Miami, Florida: A federal jury on Friday found nursing home mogul Philip Esformes guilty on various counts of paying and receiving kickbacks, money laundering, bribery and obstruction of justice after a two-month trial in Miami, in what the government called the largest health care fraud case it has ever brought.
The jurors found Esformes, 50, guilty on 19 counts related to bribes prosecutors say he paid to doctors to send patients to his South Florida network of facilities, to state health agency officials to get inspection schedules and complaint reports and to former University of Pennsylvania men’s basketball coach Jerome Allen to get his son a spot on the school’s basketball team and admission into its Wharton School of Business.
They also found Esformes guilty of one count of obstruction of justice for allegedly suggesting that an associate leave the country to escape federal health care fraud charges.
The jurors failed to reach a decision on six counts, including one count of conspiracy to commit health care fraud and wire fraud, two counts of payment of kickbacks, two money laundering counts and one count of bribery.
Esformes’ attorney Roy Black called the verdict “interesting” and noted that the jury did not find Esformes guilty on the only remaining health care fraud charge in the case, conspiracy to commit health care fraud and wire fraud. To find him guilty on that charge, the jurors would have had to find that Esformes intended to defraud the government, he said.
“It’s certainly a mixed bag at best,” Black said. “Now we will proceed with the rest of the litigation.”
Prosecutors accused Esformes of fraudulently receiving $450 million from Medicare and Medicaid through his South Florida network of facilities for services that were provided because of bribes, services that were not needed or services that were never provided. Prosecutors say he personally pocketed $38 million through a network of 256 bank accounts.
He faces the potential of decades in prison and being ordered to pay tens of millions of dollars in forfeiture and restitution when he is sentenced. Jurors will be back Monday for the second phase of the trial to address the issue of forfeiture.
“Philip Esformes orchestrated one of the largest health care fraud schemes in U.S. history, defrauding Medicare and Medicaid to the tune of over a billion dollars,” Brian A. Benczkowski, assistant attorney general of the U.S. Department of Justice’s Criminal Division, said. “I commend our dedicated prosecutors and law enforcement partners for their professionalism and unyielding pursuit of justice on behalf of American taxpayers and vulnerable beneficiaries who, as a result of Esformes’ crimes, were denied the level of care that they needed and deserved.”
The verdict ends the hotly contested two-month trial in which the prosecution claimed Esformes, who owns seven nursing homes and nine assisted living facilities, would bribe doctors to refer patients to his nursing homes and then move them to his assisted living facilities once he had charged Medicare for the maximum 100 days the government would pay out for skilled nursing services.
He would then move patients back to the hospital and get doctors to sign off on more skilled nursing care, starting the cycle from the beginning, according to the government.
The trial featured testimony from brothers Gaby and Guillermo Delgado, who said that they had set up kickback arrangements with health care providers who were seeking access to Esformes’ thousands of patients and doctors who provided patient referrals.
The government also put Bertha Blanco, a former Florida Agency for Health Care Administration worker, on the stand to testify about how she received bribes to supply inspection schedules and patient complaints. She is currently in prison for these bribes.
In addition, jurors heard testimony from Allen, the former University of Pennsylvania head men’s basketball coach, who said he accepted $300,000 in plastic bags full of cash and wire transfers to get Morris Esformes on a list of top five priority basketball recruits for the university. Allen has pled guilty to bribery charges in a separate criminal proceeding.
In Esformes’ defense, his attorneys called the government’s witnesses “con artists, liars and even drug traffickers” and put nurses and residents of Esformes’ facilities on the stand to rebut the government witnesses’ claims that the facilities were badly managed and dirty. Nurses told jurors they always have the supplies they need and that Esformes, who they said was constantly making the rounds at his facilities, really cared about the patients.
The government is represented by James V. Hayes, Elizabeth Young and Allan Medina of the U.S. Department of Justice’s Fraud Section.
Esformes is represented by Howard M. Srebnick, Roy Black, Jacqueline Perczek and Rossana Arteaga-Gomez of Black Srebnick Kornspan & Stumpf PA, Marissel Descalzo of Tache Bronis Christianson & Descalzo PA and Bradley Horenstein of The Horenstein Firm PA.
The case is U.S. v. Esformes et al., case number 1:16-cr-20549, in the U.S. District Court for the Southern District of Florida.