The Court of Appeals for the Eleventh Circuit affirms the district court’s judgment that a man who bribed doctors to refer patients to his skilled nursing facilities for unneeded medical care defrauded Medicare and Medicaid. In United States v. Esformes (11th Cir., No. 19-13838, January 6, 2023).
Mr. Philip Esformes owned and operated several Florida medical facilities that comprised “Esformes Network.” A grand jury indicted him for cheating Medicare and Medicaid out of millions of dollars. The charges alleged that he bribed doctors to refer psychiatric patients to his skilled nursing facilities unnecessarily. Not only did the Esformes Network bill Medicare and Medicaid for treatment patients did not need, but it also inflated charges. Mr. Esformes then money laundered the proceeds.
When the F.B.I. investigated Mr. Esformes, the prosecution received privileged documents. Because of the privilege issues, Mr. Esformes attempted to dismiss the indictment and disqualify prosecutors.
Primarily adopting the magistrate’s recommendations, the district court rejected Mr. Esformes’ requests. Suppressing the privileged items was sufficient to avoid prejudice, the district court found. Mainly agreeing with the magistrate, the district court determined that the prosecutors had committed misconduct. Finding no malice, however, the district court did not dismiss them from the case.
After the trial, the district court convicted Mr. Esformes of health care fraud, illegal kickbacks, and money laundering. It issued a forfeiture judgment and ordered him to pay restitution.
There was a hung jury on several charges, including conspiracy to commit health care fraud. Following the verdict, then-President Trump commuted Mr. Esformes’ prison sentence. Mr. Esformes argued that the president’s clemency prevents the government from prosecuting him again for conspiracy to commit health care fraud. Since the hung counts did not contribute to the final judgment, the appellate court lacks jurisdiction to review them.
The prosecutorial misconduct should create a presumption of prejudice, Mr. Esformes claimed. But the court of appeals disagrees. The prosecution’s misconduct does not necessitate dismissing the indictment because Mr. Esformes failed to establish clearly how the transgression prejudiced him. The prosecution’s privilege violations were not the basis for the charges against him, nor did they constitute evidence admitted at trial or give the government a strategic advantage.
After appearing in front of a magistrate to defend charges of prosecutorial misconduct, assistant U.S. attorney Elizabeth Young did not have a conflict of interest in the case. Every attorney is interested in the outcome of their cases and in avoiding sanctions. It would be improper to permit defendants to disqualify prosecutors simply by accusing them of wrongdoing. She did not violate the prohibition upon acting as an attorney and witness in the same case since she did not testify on the charges but rather spoke to her own research.
During the trial, the district court admitted the testimony of an expert witness, Dr. Cifu, who testified that few psychiatric patients were admitted to the skilled nursing facility where he worked. Contrary to Mr. Esformes’ assertions, the district court properly admitted Dr. Cifu’s testimony. Although the district court waited until after hearing Dr. Cifu’s testimony to issue a Daubert ruling, no bright line rule states that the court must issue a Daubert finding before testimony. The judge has significant discretion in protecting the jury from unreliable experts.
Also contrary to Mr. Esformes’ claims, Dr. Cifu was qualified to testify. Dr. Cifu was a psychiatrist and medical director at a skilled nursing facility for 30 years. While he did not use testing or scientific methods, Dr. Cifu’s testimony was reliable because of his experience. His testimony helped the jury understand how skilled nursing facilities work and how Medicare rules apply to them.
The district court’s restitution order was proper, as sufficient evidence established an actual loss to the government, and the court’s estimate was reasonable. Because Mr. Esformes laundered money using transactions to disguise the source of his funds, the forfeiture order was also correct.
The district court properly found Mr. Esformes defrauded Medicare and Medicaid.
Concurrence
Circuit Judge Grant concurs. By delaying the Daubert ruling until after Dr. Cifu’s testimony, the district court may have caused a harmless error, as the testimony was admissible. However, the district court’s decision to delay its gatekeeping function could have opened the door to reversible error. Waiting to qualify an expert until after the individual provides testimony can be misguided, as the court should maintain its gatekeeping function.
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