The national deficit has been declining since its peak in 2009, but balancing the federal budget will undoubtedly be a hotly debated topic during this presidential election year. One of the government’s largest areas of spending is Medicare. Accounting for 15% of the federal budget, with a spending budget of $540 billion, Medicare is the third largest ticket item, behind social security (24%) and defense (16%). One way to reduce the debt is by going after those scheming and defrauding the Medicare program. In recent years, the Department of Justice (“DOJ”) has been aggressively investigating fraudulent activities – pressing hard on the wrongdoers and rewarding whistleblowers.

Last Friday, the DOJ brought the largest single criminal health care fraud case against three individuals, charging them with conspiracy, obstruction, and a money laundering and Medicare fraud scheme that resulted in losses over $1 billion to the government. This case is groundbreaking. The government recaptures on average around $2 billion for healthcare-related fraud each year. The DOJ is now presented with an opportunity to recoup half of what the government typically recovers a year through a single case.

The case involves the owner of a nursing home and assisted living facility conglomerate, Esformes Network, a hospital administrator, and a physician’s assistant. The indictment states that Defendants Esformes, Barcha, and Carmouze conspired to place Medicare and Medicaid beneficiaries into Esformes Network facilities even though the patients did not qualify or required to be place in these facilities. These transactions were taken with complete disregard to the danger they place on the patients. For example, drug addicts were prescribed opioids, including OxyContin and Fentanyl, and other narcotics to lure them to stay at these facilities. The Defendants also received kickbacks for sending Medicare beneficiaries to other healthcare providers to perform medically unnecessary treatments that were then billed to Medicare and Medicaid.

This billion dollar health care fraud scheme has allowed the criminal defendants to live very extravagant lifestyles, including $600,000 watches, private jets, and private basketball coach for Esformes’ son. What makes this scheme even more egregious and further exposes Esformes’ and the co-conspirators’ level of greed is that in 2006, Esformes paid $15.4 million to settle a civil health care fraud case with similar charges. After the settlement, he continued defrauding Medicare and Medicaid programs by developing a more sophisticated money-laundering scheme.

If you have information about similar types of fraudulent activities and are considering making a claim, we encourage you to learn more about our whistleblower practice. It is important to involve an attorney early in the process to achieve the highest level of protection and success.

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