Florida Physician to Pay $18 Million for Medicare Fraud

Roxanne Nelson, BSN, RN

February 15, 2017

A Florida dermatologist has agreed to settle a case with the federal government for $18 million on allegations of Medicare fraud.

Gary Marder, DO, allegedly diagnosed and treated patients for skin cancer that they didn't have, put them through medically unnecessary treatments, and then pocketed millions from Medicare and other insurers.

According to a statement from the US Attorney's Office of the Southern District of Florida, Dr Marder, who resides in Palm Beach County and is the owner and operator of the Allergy, Dermatology and Skin Cancer Centers in Port St. Lucie and Okeechobee, knowingly submitted false claims to Medicare by requesting reimbursement for services that he never performed or directly supervised.

He also claimed to have performed radiation therapy on patients using expensive equipment that he doesn't own.

Robert Kendall, MD, a Coral Gables pathologist who worked with Dr Marder and is a codefendant in the case, has agreed to pay $250,000 for his role in the scheme.

The court also found that all of Dr Marder's claims for medical physicist services that were submitted to Medicare since 2011 were false and that Dr Marder was aware that a physicist did not perform the services that he billed for.

"Today's settlement demonstrates this office's ongoing commitment to hold accountable healthcare providers who receive reimbursements from government-sponsored healthcare programs for services that are never actually performed," said Wifredo A. Ferrer, US Attorney for the Southern District of Florida, in a statement.

"This conduct results in significantly increased costs to the federal government and others," he added.

Whistle-blower Blows the Whistle

The allegations stem from a qui tam lawsuit that was filed by whistle-blower Theodore A. Schiff, MD, a dermatologist working in Palm Beach County.

According to the Palm Beach Post, Dr Schiff became suspicious when he began seeing an alarming number of patients who had been previously treated by Dr Marder. Although these patients had been told by Dr Marder that they had squamous cell carcinoma, Dr Schiff found that many of them did not have cancer. He said in his whistle-blower's lawsuit that even patients who had skin conditions that were benign, such as freckles, warts, or even just irritated skin, had been told that they had cancer.

Dr Schiff's lawsuit alleged that Dr Marder "knowingly submitted claims to federal healthcare programs for medically unnecessary biopsies and radiation therapy services, radiation therapy services performed in contravention of standard practice regarding the amount of time between radiation treatments, and radiation therapy services performed without direct supervision and by unlicensed and/or unqualified physician assistants."

It further implicated his associate Dr Kendall, alleging that he had "submitted false claims to federal and state healthcare programs for laboratory services tainted by kickbacks to, and improper financial relationships with, Dr Marder."

Focus on Government Billing

When the federal attorneys took over the lawsuit in 2014, they focused on billing to Medicare and Tricare, a federal health insurance program that serves active and retired members of the military and their families.

One of the factors in the case was that Dr Marder traveled frequently and was frequently absent from his practice. The times in which Dr Marder was absent from his practice corresponded to billing dates for more than 50% of the payments he received from Medicare.

Dr Marder billed Medicare more than $2.7 million for 8000 radiation treatments that were supposedly administered over the course of 256 days — when he was out of the country. Medicare rules stipulate that a physician must be on site when radiation treatment is administered. Dr Marder claimed that he was available by telephone to the physician assistants who were delivering the treatment. He received more than $830,000 from Medicare.

He also claimed that he used sophisticated equipment to administer radiation therapy, which have a reimbursement rate that is roughly seven times greater than the rate for the equipment that was actually used to treat patients.

The Medicare billing code used by Dr Marder corresponds to a higher-voltage radiation treatment machine. This type of equipment requires extra shielding, and treatment needs to be conducted in a controlled environment, similar to dedicated radiation-oncology departments within a hospital.

The lower-voltage machine that was actually used in Dr Marder's office would have been reimbursed by Medicare for about $22 per treatment in 2012, but Dr Marder received an estimated $154 per treatment. Not only did Dr Marder bill under the wrong code, but he also billed for treatments that were never administered or for procedures in which patients were excessively irradiated. In 2012, he billed 15,610 times for radiation treatments given to 94 patients, an average of 166 treatments per patient.

Criminal Charges?

Dr Marder has until February 24 to pay up. If not, the amount will more than double, to $41 million, according to the Palm Beach Post. He reached a separate agreement with the government to pay $5.2 million by the due date. If he does, that will satisfy the agreement. He will also have to deed a vacant lot to the government valued at $650,000.

Despite the fact that Dr Marder lives in a luxurious oceanfront 12,700-square-foot home that is valued at $28 million, it cannot be seized to pay his settlement because of laws that protect homesteads.

Thus far, no criminal charges have been filed against either Dr Marder or Dr Kendall, and it is unknown at this time if that avenue is being pursued. Both physicians are free to continue practicing in the state of Florida, and no action has been taken against their medical licenses.

Under the terms of the federal whistle-blower act, Dr Schiff is eligible to receive from 15% to 25% of money recovered.

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