Philip Esformes – Fraud, Miami Style

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Original story posted on: April 10, 2019

Major takedown by DOJ sends shivers through skilled nursing facilities.

Philip Esformes, the operator of 16 skilled nursing and assisted living facilities in South Florida, was found guilty Friday of 20 charges, including paying bribes and kickbacks to bring Medicare patients into his businesses. According to Assistant Attorney General Brian A. Benczkowski of the U.S. Justice Department’s Criminal Division, “Philip Esformes orchestrated one of the largest healthcare fraud schemes in U.S. history, defrauding Medicare and Medicaid to the tune of over a billion dollars.”

I would like to give some background on South Florida and healthcare fraud that will give you an idea of what he was found guilty of, as well as how he argued he was innocent. 

The largest challenge for skilled nursing homes is keeping up census – and not just any type of census; you need a lot of Medicare patients. Most nursing homes are filled mainly with patients covered by Medicaid, which pays lower amounts for care and does not provide for ancillary services that drive up revenue.

One way of getting Medicare patients into your skilled nursing homes is to bribe local doctors to put them there. 

As an example, in 2013 Plaza Health Networks in Miami settled with the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) and paid $17 million in fines, in large part for allegedly paying kickbacks to doctors for filling beds with Medicare patients.

In that case, the OIG argued that the large payments made to physicians as director fees were kickbacks for steering patients to Plaza. Plaza argued that they were paying the physicians for providing support and assisting in providing care to patients.

The government made similar arguments in the case against Mr. Enformes. Mr. Esforme’s attorney made similar arguments to those of Plaza Health in his defense.

The other way of making money that you didn’t earn is to bill the government for things you didn’t provide.

The indictment argued that Esformes used his network of skilled nursing homes to file false claims for services that were not necessary or not provided. There is an almost certain validity to the OIG’s arguments.

How do skilled nursing homes argue that they are doing nothing wrong? Until recently, reimbursement for Medicare patients in skilled nursing homes was driven mainly by the amount of physical, occupational, and speech therapy given. 

Miami averages for providing ancillary services per patient in nursing homes is vastly out of sorts with national norms. Some South Florida nursing homes bill so much in therapy services that every patient is billed as “ultra-high” under the existing Medicare system.

Skilled nursing providers cheating the system argue that the nursing homes are providing care based on physician orders and that this level of care is just the amount of care required. While it is true that a lot of ancillary services billed for never were provided, in large part, services were given to patients, and providers argue it is necessary even when it appears unbelievable. 

How can you tell there is fraud? Here are some hints: Mr. Esformes was running nursing homes. He also has a Ferrari worth $1.6 million.   

 

Timothy Powell, CPA CHCP

Timothy Powell is a nationally recognized expert on regulatory matters, including the False Claims Act, Zone Program Integrity Contractor (ZPIC) audits, and U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) compliance. He is a member of the RACmonitor editorial board and a national correspondent for Monitor Mondays.

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