DOJ Busts Biggest Medicare Scam in History

I don’t know what’s more alarming about this, that a company in Miami was able to abscond with more than a billion dollars in illegal Medicare billings or that it took the Department of Justice 14 years to catch them.


The mastermind of this complex scheme, Philip Esformes, operates about 20 skilled care and assisted living facilities. In addition to fraudulent claims for services that were never performed, an intricate web of kickbacks to physicians and other hospitals as well as referrals to other Medicare fraudsters lined Esformes’ pockets.

Miami Herald:

An unidentified local hospital referred some of the thousands of Medicare patients to his network through kickback payments to physicians and other medical professionals, according to an indictment.

Esformes is charged with conspiring with Arnaldo Carmouze, 56, a Palmetto Bay physician’s assistant, and Odette Barcha, 49, a former longtime director of outreach programs at Larkin Community Hospital in South Miami. Authorities would not confirm whether that was the local hospital at the center of the alleged scheme.

Esformes is also accused of referring his own network of patients to other convicted healthcare fraud offenders, who swindled Medicare for mental health, prescription drug and home healthcare services and ultimately helped federal investigators target the Miami Beach business executive. According to the indictment, those kickbacks were “disguised” as payments for escort services for Esformes as well as related travel and hotel expenses.

Justice Department officials — along with South Florida’s U.S. attorney, the FBI and Health and Human Services agents — described the Esformes case as one for the record books in the nation’s long-standing battle against healthcare fraud. They noted that while his healthcare network billed $1 billion for fraudulent medical services, Medicare paid Esformes’ skilled-nursing and assisted-living facilities about $500 million since 2009.

“This is the largest single criminal healthcare fraud case ever brought against individuals by the Department of Justice,” the criminal division’s assistant attorney general, Leslie R. Caldwell, said Friday during a news conference at the U.S. attorney’s office in Miami.

“The magnitude of alleged false claims in this scheme is staggering and outrageous, even by South Florida healthcare fraud standards,” said U.S. attorney Wifredo Ferrer. “This case illustrates once again that Medicare fraud has infected every aspect of the healthcare system.”

To put this Medicare scheme in context, the healthcare network’s billing activity equaled the amount of money that convicted Fort Lauderdale Ponzi schemer Scott Rothstein churned while he ripped off wealthy investors from Florida to New York. Rothstein’s investment racket was considered one of the state’s biggest financial frauds.


The GAO figured that there were close to 10% or $60 billion in illegal or mistaken Medicare billings. Given how long this criminal conspiracy operated without being caught, you have to wonder how many more large-scale fraud schemes are being run around the country.

These guys didn’t appear to have much trouble at all — even on the scale they were operating, with thousands upon thousands of patients and paperwork that must have involved thousands more. Meanwhile, Medicare bureaucrats were asleep at the switch, approving bogus charge after bogus charge.

You would think even just minimum oversight would have caught these criminals years ago. But our government doesn’t do oversight, or accountability. So it is likely that we’ll see more fraud schemes like this, bilking taxpayers of tens of billions of dollars.


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