MIAMI — In a politically fraught Medicare fraud case, a deal appears to be in the works between the Justice Department and a South Florida health care executive whose 20-year prison sentence was commuted by former President Donald Trump, according to law enforcement sources familiar with the negotiations. Philip Esformes still faces a potential retrial on charges that deadlocked during his first trial.
A retrial of Esformes, who claims that Trump’s commutation protects him against double jeopardy for being charged for the same crime, would likely be an abridged version of his first trial. But at this stage, both sides don’t appear up to a redo of the exhausting original trial.
A plea deal, a more likely scenario that would require approval at the highest level of the Justice Department, is expected to include dropping the six hung counts against Esformes, giving him credit for his four-plus years previously served behind bars, and requiring payment of financial penalties totaling $44 million. He would also have to give up his final appeal to the U.S. Supreme Court.
Both sides are not talking, but the court docket in Miami federal court shows they have repeatedly delayed a critical hearing with U.S. District Judge Robert Scola to set a new trial date because they’re apparently negotiating a deal — possibly to avoid the retrial, sources told the Miami Herald.
“The parties have initiated dialogue concerning issues inherent in this matter, and wish to have the opportunity to continue such dialogue,” according to their latest filing, which echoes the same language in several prior motions to delay the hearing on setting a date for the retrial of Esformes. The hearing was supposed to happen Monday, but Scola delayed it.
Since his release from prison, Esformes, 54, has kept a low profile, living in Palm Beach County and devoting himself to his Jewish faith. Yet despite his apolitical past, Esformes has evolved into a curious cause celebre for right-wingers on Capitol Hill and in the blogosphere. He has failed to have his conviction and fines overturned by a federal appeals court in Atlanta and to have the U.S. Supreme Court put that decision on hold. As result, federal prosecutors can legally move forward with retrying Esformes — or striking a possible plea deal with him, according to sources familiar with the negotiations.
Seven years ago, top Justice Department prosecutors traveled to Miami for a news conference to unveil the $1 billion health care fraud case against Esformes, touting it as the biggest Medicare crime in history.
The first trial
When the former Miami Beach executive’s trial ended in 2019, Esformes was found guilty of 20 of 26 counts, including paying bribes, receiving kickbacks, committing money laundering and obstructing justice. But the 12-person jury deadlocked on the main health care conspiracy charge, which accused him of recycling thousands of patients from a local hospital to his Miami-Dade chain of skilled-nursing and assisted-living facilities in a scheme to bill Medicare excessively.
Although he dodged that main charge, Esformes was sentenced to 20 years in prison and ordered to pay $5.5 million to Medicare and an additional $38.7 million fine to the U.S. government — the amount of his ill-gotten gains from the taxpayer-funded health insurance program.
But then, in a shocking blow to prosecutors, Trump commuted Esformes’ sentence in late 2020, allowing him to leave prison after serving 4 1/2 years behind bars, including his time in detention before trial. His conviction and fines remained intact.
Still, infuriated federal prosecutors vowed to retry Esformes on the six hung counts from his first trial — but now the question looms: Will they?
The hearing now scheduled for Dec. 4 before Scola might provide a clue. According to the court filing, the judge is scheduled yet again to specify a date for Esformes’ retrial on the hung counts, which Trump’s commutation never addressed, if a plea deal doesn’t resolve the long-running case.
The Justice Department, which has jointly run the case with prosecutors in the U.S. attorney’s office in Miami, declined to comment about its strategy. Esformes’ defense attorneys, led by Mark Bini with the law firm Reed Smith in New York and Miami, did not respond to a request for comment.
Background on the Esformes case
Even by the standards of Miami’s rampant Medicare rackets, Esformes’ case has stuck out for its sheer size. Before his assets were frozen after his arrest in July 2016, the Chicago transplant owned dozens of local health care businesses that, along with other associates, billed $1 billion to Medicare and Medicaid over a decade. Esformes, who went through a messy divorce, also acquired pricey real estate in Miami Beach and drove a Ferrari sports car. In addition, he used some of his ill-gotten Medicare proceeds to pay for prostitutes, five-star hotel stays and other personal expenses, according to court records.
Esformes, who had been detained without a bond after his arrest in July 2016, went to trial alone because two key conspirators — a physician’s assistant and a former Larkin Hospital administrator who recycled patients for cash — had pleaded guilty. Several other health care associates charged with Medicare fraud in related cases had also pleaded guilty and cooperated with federal prosecutors, including some who testified against him.
At trial, convicted health care operators, the former hospital administrator and an ex-Ivy League basketball coach testified that Esformes paid them and various doctors hundreds of thousands of dollars in bribes to buy and sell patients. The former Penn coach, Jerome Allen, now an NBA assistant coach, testified that Esformes’ illicit payments enabled his son to be accepted to the University of Pennsylvania by reserving a spot for him on the basketball team. The son never played a game, though he ended up graduating from Penn.
Trial evidence showed that Esformes himself made $38 million from Medicare and Medicaid payments between 2010 and 2016.
The verdict and sentencing
In April 2019, the 12-person federal jury in Miami found Esformes guilty of most of the 26 charges brought against him in an indictment filed after his arrest in 2016. Jurors, however, did not reach a verdict on the main count — that Esformes had conspired to defraud the Medicare program for the elderly and indigent — even though they found him guilty on a money-laundering charge and expressly stated on the verdict form that the illegal proceeds came from health care fraud.
At his sentencing in September 2019, both federal prosecutors and the trial judge described Esformes as a cunning thief of taxpayer money.
“This is not a mistake,” Allan Medina, a Justice Department prosecutor, said at Esformes’ sentencing. “Day after day, this defendant chose to steal, this defendant chose to bribe.”
Scola, the judge, called Esformes’ scheme to generate thousands of Medicare patients for his chain of 16 assisted-living and nursing-home facilities in Miami-Dade “unmatched in our community, if not our country” and said he “violated (the system’s) trust in epic proportions.”
Trump’s commutation of Esformes’ sentence
Esformes was among 20 people — mostly political cronies of former President Trump implicated in scandals that marred his first term in office as well as the Republican Party — who were granted a full pardon or commutation of all or part of their sentences. But in many ways, Trump’s commutation of Esformes’ sentence was an outlier of sorts because he did not appear to have any political relationship to the president over his 30 years in the health care business.
Esformes has never written a check to support Trump, according to Federal Election Commission records. If anything, Esformes, his former wife, Sherri, and his father, Morris, have been donors to Democratic Party candidates. Esformes and his ex-wife gave $100,000 combined in 2012 to support President Barack Obama’s reelection. Sherri also gave $17,600 in 2010 to support the Democratic Congressional Campaign Committee. That same year Philip Esformes Inc. gave $10,000 to the Florida Democratic Party, according to Florida campaign finance records.
A statement issued by the White House noted that Esformes’ commutation was “supported” by former U.S. Attorney General Edwin Meese, who served under President Ronald Reagan, and Michael Mukasey, a former attorney general who served under President George W. Bush, as well as by former Deputy Attorney General Larry Thompson, who also served in the Bush administration.
The statement also highlighted that Esformes’ federal appeal of his 20-year sentence was backed by Meese, former Attorney General John Ashcroft and Attorney General Alberto Gonzales, who both served in the Bush administration. Kenneth Starr, the late GOP lawyer best known as an independent counsel who investigated President Bill Clinton, also backed the appeal. The statement alluded to “challenging his conviction on the basis of prosecutorial misconduct” by lawyers in the U.S. attorney’s office and Justice Department relating to an FBI search and seizure of records from the office of the healthcare executive’s lawyer in one of his Miami-Dade facilities.
Esformes’ defense team argued that the search of those documents violated “attorney-client privilege” between the businessman and his company lawyer, and that the prosecution’s evidence was tainted and its case should be thrown out.
One of Esformes’ original trial attorneys, Howard Srebnick, said after the commutation that the convicted defendant’s appeal mirrored his petition to the president. In a statement, Srebnick alluded to a Miami magistrate judge’s 113-page report “detailing the prosecutorial misconduct that we exposed” before trial — a decision that was later overturned in part by Scola, the district judge who found that federal prosecutors and agents did not act in “bad faith” in the Esformes case.
Ultimately, however, the controversial issue over the FBI’s gathering of privileged documents from the office of Esformes’ company lawyer became a moot point for Scola because prosecutors agreed not to use any of that evidence at his trial.
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