiff has six clinics in Palm Beach County and 22 others from Ocala to Plantation, including ones in Okeechobee and Port St. Lucie, where Marder also practices.

Concerned after repeatedly seeing patients who Schiff believed had been falsely diagnosed by Marder with squamous cell carcinoma, Schiff launched his own investigation. He eventually hired Sunrise attorney, Lawrence Klitzman, who brought Schiff’s allegations to the attention of the U.S. Attorney’s Office in West Palm Beach. Under the terms of the federal whistleblower’s act, Schiff would be eligible for 15 to 25 percent of any settlement agreement.

The claims in the government’s case are complex and far-flung. To drive up his billings, Marder told his physician assistants they had to perform up to 50 biopsies a day, the government claims. If they reached the quota, they could receive up to $10,000 cash bonuses, Schiff said in his lawsuit.

Using Marder’s appointment calendars and statements from his former physician assistants, federal attorneys claim Marder rarely showed up at his clinics. While Marder claims he was available to his office by phone, he billed Medicare more than $2.7 million for 8,000 procedures done on 256 days that he was out of the country, Lavine’s lawsuit said. Marder was paid more than $830,000 for those claims, which were made over six years.

His assistants, who admitted they didn’t have proper training, administered what they described as cookie-cutter radiation treatments to patients. “Dr. Marder instructed that every patient was to receive two radiation treatments a day to each lesion for 20 days,” former assistant Martin Burke said in a sworn affidavit. “The treatment was the same for every lesion on every patient. … The radiation dosage administered by the machine at each location was preset.”

Although the assistants did the work, Marder billed Medicare the higher rate physicians get for treating patients, Lavine claims in the federal government’s lawsuit.

Further, he accused Marder of conspiring with Coral Gables pathologist Dr. Robert Kendall in what an FBI agent described as a kickback scheme. Marder sent 35,000 Medicare patient pathology specimens to Kendall, who is also part of the lawsuit that was settled. But, instead of billing the federal agency himself, Kendall allowed Marder to send the bills and then Marder would give him a cut, Lavine’s lawsuit said.

Attorney Jared Dwyer, who represents Kendall, declined comment, also citing federal court rules.

Marder collected $2.8 million from Medicare for false claims he filed for laboratory work and paid Kendall a salary of $120,000 annually to make it appear an employee was doing the work, Lavine’s suit said.

The dermatologist also lied about the type of machine he used to administer the radiation, Lavine alleged in the federal lawsuit. While an FBI agent testified that she saw a small piece of equipment, describing it as similar to machines dentists use to take X-rays, Marder billed Medicare for using a sophisticated high-voltage machine that delivers so much radiation that it typically is housed in its own building.

The reimbursement rate for the equipment Marder purported to use is roughly seven times more than the machines he actually used, which delivered superficial radiation, Lavine wrote. That alone accounted for $6 million Medicare paid to Marder over four years.

This isn’t the first time Marder’s billing practices have attracted government notice. In 1998, he was fined $2,500 by the Florida Board of Osteopathic Medicine in connection with three cases in which he was accused of fraudulently billing private insurers. As part of the negotiated settlement, he also agreed to take a classes in medical record-keeping and risk management and perform 25 hours of community service.

The federal attorneys focused on Marder’s Medicare billings. However, in his complaint, Schiff said there was a human cost as well.

Many of Marder’s patients didn’t have skin cancer in the first place, but they didn’t know that and zapping them with radiation at 45-minute intervals could put them at medical risk, according to Schiff’s lawsuit.

“This radiation therapy not only damages the cancer cells present in the body, but it also has a damaging effect on healthy tissue which surround the tumor being treated,” Schiff’s attorney, Klitzman, wrote of the near back-to-back treatments. Side effects, ranging from hair loss to muscle atrophy to fatigue, are always a possibility. The procedure, he said, was “both ineffective and dangerous.”

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