South Florida

Bribes to low-paid state worker key to $1 billion Miami Medicare fraud case, prosecutors say

U.S. Attorney Wifredo Ferrer and other federal authorities unveil a $1 billion Medicare fraud case against Miami Beach businessman Philip Esformes at a news conference after his arrest in July of last year.
U.S. Attorney Wifredo Ferrer and other federal authorities unveil a $1 billion Medicare fraud case against Miami Beach businessman Philip Esformes at a news conference after his arrest in July of last year.

Philip Esformes is a fabulously rich businessman who once made more than $10 million in a single year from his network of Miami-Dade nursing and assisted living facilities. He also owns two homes next door to each other on exclusive North Bay Road in Miami Beach, along with numerous other properties in Miami, Chicago and Los Angeles.

Bertha Blanco, a former state administrator who lives in working-class Hialeah, made $31,281 a year overseeing inspections of the very same kinds of healthcare facilities in Miami-Dade. She was fired in late 2016 after working for 29 years at the Florida Agency for Health Care Administration.

Esformes, 48, and Blanco, 66, lived worlds apart but federal authorities say they were linked in a long-running $1 billion Medicare ripoff.

Esformes, charged last year in what has been touted as the nation’s biggest Medicare fraud case, supplied tens of thousands of dollars in cash to Blanco but never knew her. Prosecutors say the bribes were passed through four other people who have already pleaded guilty.

Blanco, according to a new criminal case filed against her, was a small cog in the complicated operation, supplying confidential information on patient complaints and unannounced state inspections at Esformes’ facilities.

That inside information helped keep the Medicare tap flowing, according to court records. Esformes would use the information sold by Blanco — the first state AHCA employee ever to be charged with accepting bribes — to “address deficiencies” before state inspectors showed up at his facilities, a Health and Human Services criminal affidavit says. As a result, Esformes avoided the revocation of his licenses and continued to bill Medicare for questionable patient services.

Esformes relied on two trusted business associates — brothers Gabriel and Guillermo Delgado — to obtain the valuable state information, by paying $200 cash for each patient complaint and $3,000 cash for each unannounced inspection schedule over the span of five years. Gabriel Delgado then “personally provided these documents to Philip Esformes,” according to the criminal affidavit.

Two people acted as intermediaries for the Delgados: Isabel Lopez, who also owned several assisted-living facilities, and her son, Gustavo Mustelier. They kept a cut of the cash bribes while delivering the rest to Blanco to obtain patient and inspection records. According to statements filed with their plea deals, they delivered payoffs to the state administrator for the confidential information on two Miami-Dade facilities owned by Esformes: The Nursing Center at Mercy and Fair Havens Center.

Lopez and her son admitted they paid off Blanco for inside information on Lopez’s assisted-living facilities and on those belonging to at least five ALF owners, including Esformes.

At her end, Blanco either provided the confidential documents or called and texted the sensitive information, according to the criminal affidavit. She sometimes made the exchanges at a McDonald’s in Doral, or enlisted her son to make the deliveries.

Blanco’s defense attorney, Robyn Blake, said she is reviewing the Justice Department’s evidence against her client before deciding whether to go to trial or strike a plea deal. Blanco, who was arrested earlier this month and released from custody on a $250,000 bond, is scheduled for arraignment in Miami federal court on Sept. 1

“We don’t know which direction the case is headed right now,” Blake said.

Esformes, who was denied bond after his arrest a year ago and is being held at the Federal Detention Center in Miami, faces trial in March 2018 before U.S. District Judge Robert Scola.

His legal team, led by defense attorney Michael Pasano, asserts the Delgado brothers, who have already struck plea deals on Medicare fraud offenses, acted on their own and that Esformes knew nothing about their bribery activity.

“It may well be that for years the Delgado brothers were committing numerous crimes, including bribing AHCA people to get information,” Pasano said. “The Delgado brothers are crooks. And like most crooks who make deals for lesser sentences, they point their fingers away from themselves and try to blame Philip Esformes for their crimes.”

With the Delgados likely to be critical witnesses for the Justice Department, Esformes’ defense team has been aggressively waging a pre-trial battle to disqualify the team of prosecutors who charged the multimillionaire. The defense claims some of the evidence gathered by federal agents has been tainted and that the search of the office of Esformes’ longtime business lawyer was illegal.

In February, the first sign of the bribery scheme surfaced when Justice Department lawyers added the explosive charge to the original 2016 indictment against Esformes, accusing him of paying thousands of dollars to a then-unnamed employee with the state Agency for Health Care Administration to obtain patient complaints and inspection schedules.

In an undercover operation two years ago, federal agents used the Delgado brothers to zero in on Esformes.

In his two-story, Mediterranean-style home on North Bay Road, prosecutors say Esformes gave $5,000 to his right-hand man in a bedroom closet to be used to bribe a state regulator to learn what the state knew about his vast network of skilled-nursing and assisted-living facilities, according to the indictment.

Unbeknown to Esformes, the exchange of cash for inside information was videotaped by Esformes’ once-trusted friend, Gabriel Delgado. He had agreed along with his brother, Guillermo, to help investigators target the executive in the summer of 2015 after the brothers got into serious trouble with the feds themselves.

The charge of bribing a state regulator added a layer of intrigue to the massive Medicare fraud case: Esformes is accused of exploiting his network of about 20 Miami-Dade skilled-nursing and assisted-living facilities to fleece the taxpayer-funded program in a similar scheme by filing false claims for services that were not necessary or in some instances not provided to about 14,000 patients.

Larkin Community Hospital, though not identified in the Esformes indictment, referred many of those Medicare patients to his network through kickback payments to physicians and other medical professionals, prosecutors say. Esformes, in turn, recycled the same patients back through the hospital after they stayed in his network, according to the indictment.

Esformes is charged with conspiring with Arnaldo Carmouze, 57, a Palmetto Bay physician’s assistant, and Odette Barcha, 50, a former director of outreach programs at Larkin, to move the patients in and out of the hospital through Esformes’ facilities to bilk Medicare.

Esformes is also accused of referring the patients in his network to other convicted healthcare fraud offenders, including the Delgado brothers. According to their indictment, the brothers paid him kickbacks while swindling Medicare for mental health, prescription drug and home healthcare services. As a result of their plea deals and help in the Esformes investigation, they received more lenient prison sentences. Gabriel, 44, got 4 1/2 years and had to repay Medicare $9.1 million. For his additional assistance to prosecutors, his term was reduced to 3 years. Guillermo, 47, was imprisoned for 9 years.

According to the Esformes indictment, some of the kickback payments were “disguised” to cover escort services for him as well as related travel and hotel expenses to the Ritz-Carlton Hotel in Orlando.

Prosecutors said Esformes’ healthcare network as well as other co-conspirators such as the Delgado brothers billed $1 billion for fraudulent medical services between 2009 and last year. In turn, the Medicare program paid out about $500 million — with Esformes’ network receiving about half that income.