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Florida trio accused of unprecedented $1 billion Medicare fraud

by Gail Kalinoski, Contributing Reporter | July 25, 2016
Risk Management
Accused in a $1 billion Medicare fraud and money laundering scheme, the owner of more than 30 Florida skilled nursing and assisted living facilities, along with two others, has been charged by the U.S. Justice Department in what's being called the largest single criminal health care fraud case ever brought against individuals.

The Justice Department accused the three of “using a network of doctors, hospitals and health care providers across South Florida to improperly bill more than $1 billion to Medicare and Medicaid,” according to the Wall Street Journal.

Philip Esformes, 47, who owns numerous health care facilities in the Miami area, is accused of being the mastermind of the alleged scheme that went on for 14 years. Prosecutors said he was able to move about 14,000 elderly people in and out of his facilities, even if they did not need the medical care, and billed Medicare or Medicaid for the services.

“Furthermore, Defendant (Esformes) and his co-conspirators preyed upon his beneficiaries addictions by providing them with narcotics so that the beneficiaries would remain in Esformes Network facilities, allowing the cycle of fraud to continue,” prosecutors stated in a court filing described by CNBC.

The Wall Street Journal reported Esformes and his co-conspirators – hospital administrator Odette Barcha, 49, and physician assistant Arnaldo Carmouze, 56, – also paid and received bribes and kickbacks to place the patients in the Esformes facilities.

The three face charges of conspiracy, money laundering and health care fraud, according to the U.S. Attorney’s office in Miami.

Prosecutors said Esformes has faced charges before on similar counts. In 2006, he and partners agreed to pay $15.4 million to settle a federal civil lawsuit stemming from accusations of Medicare fraud in the Miami area, according to the New York Times.

The latest indictment alleges Esformes continued with Medicare fraud “using intermediaries, shell companies and money laundering operations,” to try and cover it up, the Times story stated.

Esformes’ attorneys have said their client, who faces a possible life sentence, “adamantly denies” the allegations. Lawyers for his co-defendants could not be reached for comment. The Justice Department has asked that Esformes be held without bail.

The investigation was conducted by an interagency Medicare Fraud Strike Force, which has operated across the United States since 2007, according to the Wall Street Journal. Since its inception the strike force has charged about 2,900 people who were accused of bilking Medicare of more than $10 billion.

CNBC noted that South Florida is a “hot spot for health care billing fraud schemes.”

Miami U.S. Attorney Wilfredo Ferrer told CNBC, “Medicare fraud had infected every facet of our health system.”

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