Federal prosecutors reached the summit of the largest health care fraud scheme in U.S. history with the April 5 conviction of Philip Esformes, the owner of several Miami, Florida-area nursing home facilities, who faced dozens of charges related to cheating Medicare and Medicaid out of about $1.3 billion.

A federal jury in Miami found Mr. Esformes guilty of 20 health care fraud charges, including paying and receiving bribes and kickbacks to increase the volume of Medicare and Medicaid patients his network of skilled nursing and assisted living facilities received.

Federal officials also allege that the facilities, which Mr. Esformes managed “with an iron hand,” according to the Miami Herald, billed Medicare and Medicaid more than a billion dollars for treatments and services that patients didn’t need or even receive.

According to U.S. Attorney Ariana Fajardo Orshan, Mr. Esformes was convicted of one count of conspiracy to defraud the U.S.; two counts of receipt of kickbacks in connection with a federal health care program; four counts of payment of kickbacks in connection with a federal health care program; one count of conspiracy to commit money laundering; nine counts of money laundering; two counts of conspiracy to commit federal program bribery; and one count of obstruction of justice.

Mr. Esformes’ sentencing hearing has not yet been scheduled, but the 50-year-old businessman faces a potential 250 years for the charges of which he was convicted. Even if the sentences are drastically reduced under federal guidelines, Mr. Esformes still faces the prospect of spending the rest of his life behind bars.

Federal authorities arrested Mr. Esformes in July 2016. He has been held without bond at a federal detention center since then.

Two other health care professionals — a physician’s assistant and a former Larkin Hospital administrator — were charged along with Mr. Esformes, but they pleaded guilty earlier and cooperated with federal officials investigating the health care fraud scheme. Several other health care associates were also charged with fraud in the sweeping schemes, which allegedly ran from 1998 to 2016, including some who testified against Mr. Esformes.

Former University of Pennsylvania head basketball coach Jerome Allen was also among those who testified against Mr. Esformes at trial. The Miami Herald reported that Mr. Allen got to know Mr. Esformes through a fellow coach who trained his son. Mr. Allen said that Mr. Esformes “paid him about $300,000 in cash bribes and wire transfers to place his son, Morris, on a priority list as a ‘recruited basketball player’ so he could be accepted to Penn and its exclusive Wharton School of Business.”

Those revelations come on the heels of a completely separate college admissions fraud scandal in which celebrities knowing paid vast sums of money to a sham charity, which used the funds to bribe admissions test administrators and college sports coaches to let unqualified students gain entrance to prestigious colleges.

According to the Miami Herald, Mr. Esformes and his father “had amassed a fortune in the healthcare field in Chicago before they set their sights on Miami, where they got into trouble with the law for the first time in 2006.” At that time, the Esformes family and the owners of Miami’s Larkin Hospital paid the U.S. government $15.4 million to resolve allegations that they recycled patients between the hospital and the family’s nursing home and assisted living facilities.

Little did federal authorities know at the time but that relatively minuscule settlement set the stage for the much bigger health care fraud schemes the Esformes gang was to operate in the future.

It is uncertain how much of the $1.3 billion the Esformes entities stole from U.S taxpayers that the federal government will be able to recover. Prosecutors sought Mr. Esformes’ assets, which reportedly included several luxury Miami Beach properties and luxury automobiles. However, according to Law360, on April 9 a federal jury essentially gave the government only the operating licenses for the facilities but none of the various physical assets, the law journal reported.

“This largest ever health care fraud conviction highlights the awful toll criminal schemes take on federal health programs,” said Shimon Richmond, a special agent for the Department of Health and Human Services who helped prosecute the case. “Even beyond the vital dollars lost though, Esformes exploited and victimized patients by providing inadequate medical care and poor conditions in his nursing homes. Along with our law enforcement partners, we will continue the fight against such parasites.”


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