The 11th U.S. Circuit Court of Appeals on Friday upheld the criminal conviction of assisted living community and skilled nursing facility owner Philip Esformes in a healthcare fraud case that the federal government valued at $1.3 billion and described as “the largest healthcare fraud scheme charged by the US Justice Department.”
Esformes’ 20-year prison sentence had been commuted in December 2020 by then-President Donald Trump, who announced the action with a note that Esformes was “challenging his conviction on the basis of prosecutorial misconduct related to violating attorney-client privilege.”
The clemency, however, left intact the remaining parts of Esformes’ sentence, including three years of supervised release and the payment of $5.5 million in restitution and the forfeiture of $38.7 million, the latter amount deemed “equal in value to the property traceable to the property involved in [Esformes’s] money laundering offenses,” the appeals court noted.
In January 2021, Esformes appealed the financial penalties stemming from his conviction. Friday’s unanimous court ruling, however, means that he remains liable for them.
Esformes further contended that the case against him should have been dismissed because the prosecutors improperly reviewed information that was covered by attorney-client privilege, but the appeals court did not agree with him. The panel ruled that the business records in question, taken when one of Esformes’ assisted living facilities was searched, had not been the basis for the charges against him and did not provide the prosecutors with an advantage in the case. Further, the panel ruled that the district court judge had not improperly used his discretion when he excluded from the case the materials covered by attorney-client privilege rather than dismissing the case entirely.
Guilty on more than 20 charges
Esformes was found guilty of 20 charges including conspiracy to defraud the United States, money laundering, paying and receiving kickbacks, bribery, wire fraud and obstruction of justice in April 2019 after being charged in 2016.
The federal government in part had alleged that Esformes would move skilled nursing residents to his assisted living facilities when they were at or near the end of Medicare’s 100-day post-hospital benefit period for skilled nursing. “After the required 60-day waiting period between consecutive admissions to an [sic] SNF, a physician or physician assistant would readmit the beneficiary to the hospital, re-initiating the cycle,” according to a federal motion in 2016.
Meanwhile, the government alleged, Esformes provided access to assisted living residents “for any healthcare provider willing to pay a kickback” — including pharmacies, home health agencies, physician groups, therapy companies, partial hospitalization programs, laboratories and diagnostic companies — even though many of the services for which they were paid were not medically necessary or were never provided.
The jury in 2019 did not reach a verdict on six other counts that Esformes faced, and the government has said that it intends to retry him on those counts.
