Orchestrator of landmark healthcare fraud scheme given 20-year prison sentence

Conspiracy ran for nearly 20 years, netting owner of assisted living and skilled nursing facilities $37 million.

The primary orchestrator of what federal authorities called the most wide-reaching healthcare fraud scheme ever uncovered has been sentenced to 20 years in state prison – far short of the 30 years prosecutors had reportedly sought, but a term sure to draw attention throughout the industry at large.

Philip Esformes, 50, of Miami Beach, Fla., was handed the sentence Thursday by U.S. District Judge Robert N. Scola of the Southern District of Florida, who also sentenced Esformes to three years of supervised release. A hearing to determine restitution and forfeiture has been scheduled for Nov. 21.

The case against Esformes involved an intricate scheme of kickbacks and money laundering connected to a pattern of fraudulent claims to Medicare and Medicaid for services deemed medically unnecessary.

According to the evidence presented during an eight-week trial that ended in April, between January 1998 and July 2016, Esformes led a conspiracy to keep the scheme afloat, using the network of more than a dozen assisted living facilities and skilled nursing facilities he owned. Esformes bribed physicians to admit patients into his facilities, then cycled the patients through the facilities, where they often failed to receive appropriate medical services or received medically unnecessary services billed to Medicare and Medicaid.

It all added up to some $37 million.

“For nearly two decades, Philip Esformes bankrolled his lavish lifestyle with taxpayer dollars, paying bribes with impunity and robbing Medicare and Medicaid by billing for services that people did not need or get,” U.S. Assistant Attorney General Brian A. Benczkowski said in a statement. “It is a credit to the tenacity of our prosecutors and law enforcement partners that the man behind one of the biggest healthcare frauds in history will be spending 20 years in prison.”

Esformes concealed the scheme from authorities for so long by bribing an employee of a Florida state regulator for advance notice of surprise inspections scheduled to take place at his facilities. The evidence further showed that the “lavish lifestyle” Benczkowski alluded to included luxury automobiles, a $360,000 watch, and, according to the Chicago Tribune, a luxurious penthouse apartment in a Chicago skyscraper and a mansion in the Los Angeles area.   

The newspaper further noted that the scheme had a few outrageously tragic results, recounting an incident at the Oceanside Extended Care Center in Miami Beach in which “an elderly patient was attacked and beaten to death by a younger mental health patient who never should have been at (a nursing facility) in the first place,” according to prosecutors’ remarks in a pre-sentencing memo.

“Philip Esformes is a man driven by almost unbounded greed,” said Deputy Special Agent in Charge Denise M. Stemen of the FBI’s Miami Field Office. “The illicit road Esformes took to satisfy his greediness led to millions in fraudulent healthcare claims, the largest amount ever charged by the Department of Justice. Along that road, Esformes cycled patients through his facilities in poor condition, where they received inadequate or unnecessary treatment, then improperly billed Medicare and Medicaid. Taking his despicable conduct further, he bribed doctors and regulators to advance his criminal conduct and even bribed a college official in exchange for gaining admission for his son to that university.”

“The FBI and its partners are constantly investigating healthcare fraudsters, big and small, who steal money from taxpayers at the expense of patients in need of quality medical care,” Stemen added.

After his eight-week trial, Esformes was found guilty in April 2019 of one count of conspiracy to defraud the United States, two counts of receipt of kickbacks in connection with a federal healthcare program, four counts of payment of kickbacks in connection with a federal healthcare program, one count of conspiracy to commit money laundering, nine counts of money laundering, two counts of conspiracy to commit federal program bribery, and one count of obstruction of justice. Several witnesses testified at trial, describing the poor conditions in the facilities Esformes owned and the inadequate care patients received.

The Chicago Tribune noted that the sentencing judge did recognize that Esformes had a long and consistent record of philanthropy, as his attorneys said he had donated more than $15 million to various charitable causes over the years, often anonymously.

“Philip Esformes will now spend years in prison for orchestrating a kickback and money laundering scheme that defrauded America’s healthcare system out of millions of dollars,” said U.S. Attorney Fajardo Orshan of the Southern District of Florida. “The U.S. Attorney’s Office for the Southern District of Florida remains committed to working with our partners at the Department’s Criminal Division, the FBI, and HHS-OIG (U.S. Department of Health and Human Services Office of Inspector General) to root out healthcare fraud and protect taxpayer dollars for patient care.”

Esformes’s coconspirator, physician’s assistant Arnaldo Carmouze, previously pleaded guilty to conspiracy to commit healthcare fraud and was sentenced in April to 80 months in prison, also ordered to pay a little more than $12.5 million in restitution. Co-conspirator Odette Barcha also pleaded guilty to one count of conspiracy to violate the anti-kickback statute, and was sentenced to 15 months in prison and three years of supervised release, ordered to pay about $700,000 in restitution.

This case was investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida, with assistance from Florida Attorney General’s Office Medicaid Fraud Control Unit.

Facebook
Twitter
LinkedIn

Mark Spivey

Mark Spivey is a national correspondent for RACmonitor.com, ICD10monitor.com, and Auditor Monitor who has been writing and editing material about the federal oversight of American healthcare for more than a decade.

Related Stories

The Enigma of Sepsis

The Enigma of Sepsis

Sepsis is one of the most (if not the most) challenging concepts in the International Classification of Diseases, 10th Edition, Clinical Modification (ICD-10-CM), the Health Insurance Portability and Accountability

Read More

Leave a Reply

Please log in to your account to comment on this article.

Featured Webcasts

2026 IPPS Masterclass 3: Master MS-DRG Shifts and NTAPs

2026 IPPS Masterclass Day 3: MS-DRG Shifts and NTAPs

This third session in our 2026 IPPS Masterclass will feature a review of FY26 changes to the MS-DRG methodology and new technology add-on payments (NTAPs), presented by nationally recognized ICD-10 coding expert Christine Geiger, MA, RHIA, CCS, CRC, with bonus insights and analysis from Dr. James Kennedy.

August 14, 2025
2026 IPPS Masterclass Day 2: Master ICD-10-PCS Changes

2026 IPPS Masterclass Day 2: Master ICD-10-PCS Changes

This second session in our 2026 IPPS Masterclass will feature a review the FY26 changes to ICD-10-PCS codes. This information will be presented by nationally recognized ICD-10 coding expert Christine Geiger, MA, RHIA, CCS, CRC, with bonus insights and analysis from Dr. James Kennedy.

August 13, 2025
2026 IPPS Masterclass 1: Master ICD-10-CM Changes

2026 IPPS Masterclass Day 1: Master ICD-10-CM Changes

This first session in our 2026 IPPS Masterclass will feature an in-depth explanation of FY26 changes to ICD-10-CM codes and guidelines, CCs/MCCs, and revisions to the MCE, presented by presented by nationally recognized ICD-10 coding expert Christine Geiger, MA, RHIA, CCS, CRC, with bonus insights and analysis from Dr. James Kennedy.

August 12, 2025

Trending News

Featured Webcasts

The Two-Midnight Rule: New Challenges, Proven Strategies

The Two-Midnight Rule: New Challenges, Proven Strategies

RACmonitor is proud to welcome back Dr. Ronald Hirsch, one of his most requested webcasts. In this highly anticipated session, Dr. Hirsch will break down the complex Two Midnight Rule Medicare regulations, translating them into clear, actionable guidance. He’ll walk you through the basics of the rule, offer expert interpretation, and apply the rule to real-world clinical scenarios—so you leave with greater clarity, confidence, and the tools to ensure compliance.

June 19, 2025
Open Door Forum Webcast Series

Open Door Forum Webcast Series

Bring your questions and join the conversation during this open forum series, live every Wednesday at 10 a.m. EST from June 11–July 30. Hosted by Chuck Buck, these fast-paced 30-minute sessions connect you directly with top healthcare experts tackling today’s most urgent compliance and policy issues.

June 11, 2025
Open Door Forum: The Changing Face of Addiction: Coding, Compliance & Care

Open Door Forum: The Changing Face of Addiction: Coding, Compliance & Care

Substance abuse is everywhere. It’s a complicated diagnosis with wide-ranging implications well beyond acute care. The face of addiction continues to change so it’s important to remember not just the addict but the spectrum of extended victims and the other social determinants and legal ramifications. Join John K. Hall, MD, JD, MBA, FCLM, FRCPC, for a critical Q&A on navigating substance abuse in 2025.  Register today and be a part of the conversation!

July 16, 2025

Trending News

Happy National Doctor’s Day! Learn how to get a complimentary webcast on ‘Decoding Social Admissions’ as a token of our heartfelt appreciation! Click here to learn more →

CYBER WEEK IS HERE! Don’t miss your chance to get 20% off now until Dec. 2 with code CYBER24