Melgen's lawyers assert he did not bill Medicare fraudulently. They contend the doctor differed with the program over its reimbursement policy for Lucentis.
Medicare reimburses $2,000 for each vial of the drug used to treat macular degeneration. The policy is that one vial is used for each patient. But Melgen is suspected of using one vial for as many as four patients, while submitting claims of up to $8,000, as if he had used separate vials for each, according to sources familiar with the billing dispute.
In a 2012 report by the Health and Human Services' inspector general, the agency recommended that Medicare officials stop using the drug because it was so costly, noting there was a cheaper and equally effective alternative called Avastin. In 2010, Medicare approved $1.1 billion in reimbursements for Lucentis, a drug manufactured by Genentech.
When Menendez contacted federal officials in 2009 and 2012, Melgen was dealing with several financial setbacks. In 2008, the Internal Revenue Service filed a $6 million tax lien against Melgen's Palm Beach estate. Melgen satisfied that lien in 2011, but the IRS slapped a new $11.1 million tax lien on Melgen that same year.
Richard Dansoh, Melgen's Miami lawyer, told The Herald Thursday that Melgen has satisfied all his tax obligations, although public court records do not reflect that.
Over the years, Melgen has steered more of his campaign money to Menendez -- at least $655,700 -- than any other politician. That's far more than all the money the Florida doctor has contributed to Florida members of Congress.
The sums of campaign cash have invited extra scrutiny, as has the fact that the New Jersey senator isn't Melgen's elected official in Congress. Usually in Washington, a constituent's interests are represented by their home-state congress member or senator.
Sources told The Herald that the doctor has asked various members of Congress over the years for help with one of his lawsuits, his port deal, Medicare and a tax issue. For the tax issue, a consulting company wrote Menendez and four Florida lawmakers on Melgen's behalf after the November election.
Miami Republican Rep. Ileana Ros-Lehtinen's interests as Committee on Foreign Affairs chair also dovetailed with the business interests of Melgen, who has crusaded for the Dominican Republic port-security contract to X-ray cargo.
A month after contributing $5,000 to Ros-Lehtinen, the congresswoman on April 10 wrote Anibal de Castro, the Dominican Republic's ambassador to the United States, a letter asking about "what specific steps your administration has taken to improve cargo security and reducing the flow of drugs to the United States and how we can work together towards achieving this goal."
Ros-Lehtinen said she was writing the note because her committee was increasingly concerned that "the illicit drug trade and the presence of drug cartels may shift towards the Dominican Republic.''
Over the years, Melgen has attracted both friends and enemies in his profession, mainly because of his high profile and wealth.
HAD MET MELGEN
Dr. Richard Shugarman, an ophthalmologist in West Palm Beach, said he met Melgen about 20 years ago when Melgen first came to the community after finishing training in Boston. Shugarman said he reached out to Melgen to learn about the new treatments he was using.
Shugarman said he helped Melgen on many surgeries in Palm Beach County.
Between surgeries, "he was frequently on the phone talking to people about business deals and stock, things other than medicine," Shugarman said.
The two doctors sometimes socialized together with their families. Melgen would sometimes mention his political connections.
"I do know he was friendly with Gov. Chiles -- he operated on him while he was governor," Shugarman said.
"There was no question to me he liked his political connections but he never flaunted them or threatened anyone with them, not that I have ever heard of."
State records show five patients have filed medical malpractice claims against Melgen, resulting in three settlements totaling $575,000. The remaining two claims were not settled, according to the Florida Office of Insurance Regulation.
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