Not long ago, Miami Beach executive Philip Esformes was living quite comfortably among America’s “1 percent,” raking in millions from his healthcare business, gobbling up pricey real estate and darting around the country in chartered jets.
Then, in a flash, his luxurious lifestyle went poof: FBI agents arrested Esformes in July 2016 and he suddenly became the poster boy for the biggest Medicare fraud case in the country. He was charged with bilking $1 billion out of the federal healthcare program for the elderly and disabled, while his vast business assets and bank accounts were frozen. Worse, Esformes, 50, was ordered held without bail at the Federal Detention Center in Miami.
Esformes was back in court Monday for one final hearing before he goes to trial by himself on Feb. 11. Once always tan and fit, he looked wan and frail as his defense team tried in vain to delay the start of trial. They sought more time to review the Justice Department’s long list of patients who prosecutors say received no services or medically unnecessary treatment at Esformes’ Miami-Dade chain of skilled-nursing and assisted-living facilities.
“We’re not ready to do it by Feb. 11,” said Esformes’ defense attorney, Howard Srebnick, arguing for more time to review the patient files. “The government can choose how it wants to make its case, but it cannot choose how we defend it.”
“They have had adequate time,” Justice Department lawyer James Hayes countered, noting the list of about 100 Medicare patients was turned over to the defense in early December. “They have had sufficient time.”
U.S. District Judge Robert Scola refused to budge on the trial’s start date, which falls two and half years after Esformes’ arrest.
Esformes is standing trial alone because all of his co-conspirators have already pleaded guilty, including a physician’s assistant, Arnaldo Carmouze, and a former Larkin Community Hospital outpatient director, Odette Barcha. In January, both admitted that they recycled Medicare patients through the hospital and Esformes’ network of nursing homes and ALFs in an elaborate bribery scheme that prosecutors say was orchestrated by the healthcare executive.
Carmouze, 59, pleaded guilty to conspiring to defraud Medicare by accepting bribes for making patient referrals to Larkin and Esformes’ healthcare facilities. Barcha, 52, pleaded guilty to conspiring to pay bribes to physicians to refer patients to Larkin and receiving kickbacks herself to move patients into Esformes’ facilities.
In turn, both avoided the risk of trial and much longer prison sentences. Carmouze faces eight years and Barcha three and a half years in prison.
“She was facing significant time if she lost at trial,” said Barcha’s defense attorney, Sam Rabin. “The government offered far less time. It was too good of a deal to pass up.”
It is not clear, however, whether Carmouze and Barcha will testify as government witnesses. Their plea deals don’t require them to do so.
Esformes also could have cut his own deal in the tense months leading up to trial, but he did not want to go to prison for 10 to 20 years, according to sources familiar with the Justice Department’s proposed offer. But if he loses at trial, he could spend the rest of his life in prison because of the massive scope of the alleged taxpayer-funded Medicare losses.
His team of defense lawyers, which include Srebnick and his prominent partner, Roy Black, are ramping up for trial. Because the defendant’s assets are frozen, his father, Morris Esformes, a Chicago rabbi who made a fortune in the healthcare business, is footing the son’s legal bills. Father and son were once partners in a similar chain of skilled-nursing and assisted-living facilities in Chicago before expanding to Miami.
According to the Justice Department’s indictment, Esformes is accused of exploiting his network of about 20 Miami-Dade skilled-nursing and ALFs to fleece the taxpayer-funded Medicare program by filing false claims for services that were not necessary or not provided over the decade leading up to his arrest.
Larkin Hospital in South Miami referred some of the thousands of Medicare patients to his network through bribery payments to physicians and other medical professionals, according to the indictment and sources familiar with the federal investigation. Larkin is not identified in the indictment.
Esformes is also accused of referring his own network of patients to convicted healthcare-fraud offenders, including Guillermo and Gabriel Delgado, who are serving prison time. The brothers admitted swindling Medicare for mental-health, prescription-drug, and home-healthcare services, and they ultimately helped federal investigators target the Miami Beach executive.
According to the indictment, the brothers paid some kickbacks for the patients by disguising them as payments for escort services for Esformes as well as related travel and hotel expenses.
Esformes was also charged with obstructing justice because prosecutors say he plotted in 2015 with the Delgado brothers to help one of them leave Miami for Israel to avoid trial. Unbeknown to Esformes, the co-conspirators, who had already been charged with sharing Medicare patients with him in the alleged kickback scheme, recorded a two-hour conversation with him before Esformes was indicted the following year. The secret recording was carried out as part of the brothers’ cooperation deal with the feds to plead guilty.
Justice Department officials — along with South Florida’s U.S. attorney, the FBI, and Health and Human Services agents — described the Esformes prosecution as the nation’s biggest Medicare fraud case.
Prosecutors said his healthcare network as well as other co-conspirators billed $1 billion for fraudulent medical services since 2009. In turn, Medicare paid Esformes’ skilled-nursing and assisted-living facilities and the Delgado brothers’ healthcare operations about $500 million.