Washington Post: Senator Menendez Contacted High-Level Officials in Melgen Medicare Fraud Investigation

Feb 7, 2013
8:51 am

Last night The Washington Post presented a new angle in the recent saga of New Jersey Senator Bob Menendez (D), the only Latino Democrat in the U.S. Senate and a member of the bipartisan “Gang of 8” group on immigration. The Post’s investigative piece, which is three web pages long, centers on how Menendez reached out to top federal health-care officials to complain about about a Medicare case claiming that the clinic of Dr. Salomon Melgen, a Menendez friend and one of his top donors, “had overbilled the government by $8.9 million for care.”

The details of the report are only the latest developments of a spiraling political scandal that is testing the New Jersey Democrat’s political survival. Once the subject of conservative media sites, the Menendez story has now become a mainstream story being covered by the nation’s top newspapers and networks. The Post article is the latest example. You can read the full story here. The following is a summary with excerpts from the article:


Menendez met with the person is charge of Medicare and Medicaid:

Last year, in a meeting with the acting administrator of the agency in charge of Medicare and Medicaid, Menendez again questioned whether federal auditors had been fair in their assessment of Melgen’s billing for eye injections to treat macular degeneration, the senator’s aides said.

The agency had ordered Melgen to repay the $8.9 million, and at the time of both conversations, Melgen was disputing the agency’s conclusion. His appeal continues to this day.

The Post reports that the recent FBI raid of Melgen’s clinic is very likely connected to possible Medicare fraud:

Meanwhile, a federal investigation of what law enforcement officials say are allegations of health-care fraud by Melgen escalated last week when FBI agents and health-care investigators raided medical offices in West Palm Beach where he runs Vitreo-Retinal Consultants. The teams spent nearly 24 hours searching the premises and removing dozens of boxes containing billing and medical records and computer files.

Federal investigators and health-care auditors have had concerns about Melgen’s billing practices at various times over the past decade, two former federal officials said. In part, they have examined the volume of eye injections, surgeries and laser treatments performed at his West Palm Beach clinic.

But a Menendez aide said Wednesday that the senator did not know Melgen was under formal investigation for possible fraud until the well-publicized raid last week.

“Senator Menendez was never aware of and has not intervened in any Medicare fraud investigation on behalf of Vitreo Retinal Consultants,” his office said in a statement.

The government claims that Melgen had been charging $6,000-$8,000 for a vial that treated macular degeneration, when then Medicare reimburses “providers $2,000 for each vial.” It led to a ruling by the government that Melgen had to pay the difference back the government. In addition, the Post also reached out to Melgen’s lawyer and wrote the following:

Alan Reider, Melgen’s attorney, said Wednesday that his client has returned the government money in dispute but is contesting the CMS audit finding so he can reclaim the money. Reider said Melgen believes he was following Medicare guidelines. Reider added that Melgen was not aware that his practice was under investigation until federal agents arrived at his clinic last week.

The story goes on to say the following:

After [The Center for Medicare and Medicaid Services] ruled in 2008 that Melgen would have to repay the government, he and his legal representatives contacted Menendez’s office, arguing that the finding was unfair, the senator’s aides said. Menendez’s staff members had several conversations with agency officials to learn more about the billing rules and the details of Melgen’s case in particular, the aides said.

In July 2009, Menendez called Jonathan Blum, the Medicare director at CMS, to express concern, the aides said. Menendez brought up Melgen’s case, they said, in the context of broader concerns about the guidelines.

Then, in June 2012, Menendez raised Melgen’s case again at a meeting with CMS Acting Administrator Marilyn Tavenner, aides recounted. They said the primary subject of the meeting was the implementation of President Obama’s health-care overhaul.

The aides said Menendez never urged the CMS to take specific action on Melgen’s case.

The Post also reported that Melgen would always bring up Menendez’s name when communicating with federal investigators who would asking him questions about the potential fraud:

“He used Menendez’s name all the time. He would say, “‘Menendez is a good friend of mine, and he knows I never did anything wrong,'” said a former senior federal official familiar with the investigation.

The story concludes by adding that Melgen was seen by many local South doctors Florida as someone who would bring up his connections to the U.S. Senate if anyone criticized his methods. According to Meglen’s lawyer, the Posts says, he was unaware of the side of the story. In fact, Melgen, according to the Post, “came to the attention of fraud investigators amid complaints from other local eye doctors alleging that his treatments were often unnecessary, a waste of money and sometimes harmful to patients’ eyesight, the two former federal officials and several doctors said.” He was seen as an “outlier” because of the “volume of his billing and the rate at which he administered eye injections and performed procedures on government-insured patients, the former officials said.”

The Menendez connection would be brought up by Melgen on several occasions, according to what The Post reported:

When federal investigators interviewed Melgen, he tried to exert pressure on them by mentioning the names of Menendez and other influential politicians, the former fraud investigator said. “We thought it was odd because Menendez was in New Jersey and this guy was in Florida,’’ the official said.

A second former federal official recounted that Menendez’s name came up repeatedly when Melgen was interviewed by investigators from the Justice Department and the inspector general’s office at the Department of Health and Human Services.

“He was using Menendez more as a character reference,” the official said. “He thought he was untouchable.”

The story raises several questions that will very likely be answered from the current investigation of Melgen. A few come to mind: Was Meglen in financial trouble and was there hope that Menendez could help his friend out in this Medicare case, as well as in the Dominican port contract that has been reported by several outlets? Is this case being seen as a political attack on the Senate’s only Latino Democrat or does it begin to shed light on another example of “business as usual” in Washington? In addition, why are Latino organizations issuing statements about Menendez being smeared by so-called “news” outlets when the story is now being consistently covered by the mainstream media?

No one really knows the answers to these questions, but the latest Post story does not do Menendez any favors as he tries to fight the allegations and the coverage. The truth will indeed come out one way or another, and it is still too soon to tell what the consequences will be. However, publicly-elected leaders cannot be immune from questions that speak to ethics and accountability, no matter the politician’s background.