Florida Doctor to Pay $18 Million to Resolve False Claims Act Case Involving Dermatology Fraud

According to Department of Justice press release issued February 7, 2017, Gary L. Marder, D.O., a physician residing in Palm Beach County and the owner and operator of the Allergy, Dermatology & Skin Cancer Centers in Port St. Lucie, Florida and Okeechobee, Florida has agreed to pay over $18 million to settle False Claims Act allegations involving extensive dermatology procedure fraud.  Co-defendant, Robert I. Kendall, M.D., a physician practicing in Coral Gables, has also agreed to pay the United States $250,000 to settle allegations that he violated the False Claims Act.

The allegations were originally brought under the qui tam provisions of the False Claims Act by whistleblower, Theodore A. Schiff, M.D.  The qui tam, or whistleblower, provisions allow a private person or entity with knowledge of fraud against the government to bring a lawsuit on behalf of the government and share in any recovery.

Dr. Schiff’s qui tam lawsuit alleged 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.  Specifically, Dr. Schiff alleged that Marder sought to perform as many skin cancer radiation treatments as possible — regardless of medical necessity — and told his physician assistants they had to perform up to 50 biopsies a day and if they reached the quota, they could receive up to $10,000 cash bonuses.  The lawsuit further alleged that Dr. Kendall submitted false claims to federal and state healthcare programs for laboratory services tainted by kickbacks and improper financial relationships with Dr. Marder.

Dr. Schiff will recieve a relator’s share of the recovery of between 15-25 percent of the total $18 million settlement.  Dr. Schiff operates Water’s Edge Dermatology and 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.  Dr. Schiff began his investigation after he became concerned because he was repeatedly seeing patients who Schiff believed had been falsely diagnosed by Marder with squamous cell carcinoma.

After a qui tam complaint is filed, the United States investigates the case and may choose to “intervene” in the case, which means the Department of Justice takes primary responsibility for prosecuting the case.  In this case, the United States intervened on October 14, 2014, and filed its Complaint in Intervention on November 19, 2014.   The Complaint in Intervention alleges Marder operated 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.  Specifically, the Complaint in Intervention alleged from January 2008 to May 2014, Marder, who lives in a $28 million ocean front mansion in Palm Beach, billed the two programs over $49 million. The U.S. Attorneys prosecuting the case claimed that Marder billed Medicare more than $2.7 million for 8,000 procedures done on 256 days that he was out of the country.  Marder was paid more than $830,000 for those claims, which were made over six years.

In September 2016, the U.S. District Court for the Southern District of Florida granted summary judgment — which is a preliminary pre-trial determination — in favor of the United States with respect to several key issues in the case.  The Court found that Dr. Marder knowingly submitted false claims to Medicare by requesting reimbursement for services that he never actually performed or directly supervised due to his frequent absence from his medical clinics (including expansive periods of foreign travel) on days corresponding to over fifty percent of the payments that Dr. Marder received from Medicare. The Court further found that all Dr. Marder’s claims for medical physicist services submitted to Medicare since 2011 were false, and that Dr. Marder had actual knowledge that a physicist did not perform the corresponding services. The Court made no determination of liability against Dr. Kendall.

“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. This conduct results in significantly increased costs to the federal government and others,” said Wifredo A. Ferrer, United States Attorney for the Southern District of Florida.

The settlement was the result of a coordinated effort by the United States Attorney’s Office for the Southern District of Florida, HHS-OIG, DCIS, U.S. Office of Personnel Management, Office of Inspector General (OPM-OIG) and the Federal Bureau of Investigation (FBI). The case was investigated and the settlement negotiated by Assistant U.S. Attorney’s Mark Lavine and John Spaccarotella.

Frohsin Barger & Walthall would like to thank and congratulate the government investigators and attorneys who brought this case as well as Dr. Schiff’s counsel Lawrence S. Klitzman of Klitzman Law Group PLLC in Sunrise, Florida for bringing this case to light.