NEWARK — Former health and human services secretary Kathleen Sebelius testified Tuesday that Sen. Robert Menendez (D-N.J.) asked her for help in changing a Medicare billing policy that cost his supporter, Florida ophthalmologist Salomon Melgen, millions of dollars.
Sebelius, testifying as a prosecution witness in Menendez and Melgen's federal corruption trial, recounted the events leading up to an August 2012 meeting with Menendez and then-Senate Majority Leader Harry Reid (D-Nev.) at Reid's office.
“I don’t know exactly what [Menendez] wanted, just that he wanted me to do something,” Sebelius, a Kansas Democrat who led HHS from 2009 to 2014, testified. “My definite impression was that he was very concerned that the policy was inconsistent and unfair and something should be done.”
After meeting for about 30 minutes, Sebelius declined to take action, explaining that she thought the policy was consistent and clear and in keeping with safety protocols.
The defense has argued that Menendez was voicing concerns about a national policy issue, an appropriate action for someone with congressional oversight duties, and that he didn’t even bring up Melgen’s name during the meeting.
Menendez’s intervention in the Medicare issue is a key prong in the government’s case. The senator is accused of fighting for Melgen’s business and personal interests in exchange for political donations, trips on Melgen’s private plane and other gifts.
Sebelius testified that she turned down an earlier request from Menendez to meet about the issue and didn’t agree to talk to him until Melgen’s appeal of the case was no longer before her agency.
She said she was surprised when Reid set up the meeting.
“It was unusual for Senator Reid to ask me to come to a meeting involving another member of Congress,” Sebelius said, adding it was the only time she could recall a member of Congress asking her to discuss a specific Medicare or Medicaid billing policy.
Over the past week, the prosecution has laid out the chronology of events that led to the meeting at Reid’s office, which came three years after Menendez started advocating for his friend on the Medicare issue.
Menendez worked his way up the HHS ladder until getting all the way to Sebelius. Along the way, Menendez also sought help from former senator Tom Harkin (D-Iowa), who declined to get involved.
At every turn, a sometimes angry Menendez challenged Medicare’s policy on the “multi-dosing” of a drug for macular degeneration. At issue was Melgen’s practice of splitting single vials of the drug into multiple doses and billing Medicare for more than one vial. The agency ended up coming after him, demanding repayment of $8.9 million.
The defense has argued that Medicare policy allowed for the multi-dosing of another similar eye drug.
Prosecution witness Jonathan Blum, a former official with the Centers for Medicare and Medicaid, testified this week that a contentious 2009 phone call with Menendez ended with the senator hanging up on him. Blum also attended the 2012 meeting, along with Reid, Menendez staffers and another HHS official.
From the time Menendez’s staff first contacted Medicare officials, it was the agency’s thought that he was advocating for Melgen, Blum testified, a claim that the defense repeatedly disputed Tuesday.
An internal HHS email introduced Tuesday as evidence notes that Menendez’s office said it didn’t want Melgen punished if he complied with Medicare regulations.
Two months before the meeting at Reid’s office, Menendez met with Medicare’s acting top administrator, Marilyn Tavenner, who said she thought the purpose of the meeting was to discuss her Senate confirmation process.
Instead, Tavenner said, she was confronted with the Medicare billing issue. She backed Blum’s conclusion that the agency’s actions were appropriate. Abbe Lowell, Menendez’s attorney, produced a memo from Menendez’s office showing that he wanted to discuss a range of issues with Tavenner.
But Tavenner recalled talking only about the Medicare situation.
“(Menendez) said he wasn’t satisfied with my actions, so he would take additional steps,” Tavenner testified on Tuesday. “He told he me was disappointed . . . and he wouldn’t let it stand.”
That led to the meeting with Sebelius, who agreed with her staffers’ responses.
Blum testified that he didn't recall Menendez or Reid making a specific request during the 30-minute meeting, but he remembered Reid expressing frustration to Sebelius and stating that the Medicare billing policy "doesn't make any sense."
Reid was the only person at the meeting who brought up Melgen specifically, Blum said.
After the meeting, Menendez said he would use the "full power" of his seat on the Senate Finance Committee to get the answers he was seeking, Blum said.
Blum said his only follow-up to the meeting was to look into whether doctors who "multi-dose" can be reimbursed for administrative costs unrelated to the cost of the medicine itself.
With every element of the Medicare dispute discussed in excruciating detail, U.S. District Judge Williams Walls cautioned jurors on Tuesday that they shouldn't parse the details of the dispute, but rather determine "whether the squabble was the subject of a conspiracy to commit bribery."
The seven-woman, five-man jury will be called upon to untangle a web of gifts and campaign contributions to determine whether they amounted to bribes. The trial, now in its fifth week, is taking place against the backdrop of recent rulings in similar cases that have narrowed the definition for what qualifies as an "official act" by a politician.
With the jury out of the courtroom, Walls referred to the most high-profile of those cases, the U.S. Supreme Court's reversal of former Virginia Gov. Bob McDonnell's (R) conviction on bribery charges.
It is unclear whether Reid will testify.