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Chicago-area man 1 of 3 charged in biggest-ever Medicare fraud

Three people, including a 47-year-old man who lives in the Chicago area and Miami Beach, have been charged in an unprecedented $1 billion health-care fraud scam, accused of using dozens of Miami nursing homes to bilk the taxpayer-funded Medicare and Medicaid programs, according to an indictment unsealed Friday.

“This is the largest single criminal health-care fraud case ever brought against individuals by the Department of Justice,” Assistant U.S. Attorney General Leslie Caldwell said.

Authorities said Philip Esformes, a part-time Chicagoan who ran 30 nursing homes and assisted-living facilities, joined with two conspirators and a network of corrupt doctors and hospitals to refer thousands of patients to their facilities even though the patients didn’t qualify for the services. Some of the treatments were harmful, they said.

Assistant Attorney General Leslie Caldwell.
Assistant Attorney General Leslie Caldwell.

“Among the thousands of people cycled through the fraudulent network were, for example, drug addicts who were allegedly prescribed opioids — including OxyContin and Fentanyl — and other narcotics in order to entice them to stay in facilities where they didn’t belong,” Caldwell said at a news conference.

Authorities said Esformes, along with Odette Barcha and Arnaldo Carmouze, also took kickbacks for steering patients to other health providers, including mental health centers. When a patient reached their Medicare-imposed length of stay limit at one facility, those involved moved patients to a different facility, Caldwell said, calling it a “ruthlessly efficient” scam.

Authorities allege in court documents that those facilities also billed Medicare and Medicaid for unnecessary services and that kickbacks were often paid in cash or disguised as charitable donations.

Esformes’ two other defendants were identified in court documents as a hospital administrator and a physicians’ assistant.

The three were charged Friday with conspiracy, obstruction, money laundering and health-care fraud.

According to court records, Esformes paid $15.4 million in 2006 to resolve civil federal health-care fraud claims for similar charges. But authorities said Esformes was able to continue with the crimes after that date through a sophisticated money-laundering scheme.