Biggest Medicare Fraud Scheme in History

By Jay Weaver, The Miami Herald 

One of the state’s wealthiest healthcare operators was arrested Friday at his Miami Beach waterfront estate on charges of orchestrating the nation’s biggest Medicare fraud scheme — $1 billion.

Philip Esformes, 47, charged with two other defendants, is accused of exploiting his network of about 20 Miami-Dade skilled-nursing and assisted-living facilities to fleece the taxpayer-funded Medicare by filing false claims for services that were not necessary or in some instances not provided over the past 14 years.

An unidentified local hospital referred some of the thousands of Medicare patients to his network through kickback payments to physicians and other medical professionals, according to an indictment.

Esformes is charged with conspiring with Arnaldo Carmouze, 56, a Palmetto Bay physician’s assistant, and Odette Barcha, 49, a former longtime director of outreach programs at Larkin Community Hospital in South Miami. Authorities would not confirm whether that was the local hospital at the center of the alleged scheme.

Esformes is also accused of referring his own network of patients to other convicted healthcare fraud offenders, who swindled Medicare for mental health, prescription drug and home healthcare services and ultimately helped federal investigators target the Miami Beach business executive. According to the indictment, those kickbacks were “disguised” as payments for escort services for Esformes as well as related travel and hotel expenses.

Justice Department officials — along with South Florida’s U.S. attorney, the FBI and Health and Human Services agents — described the Esformes case as one for the record books in the nation’s long-standing battle against healthcare fraud. They noted that while his healthcare network billed $1 billion for fraudulent medical services, Medicare paid Esformes’ skilled-nursing and assisted-living facilities about $500 million since 2009.

“This is the largest single criminal healthcare fraud case ever brought against individuals by the Department of Justice,” the criminal division’s assistant attorney general, Leslie R. Caldwell, said Friday during a news conference at the U.S. attorney’s office in Miami.

“The magnitude of alleged false claims in this scheme is staggering and outrageous, even by South Florida healthcare fraud standards,” said U.S. attorney Wifredo Ferrer. “This case illustrates once again that Medicare fraud has infected every aspect of the healthcare system.”

To put this Medicare scheme in context, the healthcare network’s billing activity equaled the amount of money that convicted Fort Lauderdale Ponzi schemer Scott Rothstein churned while he ripped off wealthy investors from Florida to New York. Rothstein’s investment racket was considered one of the state’s biggest financial frauds.

On Friday, Esformes’ defense attorneys, Marissel Descalzo and Michael Pasano, issued a statement declaring he committed no wrongdoing.

“Mr. Esformes is a respected and well-regarded businessman. He is devoted to his family and his religion,” the statement said. “The government allegations appear to come from people who were caught breaking the law and are now hoping to gain reduced sentences. Mr. Esformes adamantly denies these allegations and will fight hard to clear his name.”

Prosecutors Allan Medina and Elizabeth Young filed court papers Friday seeking to detain Esformes before trial, asserting that he is a danger to the community. His detention hearing is scheduled for Aug. 1 in Miami federal court.

The prosecutors said that Esformes continued to fleece the Medicare program even after he and others settled a civil dispute a decade ago with the U.S. government for $15.4 million over allegations of paying kickbacks to physicians in exchange for patient referrals to Larkin Community Hospital. In 2006, Esformes owned a chain of assisted-living facilities and supplied patients to the local hospital as part of the scheme, according to the settlement.

They also said that Esformes tried to derail the 2014 Medicare fraud case against Guillermo and Gabriel Delgado, who were charged with filing false claims for prescription drug and home healthcare services. As part of their plea deals, they agree to cooperate with prosecutors, accusing Esformes of accepting kickbacks from them in exchange for referring Medicare patients from his skilled-nursing and assisted-living facilities.

In particular, prosecutors claim that Eformes “repeatedly discussed funding Guillermo Delgado’s flight from the United States to Israel to avoid trial,” according to their motion to detain the Miami Beach businessman. “Attempting to carry out this plan, [Esformes] wrote checks to Guillermo Delgado to fund his flight from prosecution, and he encouraged Gabriel Delgado to ‘blame the empty chair’ that would be created by Guillermo’s flight to secure Gabriel’s acquittal at trial.”

The alleged flight plot was not completed, as the Delgado brothers pleaded guilty to defrauding Medicare.

The prosecutors also said Esformes “amassed significant personal wealth” — reporting assets of $78 million, including his North Bay Road waterfront estate — from his network of skilled-nursing and assisted-living facilities in South Florida. In 2012, Esformes reported making $10.4 million, according to court papers.

In their motion, the prosecutors concluded: “Given the strong likelihood that [Esformes] would persist in his pattern of criminal activity to the detriment of his community, [his] detention is necessary to ensure that he does not continue to use and endanger vulnerable Medicare beneficiaries in order to steal millions more from Medicare.”

July 22, 2016

Editor: Although the publication date of an article may not be current the information is still valid.


Federal prosecutors say a Dallas doctor netted nearly $375 million in Medicare fraud scheme.

Dr. Jacques Roy, 54, was arrested on Feb. 28 on 13 federal charges that could send him to prison for life. Prosecutors say he recruited thousands of patients, including homeless people, and billed the federal government for medical services that the patients didn’t need or that no one ever performed.

The indictment alleges that Roy took advantage of a Medicare rule that a doctor must certify that services for patients are medically necessary. He sold his certification to home health care companies, prosecutors say, and in turn, the companies filed fraudulent charges with Medicare and Medicaid and gave part of the payments to Roy.

As a result of the investigation, 78 companies that worked with Roy’s business had their eligibility to receive Medicare funds suspended, and six people were charged as his co-conspirators.

From 2006 to 2011, his company, Medistat Group and Associates, worked with more than 500 Texas home health-care companies to certify over 11,000 patients – more than any other medical practice in the country, according to the indictment. Together, they charged Medicare more than $350 million and Medicaid more than $24 million.

Associates of Roy worked to recruit patients, the indictment states. Sometimes, homeless people were offered money and food to sign up for home health care services.

In one case, court documents say, one associate parked a car outside a homeless shelter and hired people to send potential patients to her. She paid $50 a head for such prospects.

At Medistat Group, the documents state, workers spent all day in a “boiler room” signing Roy’s name to documents and churning out claims.

Feb. 28, 2012


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