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Former Miami Beach healthcare mogul Philip Esformes, 50, faced a federal jury Tuesday in the first day of one of the biggest Medicare fraud cases of all time.
Jurors will decide whether Esformes led a 10-year conspiracy to bribe doctors to funnel patients to his 16 South Florida nursing homes and then bill the federal government for services the patients never needed or never received through Medicare and Medicaid.
The government claims the scheme amounted to $1 billion in fraud, including $450 million false claims to Medicare and Medicaid, of which Esformes personally pocketed $36 million through a network of 256 bank accounts. Lawyers for Esformes say he’s a businessman, wholly unaware of which services are medically necessary or not, and that the case is nothing more than an insurance dispute with the federal government.
In her opening statement, Elizabeth Young, a federal prosecutor from the criminal fraud division of the Justice Department, described a “rinse and repeat” scheme in which Esformes would cycle patients through his facilities, billing Medicare and Medicaid over 10 years.
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“He was the mastermind, he made this happen,” Young said, sometimes pointing at Esformes sitting at the defendant’s table. “He was the owner, operator of these facilities. He got the money from Medicare and Medicaid. He was involved in every step of the way.”
Young said Esformes ordered his inner circle to bribe doctors at hospitals to order patients transferred to his skilled nursing facilities, where he billed Medicare for their stay of 100 days. Then, Young said, Esformes ordered his inner circle to transfer the patients to his assisted living facilities, which don’t require a doctor’s order, where he billed Medicaid for unnecessary medical services or services the patients never received. While the patients were at his assisted living facilities, Young said, Esformes and his co-conspirators would sell the patients’ Medicare numbers to other fraudsters who would bill for more services and rake in tax dollars. Then, Young said, the patients would return to the hospital and the cycle would start all over again.
“He sold his own patients like cattle for money,” Young said.
To cover up the scheme, Young said Esformes ordered his deputies to bribe Florida regulators to get advanced warnings of their inspections and would physically hide patients who didn’t qualify for government-funded care before inspectors arrived.
Roy Black, representing Esformes, used his opening statement to try to torpedo the credibility of the government’s witnesses, many of whom are co-conspirators in the case who have already pleaded guilty.
“They are going to rely on less-than-stellar witnesses: con artists, liars, fraudsters and drug traffickers,” Black said. “These are not people whose word you can rely on.”
Black described the case as merely a dispute between an insurer, the federal government, and a health care operator, painting the prosecution as overzealous.
“You have a dispute with the insurance company and you work it out,” he said. “You have a dispute with the federal government and they crush you.”
Black described Esformes as a “highly unique person” who is “obsessive and compulsive” about his business — he had a driver to chauffeur him around to his different health care facilities so that he could conduct business on three different cell phones from the back seat. To address the government’s claim that Esformes used money earned from the scheme to bribe a college basketball coach to give his son a spot at the school, Black said Esformes would do “anything to give his children an edge.”
“He’s spent at least $1.3 million paying people to coach his sons,” Black said. “It’s his money, he’s entitled to spend it as he likes.” The coach, who moved to the Boston Celtics, pleaded guilty to accepting bribes from Esformes last year.
FBI agents arrested Esformes in July 2016; he’s been in federal prison in downtown Miami ever since.
Jurors will hear from former patients at Esformes’ facilities and co-conspirators who are cooperating with the government, and review thousands of pages of text messages and medical bills. The trial is expected to last at least two months.