Esformes, Sentenced to 20 Years, Refused Offer of 4-Year Reduction in Exchange for Admission of Guilt and Plans Appeal

In 2016, then-U.S. Attorney Wifredo Ferrer announced a $1 billion Medicare fraud case against Miami Beach healthcare executive Philip Esformes and others at a news conference.

Miami healthcare exec Esformes sentenced to 20 years in biggest Medicare fraud case

Philip Esformes, who once reigned over a healthcare kingdom that made him a super-rich man, was sentenced to 20 years in prison Thursday for paying bribes and receiving kickbacks in a massive $1 billion Medicare fraud case touted by federal prosecutors as the biggest in the nation.

U.S. District Judge Robert Scola said Esformes’ scheme to generate thousands of Medicare patients for his chain of assisted-living and nursing-home facilities in Miami-Dade was “unmatched in our community, if not our country.”

The judge said the taxpayer-funded Medicare program for the elderly and indigent was built on an honor system, and that “Mr. Esformes violated that trust in epic proportions.”

Before Scola issued his punishment, the wealthy Miami Beach business executive sobbed as he apologized to the judge. “I lost everything I loved,” Esformes, 50, said, admitting he was a “broken” man who was “disgusted” by his criminal activity. “I destroyed my marriage. I scarred my three children. There is no one to blame but myself. I accept responsibility for what I have done and regret it.”

Convicted at trial in April of 20 healthcare-related bribery, kickback and money-laundering charges, Esformes gave an emotional 16-minute speech that generally acknowledged his criminal life but also aimed for mercy. He has been held in the Miami federal detention center since his arrest three years ago.

“Your honor, I don’t want this [crime] to be the only legacy I leave behind,” said Esformes, whose lawyers and supporters in the courtroom spoke of his personal and financial charity, especially in the Jewish, medical and academic communities.

Justice Department prosecutor Allan Medina said Esformes not only exploited patients to line his pockets at his chain of 16 assisted-living and skilled-nursing facilities, but “corrupted” the whole Medicare system in his zeal to fill patient beds without providing actual care.

“He corrupted the entire system — the Medicare and Medicaid system,” Medina said. “Philip Esformes had every opportunity. He had wealth, [making] $78 million in 2017. … He has no excuse for what he did. He has no respect for the law. He has no remorse whatsoever.

“He was the boss,” Medina said. “He bullied people to get what he wanted.”

Justice Department prosecutors Medina, Elizabeth Young and James Hayes argued that Esformes had billed $1 billion to the federal health insurance program for questionable services that patients largely didn’t need or even receive between 2006 and 2016. For his sentencing, they estimated the government’s loss at more than $550 million and urged the judge to give Esformes 30 years in prison.

However, one of Esformes’ defense attorneys, Howard Srebnick, argued that the government’s estimated loss to Medicare was grossly inflated. He said the loss was as low as $690,000 and argued for a 10-year sentence.

Scola then cut Esformes a break, saying the loss was between $4.9 million and $8.3 million, which helped reduce the defendant’s potential sentence significantly. Scola called his estimate “highly conservative.”

At a critical juncture before he imposed Esformes’ punishment, the judge seemed willing to lower his final sentence by four years if the defendant agreed to elaborate on his “acceptance of responsibility” in his original statement to Scola. The judge said he would only acknowledge Esformes’ acceptance if he specifically admitted he paid bribes and committed other crimes. But, after Srebnick consulted with counsels Roy Black and Jackie Perczek, Esformes’ legal team chose not to go that route because it would have precluded their appeal of his trial convictions.

“There’s not much more Mr. Esformes will say today about his feelings and remorse,” Srebnick told the judge, arguing he has suffered greatly in federal detention, endured unending shame, and is no longer the arrogant man he was before his arrest.

After the sentencing hearing, Srebnick said Esformes plans to raise critical pre-trial allegations on appeal that had attacked how federal authorities obtained documents and recordings that led to the defendant’s indictment.

“For three years, the government alleged a $1 billion fraud, but today the district judge rejected that grossly exaggerated characterization,” Srebnick told the Miami Herald. “We are optimistic that the [federal] court of appeals will reinstate the magistrate judge’s findings of deplorable prosecutorial misconduct and will vacate the convictions and sentence.”

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College Scandal Tied to Massive Medicare Fraud Case and the Key Worldwide Foundation – Esformes and Singer

William “Rick” Singer

FBI found clues to college admissions scandal years earlier in massive Medicare fraud case

Federal authorities were combing through the finances and phone records of a Miami businessman suspected of Medicare fraud when they came across a curious name: Rick Singer.

Philip Esformes, who was accused of farming out patients from his nursing homes to steal millions in bogus insurance claims, had sent hundreds of thousands of dollars to a foundation Singer controlled. And in text messages discovered on Esformes’ phone, the men discussed how one of Esformes’ sons had performed on his college entrance exams.

Only years later would authorities learn what Esformes had paid Singer to do: Slip his daughter into USC as a fake soccer player and fix his youngest son’s college entrance exam, according to statements a prosecutor made in court and sources familiar with the case.

Singer has said he struck similar deals with dozens more parents, an admission that has roiled higher education and implicated elites from Hollywood, Silicon Valley and the Newport coast.

But in 2016, when agents seized the iPhone Esformes used to text Singer and obtained their messages, Singer was a peripheral, if curious, player in an enormous healthcare fraud investigation. The Esformes case marks the first time Singer is known to have crossed the radar of law enforcement.

Singer would run his admissions scam undisturbed until another team of investigators, working in Boston on an altogether different case, caught a second glimpse of his operation in 2018 and unraveled it.

Andrew Lelling, the U.S. Attorney in Massachusetts, unveiled that investigation in March. Fifty people were charged, including dozens of parents and coaches at such elite schools as Yale, Stanford, Georgetown and USC, who were accused of selling spots that their schools reserved for recruited athletes.

Esformes has not been charged in the college admissions case. Convicted in April of paying and receiving kickbacks in connection with a federal healthcare program and other crimes, he faces decades in prison when a judge sentences him in September. His attorneys declined to comment.

Spokespeople for federal prosecutors in Boston and Miami declined to comment.

It is unclear how much federal authorities uncovered of Esformes’ dealings with Singer while investigating his case. But at his trial in March, a fraud expert used by the government to make sense of his finances testified that Esformes had made $400,000 in payments over several years to Singer’s foundation. At least some of the money was traced to Medicaid and Medicare funds, the expert testified.

Singer has since admitted that his Key Worldwide Foundation was little more than a sham used to launder money from clients and parcel out bribes to coaches, test proctors and bagmen.

Esformes check to The Key.jpg

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The Toppling of a Nursing Home Empire and the Elderly and Disabled Residents Who Suffer, Where’s the Oversight?

Image: Terri Thompson

Terri Thompson’s mother has dementia and wandered out of a locked unit through two broken doors and was found in ice and snow at 4:30 in the morning with severe frostbite.Hannah Rappleye / NBC News

A nursing home chain grows too fast and collapses, and elderly and disabled residents pay the price

By Laura Strickler, Stephanie Gosk and Shelby Hanssen

NEW BEDFORD, Mass. — Once a week for two years, police Lt. Jeannine Pettiford had visited the nearby nursing home where her 52-year-old cousin with cerebral palsy lived. But on their daily phone call in early May, her cousin had bad news.

“I’m getting kicked out,” he told her.

In disbelief, Pettiford asked to speak with a nurse, who told her there were rumors of closure. Her alarm rose when she visited the facility and saw nurses crying. The nursing home’s owner, Skyline Healthcare, had told its staff there was no more money.

Skyline’s four other nursing homes in Massachusetts were facing the same crisis. Funds were so short, staff had begun buying toilet paper with money from their own pockets, according to former employees. Residents and their families discovered from local newscasts they had just 30 days to find somewhere else to live.

“Nobody from the nursing home ever called me to tell me,” Pettiford said. She was angry. And, she later learned, so were many others.

At its peak, Skyline Healthcare owned or ran more than 100 facilities in 11 states, overseeing the care of more than 7,000 elderly Americans. But during the past two years, the chain has collapsed, and more than a dozen Skyline-operated nursing homes have shut their doors, throwing residents, vendors, employees and state regulators into chaos.

For more watch Stephanie Gosk tonight on “NBC Nightly News With Lester Holt” at 6:30 p.m. ET / 5:30 p.m. CT (or check your local NBC station).

Many homes ran out of money. Others were shut down over neglect documented in government records. Fourteen homes were forced to close permanently, displacing more than 900 residents to new facilities, sometimes hours away.

The story of Joseph Schwartz and Skyline Healthcare is one of swift expansion, alleged mismanagement and catastrophic failure. An NBC News investigation reveals the scale of the Skyline debacle, in which one man built an empire that quickly crumbled, with painful consequences for vulnerable people.

It also shows the failure of state and federal authorities to keep up with just who owns and runs America’s nursing home facilities, which house 1.3 million elderly and disabled Americans — about three-quarters of them in beds paid for by taxpayers via Medicare and Medicaid. The states are responsible for tracking ownership and conditions at nursing homes within their borders, but only the federal government can monitor the performance of firms that own or operate facilities across the nation. The allegations of negligence at a major nursing-home chain come as the Trump administration is moving to ease, not increase, accountability for the industry, reducing penalties and terminating fewer contracts with problem owners.

Schwartz, meanwhile, still has ownership stakes in 53 nursing homes, according to federal records. He has not returned multiple messages and emails requesting comment from NBC News.

“I just don’t think I’ve ever seen anything like it,” said Stephen Monroe, an industry analyst of three decades who is the managing editor for the nursing home trade magazine Senior Investor. “I have no idea what that family was thinking. To go from 10 to 100 in two years with no real back office? I looked at that and said from day one, ‘Impossible.”

‘The Home Life You Crave’

A Brooklyn, N.Y.-based insurance broker and landlord, Joseph Schwartz entered the nursing home business more than 10 years ago after he sold a Florida-based insurance company.

In a 2017 deposition for a malpractice lawsuit filed by a family alleging neglect at one of his homes in Pennsylvania, Schwartz explained why he’d gotten into the industry. “”Basically, I used to do a lot of servicing in selling insurance policies to long-term care industry,” he said, “and I felt that I could, that I understand the quality care … and I will do a very good job in doing the quality care for residents.”

Image: Joseph Schwartz listed a tiny office above this New Jersey pizzeria in Wood Ridge, NJ as the location where he ran over 100 nursing homes nationwide.Joseph Schwartz listed a tiny office above this New Jersey pizzeria in Wood Ridge, New Jersey, as the location where he ran over 100 nursing homes nationwide.NBC News

He started with a half dozen homes, but after creating Skyline Healthcare he began expanding rapidly in November 2015 with the purchase of 17 homes.

Schwartz ran Skyline out of a tiny office above a New Jersey pizzeria. He was CEO, his wife Rosie co-owned most of the properties and his two sons, Michael and Louis, served as vice presidents. The company had a bare-bones website and a slogan, “Skyline: The Home Life You Crave.”

During the 2017 deposition, he said, “Skyline is an entity that is me.”

His net worth is hard to compute but real estate records show he owns over $9 million worth of real estate in the New York metropolitan area, including a gated house in Suffern, N.Y.

Within a year of his purchase of 17 nursing homes, Schwartz had taken on another 64, and by 2017 was operating more than 100.

Schwartz wouldn’t provide a number when the plaintiff’s attorney asked him repeatedly in June 2017 how many homes he ran. He confirmed it was more than five, but asked if it was more than 100, he said several times that he couldn’t recall.

 

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Esformes Must Forfeit Interests in Long-Term Care Companies, if Only Others Would Follow

Esformes must forfeit interest in long-term care operating companies, judge rules

Philip Esformes, the Florida assisted living and skilled nursing facility owner found guilty in April of more than 20 charges in a case that the federal government described as “the largest single criminal healthcare fraud case ever brought against individuals by the Department of Justice,” must forfeit his interest in seven operating companies related to his facilities, a federal court has ruled.

The decision, issued July 1 in the U.S. District Court for the Southern District of Florida, was a denial of Esformes’ motion asking the court to acquit a jury’s verdict that the assets were forfeitable. The judge’s order applies to Esformes’ interest in the operating companies for the following assisted living or skilled nursing properties: Eden Gardens in Miami, Fair Havens Center in Miami Springs, Flamingo Park Manor in Hialeah, Harmony Health Center in Kendall, North Dade Nursing and Rehabilitation Center in North Miami, Nursing Center at Mercy in Miami and the now-closed Oceanside Extended Care Center in Miami Beach.

“Esformes’s operating companies gave his business a facade of legitimacy as he used them to hold bank accounts and operate the various SNFs and ALFs engaged in the elaborate money laundering and kickback scheme,” U.S. District Judge Robert N. Scola Hr, wrote. “Accordingly, the Court finds that there is sufficient evidence to ‘permit a reasonable jury to conclude that the Government has proven, by a preponderance of the evidence, that the property is subject to forfeiture.’ ”

Scola also denied Esformes’ motions seeking acquittal and a new trial.

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Health Headlines of King and Spalding – OIG and Nursing Home Results, Prevalence of Abuse and Reporting Issues

OIG Releases Audit Reports Finding High Prevalence of Nursing Home Abuse, Deficient Reporting Mechanisms

On June 12, 2019, OIG released two audit reports, A-01-17-00513 and A-01-16-00509, as part of its efforts to improve identification, reporting, and investigation of potential abuse and neglect of Medicare beneficiaries. OIG’s audits were prompted in part by investigations showing “a significant number of Medicare claims submitted for the treatment of injuries related to potential abuse and neglect.” OIG found that incidents of abuse and neglect in skilled nursing facilities (SNFs) were not sufficiently tracked, reported, and investigated, and that Medicare’s diagnosis code data could help point to abuse and neglect. The audit reports follow CMS’s recent release of its five-part nursing home plan focused on improving nursing home quality.

In OIG Report A-01-17-00513, titled, “CMS Could Use Medicare Data to Identify Instances of Potential Abuse or Neglect,” OIG identified nearly 35,000 Medicare inpatient and outpatient claims (totaling approximately $100 million worth of services) from 2015 to 2017 containing one of 17 diagnosis codes that may correlate to abuse or neglect, such as potential sexual abuse or nutritional neglect. Of that group, 100 claims underwent an in-depth review.

OIG found that 94 of the 100 claims evidenced potential abuse or neglect; among them, 61 were likely associated with incidents in the beneficiaries’ home and 16 incidents occurred at others’ homes or in public settings like parks and alleys. From this 100-claim data sample, OIG estimated that 89% of the nearly 35,000 cases had underlying medical records evidencing potential abuse or neglect. OIG further estimated that 8% of those cases may have been perpetrated by a healthcare worker, among other findings.

OIG recommended that CMS “compile a complete list of diagnosis codes that indicate potential physical or sexual abuse and neglect,” “conduct periodic data extracts” of Medicare claims with one of those codes, “inform States that the extracted Medicare claims data are available to help States ensure compliance with their mandatory reporting,” and “assess the sufficiency of existing Federal requirements . . . to report suspected abuse and neglect of Medicare beneficiaries . . . .” CMS disagreed that the recommended claims data would timely assist it with addressing acute problems, but OIG “continue[d] to recommend the use of the Medicare claims data” to thwart abuse and neglect.

In OIG Report A-01-16-00509, titled, “Incidents of Potential Abuse and Neglect at Skilled Nursing Facilities Were Not Always Reported and Investigated,” OIG reviewed a set of claims of Medicare beneficiaries residing in SNFs who had emergency room visits in 2016 that resulted in one of 580 “high-risk” diagnosis codes, and whether the SNFs reported those potential instances of abuse or neglect. The audit also focused on the adequacy of CMS’s reporting and tracking of those potential instances of abuse and neglect.

Specifically, OIG pulled a sample of 256 emergency room (ER) cases from over 37,000 high-risk hospital ER claims for nearly 35,000 Medicare beneficiaries residing in SNFs in eight states in 2016. OIG worked with the State Survey Agencies (SSAs) to review the underlying medical records to determine whether the ER cases were the result of abuse or neglect in the SNF. OIG concluded that approximately one in five of the ER claims were the result of abuse or neglect. OIG also found that the SNFs “failed to report many of these incidents” to SSAs, meaning the SSAs could not conduct immediate onsite investigations. The SSAs themselves also, given the opportunity, “failed to report some findings of substantiated abuse to local law enforcement.” OIG also faulted CMS’s recording and tracking mechanisms for failing to capture all fraud and abuse incidents.

OIG recommended that CMS “take action” to ensure that such incidents are properly identified and reported by improving training for SNF staff and requiring SSAs to track all incidents and subsequent referrals to law enforcement. CMS concurred with these recommendations.

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The Abject Failure of Nursing Homes in US to Report Thousands of Elder Abuse and Neglect Cases – and a Lack of Oversight

U.S. nursing homes failed to report thousands of elder abuse and neglect cases, report

WASHINGTON — Nursing facilities have failed to report thousands of serious cases of potential neglect and abuse of seniors on Medicare even though it’s a federal requirement for them to do so, according to a watchdog report released Wednesday that calls for a new focus on protecting frail patients.

Just 2 of 69 cases checked in five states were reported to local law enforcement

Auditors with the Health and Human Services inspector general’s office drilled down on episodes serious enough that the patient was taken straight from a nursing facility to a hospital emergency room. Scouring Medicare billing records, they estimated that in 2016 about 6,600 cases reflected potential neglect or abuse that was not reported as required. Nearly 6,200 patients were affected.

“Mandatory reporting is not always happening, and beneficiaries deserve to be better protected,” said Gloria Jarmon, head of the inspector general’s audit division.

Overall, unreported cases worked out to 18% of about 37,600 episodes in which a Medicare beneficiary was taken to the emergency room from a nursing facility in circumstances that raised red flags.

Responding to the report, Administrator Seema Verma said the Centers for Medicare and Medicaid Services does not tolerate abuse and mistreatment and slaps significant fines on nursing homes that fail to report cases.

Verma said the agency, known as CMS, is already moving to improve supervision of nursing homes in critical areas such as abuse and neglect and care for patients with dementia.

CMS officially agreed with the inspector general’s recommendations to ramp up oversight by providing clearer guidance to nursing facilities about what kinds of episodes must be reported, improving training for facility staff, requiring state nursing home inspectors to record and track all potential cases and monitoring cases referred to law enforcement agencies.

Neglect and abuse of elderly patients can be difficult to uncover. Investigators say many cases are not reported because vulnerable older people may be afraid to tell even friends and relatives much less the authorities. In some cases, neglect and abuse can be masked by medical conditions.

The report cited the example of a 65-year-old woman who arrived at the emergency room in critical condition. She was struggling to breathe, suffering from kidney failure and in a state of delirium. The patient turned out to have opioid poisoning, due to an error at the nursing facility. The report said a nurse made a mistake copying doctor’s orders, and the patient was getting much bigger doses of pain medication as a result. The woman was treated and sent back to the same nursing facility. The nurse got remedial training, but the facility did not report what happened. The report called it an example of neglect that should have been reported.

The nursing facilities covered by the report provide skilled nursing and therapy services to Medicare patients recovering from surgeries or hospitalization. Many facilities also play a dual role, combining a rehabilitation wing with long-term care nursing home beds.

Investigators said they faced a challenge scoping out the extent of unreported cases. They couldn’t query a database and get a number, since they were looking for cases that weren’t being reported to state nursing home inspectors.

To get their estimate, auditors put together a list of Medicare billing codes that previous investigations had linked to potential neglect and abuse. Common problems were not on the list. Instead it included red flags such as fractures, head injuries, foreign objects swallowed by patients, gangrene and shock.

The investigators found a total of 37,600 records representing 34,800 patients. Auditors then pulled a sample of cases and asked state inspectors to tell them which ones should have been reported. Based on the expert judgment of state inspectors, federal auditors came up with their estimate of 6,600 unreported cases of potential neglect and abuse.

Investigators found that nursing facility staff and even state inspectors had an unclear and inconsistent understanding of reporting requirements.

Medicare did not challenge the estimates but instead said that billing data comes with a built-in time lag and may not be useful for spotting problems in real time.

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