Record-Setting Nursing Home Fraud Case Ends in $44M Judgment

The former nursing home owner behind the largest criminal health care fraud case in U.S. history had already received a 20-year prison sentence, but a federal judge on Thursday added a $44 million payment to the punishment.

Philip Esformes, who once ran a skilled nursing facility and assisted living chain with locations from Miami to Chicagoland, was ordered to pay a $39 million forfeiture judgment and $5 million in Medicare losses, the Miami Herald reported, along with $617,000 in incarceration costs.

While sizable, that number paled in comparison to the $207 million figure that federal prosecutors had requested — but because Esformes’s criminal jury did not reach a verdict on a key count of conspiracy to commit Medicare fraud, Judge Robert Scola picked a lower figure, according to the Herald.


“I gave him a lesser number of years in prison in anticipation of a significant financial penalty,” Scola said in court, per the Herald.

The Department of Justice in 2016 accused Esformes of bilking Medicare and Medicaid out of $1 billion, using the Esformes Network of SNFs and assisted living facilities to provide medically unnecessary care to residents who did not qualify under the federal health care programs.

The trial wrapped up in April, with a jury returning 20 guilty verdicts on a variety of bribery and kickback charges — though the prosecutors failed to convict Esformes on the central Medicare fraud charge. At the time, the Herald speculated that some jurors believed that because the Esformes Network facilities provided legitimate care to some residents, he did not technically defraud the federal government.


Esformes’s defense attorney made a similar argument during the financial penalty phase, according to the Herald, positing that the government failed to identify a single one of the 14,000 people at Esformes’s buildings who received fraudulent care — and arguing that his client only ultimately defrauded Medicare of $4 million to $5 million.

“No one can name a single patient who fits that category,” attorney Howard Srebnick said, according to the Herald.

Scola had previously sentenced Esformes to 20 years in federal prison back in September, telling a court that the former nursing home owner had “violated the trust of Medicare and Medicaid in epic proportions.”

The Esformes case could have a lasting impact on the way the federal government punishes health care executives for financial crimes: The DOJ in September unveiled a plan to begin pursuing criminal charges in False Claims Act cases against nursing home owners, which have largely involved civil monetary settlements.

 “As America’s aging, it’s becoming a larger problem, and we need to be able on the federal side to identify who is the worst of the worst,” assistant deputy attorney general Toni Bacon told Bloomberg Law earlier this year.