Menendez staff lobbied to quash friend's billing dispute, official says

The testimony largely eclipsed that of former Sen. Tom Harkin, a one-time Democratic presidential candidate, whom the prosecution also called to the stand Wednesday.

Prosecutors say Menendez pushed high-level federal officials to help his wealthy friend and co-defendant, Dr. Salomon Melgen, avoid $8.9 million in overbilling charges levied by the Centers for Medicare and Medicaid Services in exchange for luxury vacations, rides on private jets and other perks. The men maintain they broke no laws.

One of Menendez’s staffers was particularly “persistent” in advocating for the doctor on a telephone call with several agency officials in July 2009, according to Dr. Louis Jacques, a former director of coverage and analysis at CMS.

Jacques testified that the staffer said “the issue is very important to the senator, Melgen is a personal friend, bad medicine is not illegal, Medicare should pay these claims.”

Jacques said he was so disturbed by the staffer’s words and that he told the jury he got up from his seat to “stretch” and “clear (my) head” at the doorway.

“Aside from those particular statements, the call would have been entirely forgettable to me — the reason why I remember it specifically are those statements,” Jacques added.

Melgen had been treating patients suffering from macular degeneration with a drug called Lucentis. Prosecutors say that federal regulations at the time approved the drug for “single-use” only, meaning that each vial should only be used for a single eye of a single patient, but the doctor used the “overfill” from the vials to treat up to three patients — and then billed Medicare as if a separate vial was purchased for each dose.

CMS hit Melgen with a formal repayment demand in 2009 to the tune of $8.9 million in alleged overbillings, at which point prosecutors say Menendez got involved, encouraging federal officials to help Melgen quash the charges, including Harkin — then-chair of the Senate Health, Education, Labor and Pensions Committee, which shared oversight responsibility over CMS and the Department of Health and Human Services.

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Harkin, an Iowa Democrat who donned a blue blazer and khakis for a rare trial appearance, told jurors he agreed to meet with Melgen as a “senatorial courtesy” to Menendez, which was not unusual. And the former Senate colleagues appeared friendly in court Wednesday, as Harkin stopped at counsel table to smile and shake Menendez’s hand before departing for the day.

Melgen did most of the talking to “present his side of the story” during the 2011 meeting, while Menendez silently listened to the doctor describe “a problem he was having with CMS,” Harkin said, further elaborating on two specific takeaways.

“One, I was curious as to why the (Food and Drug Administration) would put so much of that medicine in a vial,” Harkin said. “I wondered about that. … It sounds kind of odd.”

Earlier Wednesday the jury heard Jacques explain that splitting the vial among different patients, known as “multi-dosing,” created a risk of infection, but Harkin said that Melgen assured that he was using “clean needles.”

“I said the other part of it is, if he’s treating three people, charging for three, but only paying for one (vial), that doesn’t sound right either,” Harkin added.

Jenelle Krishnamoorthy, a former staffer for Harkin, further explained to the jury Wednesday that her boss took no action after the meeting despite later entreaties from a lobbyist whom she recalled also being in the room.

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“I felt that there was nothing more we could do or should do in this case,” Krishnamoorthy told the jury, noting that it was somewhat unusual for an individual dispute — originating from an someone outside of Iowa — to be rise to this level. “I would say in my 10 years, this was one of three that was like this,” she said.

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