Record-Setting $1.3B Nursing Home Fraud Case Ends in 20-Year Prison Sentence

Philip Esformes, who used to control a network of skilled nursing and assisted living facilities running from Miami to Chicago, was sentenced to 20 years in prison on Thursday.

The legal publication Law360 first reported the news.

The U.S. Justice Department called the case, which resulted in 20 guilty verdicts in April, the largest single health care bribery and kickback scheme in American history, according to the Chicago Tribune and the South Florida Sun Sentinel. Esformes had faced a total of 26 charges.

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He used the chain of facilities, Esformes Network, to defraud Medicare and Medicaid for $1.3 billion, according to the U.S. Department of Justice (DOJ); Judge Robert N. Scola Jr. said that Esformes “violated the trust of Medicare and Medicaid in epic proportions,” according to the Tribune and Sun Sentinel.

That said, the 20-year sentence came after prosecutors requested a 30-year prison term; Scola pointed to Esformes’s philanthropy as one factor in his sentencing calculus.

“I think he should get some consideration for his philanthropy, although it’s dangerous to say because he was stealing money from Medicare, so people might say he was giving that money to charity,” Scola said in remarks reported by the publications. “But the vast majority of the money he made, he made legitimately.”

Esformes’s nursing homes housed elderly patients with younger adults with mental illness and drug addiction. Run in conjunction with his father and business partner, Morris Esformes, the properties earned millions in Medicare and Medicaid per year, in spite of repeated federal law enforcement probes.

The DOJ accused the Esformes Network of taking in residents who did not qualify for SNF care while referring patients to other providers, such as mental health facilities and home health agencies, in exchange for kickbacks at the time of Philip Esformes’s original arrest in July 2016.

“His fraud involved thousands of patients, 16 nursing homes, the systematic payment of bribes, a complex web of bank accounts, and brazen obstruction of justice to try to prevent it all from coming to light,” prosecutor Elizabeth Young wrote in a sentencing memo cited by the Tribune and the Sun Sentinel.

The government asked Scola to approve a plan that would force Esformes to forfeit $38.7 million in funds gained via money laundering. About $28.8 million of that amount came from Esformes’ SNFs, according to a supplemental exhibit in the case.

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