Philip Esformes

The owner of more than 30 Miami-area nursing homes and assisted living facilities has been charged with leading a national record $1 billion-plus Medicare fraud scheme. Also accused in the alleged sprawling conspiracy that involved fraudulent placement and billing for thousands of beneficiaries were a hospital administrator and a physician’s assistant.

At the center of the storm is Philip Esformes, who is accused of illegally shuffling residents in and out of his facilities, even enticing drug addicts with illicit opioids to go where directed. Esformes, Odette Barcha and Arnaldo Carmouze were each indicted for conspiracy, obstruction, money laundering and healthcare fraud, federal prosecutors announced Friday morning.

“This is the largest single criminal healthcare fraud case ever brought against individuals by the Department of Justice, and this is further evidence of how successful data-driven law enforcement has been as a tool in the ongoing fight against healthcare fraud,” said Assistant Attorney General Leslie R. Caldwell (left) of the Justice Department’s Criminal Division.

The conspirators allegedly admitted unqualified individuals into Esformes’ skilled nursing and assisted living facilities and billed Medicare and Medicaid inappropriately for services, dating back to at least 2002. The trio also allegedly received kickbacks to send beneficiaries to mental health and home health care providers, who also allegedly performed medically unnecessary treatments. Kickbacks were hidden as charitable donations and sham lease payments, officials say.

Esformes, 47, is no stranger to authorities. He paid $15.4 million in 2006 to resolve civil federal healthcare fraud claims for “essentially identical conduct,” officials noted at a press conference Friday. The conspirators continued with more sophisticated means to launder money and at least temporarily hide Esformes’ identity from investigators, they added. Ultimately, advanced data analysis and forensic accounting techniques by the FBI and Office of Inspector General led to the unraveling of the alleged scheme, officials said.

Esformes defense attorneys Marissel Descalzo and Michael Pasano issued a statement Friday declaring his innocence.

“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 filed papers Friday in an effort to detain Esformes before trial. His detention hearing is set for Aug. 1, according to the Miami Herald.

“The conspirators were ruthlessly efficient,” the Justice Department’s Caldwell said. They allegedly paid bribes and kickbacks to keep patients nearing Medicare stay limits rotating to other corrupt providers, she added (see government graphic at right).

“Among the thousands of people cycled through the fraudulent network were, for example, drug addicts who were allegedly prescribed opioids – including OxyContin and Fentanyl – and other narcotics in order to entice them to stay in facilities where they didn’t belong,” Caldwell said.

Esformes is charged with obstruction of justice for allegedly trying to fund another co-conspirator’s flight out of the United States so that he could avoid trial in Miami, authorities said. They claim he wrote numerous checks to help fly the individual to Israel.

In a separate case, Esformes and his father, Morris Esformes, agreed to pay $5 million to settle a federal whistleblower lawsuit just six days before it was to go to trial in 2013. They were charged with accepting a multi-million dollar kickback from pharmacy giant Omnicare in 2004. The kickback allegedly came as part of a $32 million payment for Total Pharmacy, which was partially owned by Philip Esformes. In exchange for the money, Omnicare secured pharmacy contracts with two dozen nursing homes affiliated with the Esformeses, the suit charged.