United States v. Melgen, No. 18-10991

• Decision Date: 31 July 2020
• Docket Number: No. 18-10991
• Parties: UNITED STATES of America, Plaintiff - Appellee, v. Salomon E. MELGEN, Defendant - Appellant.
• Court: U.S. Court of Appeals — Eleventh Circuit

967 F.3d 1250

UNITED STATES of America, Plaintiff - Appellee,

v.Salomon E. MELGEN, Defendant - Appellant.

No. 18-10991

United States Court of Appeals, Eleventh Circuit.

July 31, 2020

John C. Shipley, Assistant U.S. Attorney, Emily M. Smachetti, U.S. Attorney Service - Southern District of Florida, U.S. Attorney Service - SFL, Miami, FL, Robert Benjamin Cornell, U.S. Attorney's Office, Fort Lauderdale, FL, for Plaintiff - Appellee

John Kirk Ogrosky, Murad Hussain, Sina Mansouri, Arnold & Porter, LLP, Washington, DC, Matthew I. Menchel, Kobre & Kim, LLP, Miami, FL, Samuel A. Stern, Stern, LLC, Miami, FL, for Defendant - Appellant

Before MARTIN, GRANT, and LAGOA, Circuit Judges.

GRANT, Circuit Judge:

Salomon Melgen, an ophthalmologist practicing in Palm Beach County, was charged in a 76-count indictment broadly alleging that he operated a multi-year scheme to defraud Medicare. At trial, the government argued that Melgen had systematically diagnosed his patients incorrectly and prescribed medically unnecessary treatments. After nine counts were dismissed for multiplicity, the jury found Melgen guilty on each of the other 67 counts. The district court sentenced Melgen to 204 months of imprisonment (below the Guidelines range of 235–293 months) and also ordered restitution.

Melgen filed a notice of appeal. He also filed a motion for a new trial alleging newly discovered evidence, along with a motion for bond pending appeal. The court denied both of Melgen's motions, and this appeal followed. On appeal, Melgen brings us a laundry list of perceived bases for reversal—including challenges to a jury instruction about materiality, the introduction of summary charts at trial (alongside a host of other miscellaneous evidentiary issues), the sufficiency of the evidence, the court's denial of a new trial, and the reasonableness of his sentence. We affirm the district court's judgment in all respects.

I.

Salomon Melgen operated a high-volume practice as an eye doctor. A significant portion of his practice focused on age-related macular degeneration, or ARMD. There are two varieties of ARMD—"wet" and "dry." Typically, only 10 to 15% of those diagnosed with ARMD have the wet version of the disease. But Melgen's treatment records told a different story. Of the rather remarkable 97.8% of his patients that he diagnosed with ARMD, he also diagnosed 75.5% with wet ARMD in at least one eye. That included almost all of his African-American patients, even though expert testimony at trial indicated that wet ARMD is "nearly exclusively a disease of Caucasians," and thus almost never present in the African-American population.

Dry ARMD is basically untreatable, but wet ARMD may be slowed or stopped by so called anti-VEGF drugs.¹ One recognized anti-VEGF treatment for wet ARMD is a drug called Lucentis. A single vial of Lucentis costs approximately $2,000. Between 2008 and 2013, Melgen's practice collected nearly $57 million from Medicare for administering Lucentis. By contrast, Melgen only rarely prescribed Avastin, another drug recognized as a treatment for wet ARMD that costs only $50.

Long before this criminal case began, Melgen was involved in litigation regarding his preferred method for prescribing and administering Lucentis—a method known as "multi-dosing." See Vitreo Retinal Consultants of the Palm Beaches, P.A. v. U.S. Dep't of Health & Human Servs. , 649 F. App'x. 684, 687 (11th Cir. 2016).

Medicare's reimbursement rate to medical providers for Lucentis is based on the fact that each vial of Lucentis is intended to provide a single dose of solution for a single eye. See id. But Melgen argued that each vial held enough of the drug to safely administer multiple doses to separate patients from one vial—and indeed, this was how he administered the drug. This created a billing-and-compensation issue with Medicare. On the one hand, Melgen could argue that Medicare's total costs were the same regardless of whether he multi-dosed or single-dosed, because Medicare paid Melgen the ordinary per-patient rate for Lucentis either way. On the other hand, Medicare's rate of payment was based in part on the expected cost to the provider, so Melgen received a windfall relative to his expenditures by multi-dosing. And this windfall was substantial—by extracting up to three doses from a single vial, Melgen's practice "was ‘reimbursed’ for approximately $6,075 per single Lucentis vial, three times the average cost of the vial and three times the amount it would have received had it administered the drug according to the label." Id. at 688.

Melgen was instructed to repay Medicare millions of dollars for this practice in June of 2009 after Medicare notified Melgen that multi-dosing misrepresented his expenses and was medically unreasonable. Id. He then filed a suit seeking the return of those funds, arguing that Medicare's interpretation of its regulations was unreasonable. In 2016, we ruled against Melgen and affirmed Medicare's interpretations as not arbitrary or capricious. See id. at 687. As relevant to this appeal, the government suggested at trial that Melgen continued multi-dosing Lucentis until 2013.

Melgen also billed Medicare for numerous applications of focal laser photocoagulation, a procedure to treat wet ARMD where a high-intensity laser light is aimed at the eye. The government presented evidence at trial that the procedure is now almost never medically necessary given the effectiveness of anti-VEGF drugs.

Melgen was charged with Medicare fraud in a 76-count indictment. The charges generally outlined a scheme in which Melgen systematically over-diagnosed wet ARMD. The government alleged that Melgen billed Medicare for treatments to patients that did not need them—whether because they were completely healthy, because they had dry ARMD, or because the particular eye he claimed to treat in his records was either fully blind or a prosthetic. In one case, for example, Melgen billed Medicare 96 times for treatment on a single patient's prosthetic eye. The government also alleged that the scheme involved "pre-filling" some patient files so that ARMD was a default diagnosis even before Melgen met with a patient—including pre-drawing depictions of the patient's retina, even though those drawings purported to depict the condition of the eye as seen on a particular (and necessarily later) day.

Counts 1–46 of the indictment alleged that Melgen knowingly and willfully executed a scheme to defraud Medicare and to obtain, by means of materially false and fraudulent representations, money controlled by Medicare. Counts 47–65 alleged that Melgen knowingly made or caused to be made false and fraudulent Medicare reimbursement claims that were medically unreasonable and unnecessary. Counts 66–76 alleged that Melgen knowingly and willfully made and used materially false documents while knowing that they contained materially false and fraudulent statements and entries in connection with the delivery of and payment for healthcare benefits. These counts covered particular entries in Medicare charts wherein Melgen falsely diagnosed patients with wet ARMD.

Melgen's case proceeded to trial. We will briefly recount those parts of the eight-week trial that are most relevant to the issues raised on appeal. As part of its case, the prosecution introduced summary charts of Medicare records under Rule 1006 to demonstrate that Melgen's practices were markedly different from similarly situated physicians. See Fed. R. Evid. 1006. Those records were compiled by drawing out particular doctors’ data from raw Medicare data. In order to make the summaries relevant, the government pulled the data for only those self-identified ophthalmologists who (1) billed Medicare for over 500 injections of Lucentis from 2008–2013, (2) had at least 2,000 Medicare patients during that time, and (3) billed at least one claim each of those years.

Melgen, who had sought to exclude the charts in limine, renewed his objection, arguing that the charts were prejudicial, that they were barred as testimonial hearsay, and that no evidence supported the comparison criteria. For its part, the government argued that it had explained its comparator criteria through the testimony of Dr. Stuart Fine, a retina specialist from Colorado. Dr. Fine endorsed the 500-injection cutoff—which would equal roughly 83 injections per year over a six-year time span—but he rephrased it as "a hundred a year, basically." The government also introduced testimony regarding that criterion from Dr. Julia Haller, an expert ophthalmologist based in Philadelphia. She testified that 500 injections of Lucentis over a six-year period would be a conservative estimate for identifying other retinal specialists. The district court admitted the charts. The witness who had prepared the charts then testified that the requirement that the comparators had treated 2,000 patients per year was based on Melgen's own patient population of slightly more than 2,000 patients during the relevant period, and that the requirement of treating one patient per year during the period ensured that the sample did not include doctors that had not practiced throughout the relevant period.

As part of the evidence indicating that Melgen had falsely treated patients, the government called two witnesses, Delores Griffith and her daughter Susanne Perry, who insisted that Griffith had never received a particular eye surgery from Melgen on a particular date. Melgen correctly countered that records from an anesthetist corroborated that the surgery occurred, and argued that the testimony was undisclosed extrinsic bad act evidence prohibited by Rule 404(b) in any event. In response, the district court issued a curative instruction:

On Thursday of last week, the prosecution introduced testimony from Delores Griffith and Susanne Perry in which both witnesses claimed that a surgical procedure performed by Dr. Melgen on May 21st of 2009, known as a vitrectomy, had not occurred.

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