Healthcare Claims Fraud is Back in the News

Dr. Salomon Melgen, a soon-to-be former ophthalmologist, who still faces criminal charges for bribing New Jersey Senator Robert Menendez, was recently found guilty of healthcare claims fraud following a seven-week jury trial.  His case is significant because it highlights some of the activities that typically cause medical service providers to becomes investigative targets and, ultimately, criminal defendants in serious healthcare claims fraud cases that can result in the loss of a professional license, an entire medical practice, and jail time.

Briefly, Melgen was charged in a 67-count federal indictment with fraud, falsifying medical records and submitting fictitious claims to Medicare.  Federal prosecutors alleged that between 2008 and 2013, he billed more than $190 million to Medicare, which paid him approximately $105 million.  According to the Government, the vast majority of his billings were based upon false and/or fictitious diagnoses, unjustified medical procedures, and repeated billings for unnecessary diagnostic tests.

The Government alleged that Melgen falsely diagnosed patients with a condition known as wet macular degeneration, which could cause blindness.   He then treated them with laser treatments that were both outdated and harmful, as well as injections of an expensive ocular drug, all with the goal of lining his pockets.  The Government’s medical experts characterized Melgen’s patient notes as “pure fantasy”, and testified that his basis for administering treatments was fabricated.  They stated that he treated patients whose maculae appeared normal, that his laser treatments were both inappropriate and harmful, and that there were other treatments available for this condition that posed less patient risk.  (One expert testified concerning Melgen’s use of a laser on a patient with only one functioning eye, calling it “unconscionable”.)  Other experts testified that Melgen’s Medicare billings were “in the next galaxy”.Melgen’s defense team argued that although his staff made insurance coding errors and allowed patient charts to become inaccurate, none of the doctor’s activities were performed with the intent to commit fraud.  The defense also presented a 2010 survey indicating that many ophthalmologists still used laser treatments similar to those at issue in this case, that the laser Melgen used was less risky because it was low-level, and that Melgen’s combination of low-level laser treatments with ocular drugs was actually novel.  The Government responded that Melgen’s billings to Medicare were false because the insurance code he used did not match the low-level laser treatment he purportedly administered.

The defense also tried to portray Melgen as a doctor who performed frequent diagnostic testing not to inflate his own personal income, but to be absolutely certain that his patients’ conditions were diagnosed in the most thorough and comprehensive manner possible.  They also likened his apparent preference for the older laser technology to a doctor who simply prefers x-rays to MRIs, concluding that the use of older technology was not a crime.  Several of his patients testified in his favor.  Finally, Melgen was the subject of a civil “clawback” suit which ended with him being compelled to return $8.9 million to Medicare.  He also lost his appeal of that ruling.  His criminal defense team argued that his willingness to challenge Medicare made him a government target for the subsequent criminal charges.

The jury did not credit any of Melgen’s arguments or defenses, and convicted him of all 67 counts in the indictment.

Melgen’s case teaches health care providers and the attorneys who represent them some basic lessons about healthcare claims fraud.  Billings that appear unusually large raise red flags and attract scrutiny.  Coding errors and mistakes concerning the recording of information in patient charts cannot be explained away as administrative carelessness.  Finally, the professional is ultimately responsible for billing issues, and should not expect to be able to hide behind their staff by blaming them for any errors.

Criminal defense attorney James S. Friedman, based in New Brunswick, Middlesex County, New Jersey, represents individuals charged with all forms of insurance fraud, including healthcare claims fraud, in the state and federal trial courts in New Jersey and New York City.  Whenever a healthcare services professional is charged with this offense, everything that person has worked for is on the line.  If you have been charged in state or federal court with healthcare claims fraud or some other form of insurance fraud, do not even attempt to explain what happened to investigators.  Rather, contact us immediately to start planning your aggressive defense.



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