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$18 Million Judgment Entered In Palm Beach Dermatologist Medicare Fraud Lawsuit

Posted: February 8, 2017
Outcome: Settlement
Practice Areas: Whistleblowers, Qui Tam & False Claims Act

Miami, FL, February 7, 2017. A judgment was entered last night in United States of America and the State of Florida ex rel. Theodore A. Schiff, M.D. v. Gary L. Marder, D.O. et al., No. 1:13-cv-24503-KMM, a qui tam lawsuit in which Port St. Lucie, FL dermatologist Gary Marder allegedly pocketed tens of millions of dollars from Medicare by ordering medically unnecessary biopsies, falsely diagnosing patients with cancer, performing unnecessary radiation treatments on patients, and illegally billing those biopsies and radiation treatments.  The judgment entered against Dr. Marder and his medical practice is $18,017,382. [1]

These allegations were first made in whistleblower lawsuits filed in December 2013 and June 2014 in the United States District Court for the Southern District of Florida by Dr. Theodore Schiff, a resident of Palm Beach County, FL.  Dr. Schiff was represented by Lawrence Klitzman of the Klitzman Law Group, PLLC, and Daniel Miller of the law firm Berger & Montague, PC.

Dr. Schiff is a double board certified medical doctor in dermatology and dermatopathology.  He is the medical director and managing partner of Water's Edge Dermatology, LLC. After examining a significant number of patients who were seeking a second opinion after being diagnosed with skin cancer by Dr. Marder, Dr. Schiff engaged attorney Lawrence Klitzman of the Klitzman Law Group, PLLC to evaluate the investigation.  That investigation led to evidence that Marder appeared to be involved in a kickback arrangement with Dr. Robert Kendall to diagnose patients with skin cancer and then bill Medicare for unnecessary biopsies and radiation treatments.

Dr. Schiff, working diligently with Klitzman, filed his first complaint in December 2013.  According to the complaint, Dr. Marder required his physician assistants to perform up to 50 biopsies each day, and he instructed them to perform biopsies on skin disorders for which biopsies were not appropriate, such as acne, dried skin, warts, and freckles.

Once the biopsies were completed, Dr. Marder sent the specimens to Dr. Kendall, a physician who operates a laboratory in Coral Gables, FL.  The suit alleged that Marder and Dr. Kendall were involved in an illegal kickback scheme in which Dr. Kendall allowed Dr. Marder to bill Medicare for the work Kendall performed as if it were performed by Marder, and in exchange Kendall received remuneration.

The complaint further alleged that Dr. Kendall falsely diagnosed benign skin conditions as cancerous, affording Dr. Marder the opportunity to recommend that such patients undergo radiation therapy, which generated extra billing opportunities. In addition to defrauding the government, Dr. Schiff alleged that this practice presented considerable risk to patients, as radiation therapy presents an increased risk of cancer, and can also be harmful to healthy skin.

After filing his first complaint, Dr. Schiff decided to investigate what type of radiation equipment Dr. Marder had at his offices.  Through this effort, Dr. Schiff developed evidence that Dr. Marder did not in fact have the radiation device necessary for billing the government for certain radiation services.  Thereafter, Dr. Schiff filed a second qui tam complaint in June 2014, alleging that Dr. Marder misled the government about the type of machine he used to dispense radiation, allowing him to collect a reimbursement rate from Medicare that was about seven times higher than it should have been.

Both complaints were combined into one qui tam lawsuit; Dr. Kendall was represented by Greenberg Traurig, and Dr. Marder was represented by Akerman LLP.

In August 2016, Akerman submitted a motion to withdraw from the case, writing, "Marder has insisted upon taking actions that Akerman considers repugnant, imprudent, and/or with which Akerman has a fundamental disagreement." (ECF No. 247, at 1-2). Chief Judge K. Michael Moore granted the motion

During the government's investigation, both Drs. Marder and Kendall invoked their Fifth Amendment right against self-incrimination. While addressing this in the court order on motion for summary judgment, which was largely granted in the government and Dr. Schiff's favor, Chief Judge K. Michael Moore wrote, "Although Defendants may have lost their best defense through invocation of the Fifth Amendment privilege against self-incrimination, the burdens on the parties at summary judgment remain the same. Accordingly, the Court will draw adverse inferences where it deems appropriate and only in situations where the inference is complementary to the evidence presented by the Government rather than its proxy." (ECF No. 255 at 8).

"Dr. Schiff should be personally commended for stepping forward and blowing the whistle, and the government should be praised for aggressively pursuing Dr. Schiff's claims," said attorneys Klitzman and Miller.   They also commented "Ted Schiff is an outstanding clinician and a highly ethical person.  When he saw what was happening, he had the courage to step forward and do something about it.  We are proud to represent Dr. Schiff, whose lawsuit brought an end to these horrific practices.  We also want to thank the government team, and in particular Assistant United States Attorney Mark Lavine, who worked tirelessly to bring this matter to s successful conclusion."

Dr. Schiff commented on the outcome: "I can only hope that more health care providers will take the time and effort to report fraud and abuse.  It is rampant in South Florida, and if it continues to go unreported, it will continue to undermine the trust our patients place in us, as well as the reputation of the healthcare community as a whole."

For more than 30 years, Klitzman Law Group, PLLC has successfully handled complex commercial litigation cases, including the representation of whistleblowers in health care fraud cases.  The firm has also handled consumer class actions against financial institutions and Fortune 500 companies resulting in multi-million dollar judgments. The practice also includes the representation of physicians and business owners on matters involving health care regulations, corporate and tax law, real estate and estate planning.

For more than 15 years, the Berger & Montague, P.C. Whistleblower, Qui Tam & False Claims Act Practice Group has represented whistleblowers in matters involving healthcare fraud, defense contracting fraud, IRS fraud, securities fraud, and commodities fraud, helping to return more than $1.1 billion to federal and state governments. In return, whistleblower clients retaining Berger & Montague to represent them in state and federal courts have received more than $100 million in rewards. Berger & Montague's time-tested approach in Whistleblower/Qui Tam representation involves cultivating close, productive attorney-client relationships with the maximum degree of confidentiality for our clients. Our goal is for each of our clients' experience as a whistleblower working with our firm and with the government to be positive and fulfilling.

[1] According to the terms of a related settlement agreement, the judgment is satisfied if Dr. Marder pays the government $5.2 million by a date certain.  If Dr. Marder does not pay that amount within the period prescribed by the settlement agreement, the judgment against him will be increased to $41,023,883.

News Coverage

Dr. Gary Marder And The United States Consent To A Final Judgment Of Over $18 Million To Settle False Claims Act Allegations - United States Department of Justice

$18M Deal Ends FCA Suit Over Doc's Allegedly Brazen Fraud - Law360

Palm Beach Doctor Agrees To Pay $18M To Settle Medicare Suit - Palm Beach Post

Doctor Allegedly Made Millions Off Fake Cancer Diagnoses - New York Post

Doctor Accused Of Falsely Diagnosing Patients With Skin Cancer Gets To Keep His License - ABC News

Port St. Lucie Dermatologist Wrongly Diagnosed Patients With Cancer For Profit - WPTV West Palm Beach

Florida Dermatologist To Pay $18M Medicare Fraud Settlement - Laboratory Economics