Philip Esformes, the owner of more than 30 Miami-area assisted living and skilled nursing facilities, was charged with conspiracy, obstruction, money laundering and healthcare fraud in connection with a $1 billion scheme that is “the largest single criminal healthcare fraud case ever brought against individuals by the Department of Justice,” government officials announced Friday.
Odette Barcha, a hospital administrator, and Arnaldo Carmouze, a physician’s assistant, also were charged in the alleged scheme, which the Justice Department said involved several other Miami-based healthcare providers, too.
“Esformes is alleged to have been at the top of a complex and profitable healthcare fraud scheme that resulted in staggering losses — in excess of $1 billion,” said Special Agent in Charge George L. Piro of the FBI’s Miami Field Office. Of that amount, $464 million was spent by Medicare for services that were medically unnecessary, never were provided or were procured through kickbacks and bribes, according to the government. The Medicaid program also was affected.
The Esformes network of facilities
The indictment against Philip Esformes, Odette Barcha and Arnaldo Carmouze listed 11 assisted living facilities and one combination assisted living/skilled nursing facility that Esformes owned, controlled or operated in Miami–Dade County and elsewhere:
The indictment also listed six SNFs that he owned, controlled or operated.
When residents of Esformes’ SNFs would near or arrive at the end of Medicare’s 100-day post-hospital benefit period for skilled nursing, they would be moved to his ALFs, according to a motion to detain Esformes pending trial that was filed Friday by the federal government. “After the required 60-day waiting period between consecutive admissions to an [sic] SNF, a physician or physician assistant would readmit the beneficiary to the hospital, re-initiating the cycle,” the document said.
Meanwhile, according to the motion, Esformes provided access to assisted living residents “for any healthcare provider willing to pay a kickback,” including pharmacies, home health agencies, physician groups, therapy companies, partial hospitalization programs, laboratories and diagnostic companies. “Many of these services, however, were not medically necessary or were never provided,” the court document stated.
So that they would be hidden from law enforcement, the kickbacks often were paid in cash or were disguised as payments to charitable donations, payments for services and sham lease payments, according to the government.
The motion to detain pointed out that although the Medicare program does not directly reimburse ALFs for the care and services they provide, the program does pay physicians, home health agencies, pharmacies and other providers for services they deliver to ALF residents. Also, the motion noted, the Medicaid program pays for some assisted living expenses that some residents incur.
Marissel Descalzo and Michael Pasano, attorneys representing Esformes, issued a statement Friday maintaining their client’s innocence.
“Mr. Esformes is a respected and well-regarded businessman. He is devoted to his family and his religion,” they 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.”
This isn’t the first time Esformes has received attention from the federal government.
According to court documents, in 2006, he paid $15.4 million to resolve civil federal healthcare fraud claims for essentially identical conduct — namely, unnecessarily admitting residents from his ALFs into a Miami-area hospital. Esformes and others, however, allegedly continued this criminal activity, adapting their scheme to prevent detection after the civil settlement. The new, 28-count indictment, dated Thursday and unsealed Friday, alleges that they accomplished this feat by using sophisticated money-laundering techniques to hide the scheme and Esformes’ identify from investigators.
The FBI and Office of Inspector General at the U.S. Department of Health and Human Services ultimately used advanced data analysis and forensic accounting techniques to identify the full scope of the purported fraud scheme. “This is further evidence of how successful data-driven law enforcement has been as a tool in the ongoing fight against healthcare fraud,” Assistant Attorney General Leslie R. Caldwell said.
Esformes and Barcha also were charged with obstructing justice.
According to the indictment, following the 2014 arrest of home health operators Guillermo and Gabriel Delgado, Esformes attempted to fund Guillermo Delgado’s flight from the United States to avoid trial in Miami. The indictment further alleges that Barcha created sham medical director contracts, after she received a grand jury subpoena on June 20, to conceal the payment of kickbacks she made in exchange for patient/resident referrals for admission to Esformes’ facilities and another Miami-area hospital.
Esformes reported his personal wealth at $78 million in August 2014, according to the government.