The U.S. Department of Justice (DOJ), in a recent press release, revealed the details of a $15.4 million settlement to put to rest various federal and Florida civil health care fraud claims.

The payment was made by Larkin Community Hospital, Miami, and its former and current owners, Dr. Jack Michel, Dr. James Desnick, Morris Esformes and Philip Esformes. The DOJ also charged Frank Palacios, a long-time employee of the hospital.

An additional 34 companies owned by the Esformes and Claudia Pace, an Esformes employee, were also part of the settlement. These companies operated nine assisted living facilities.

The settlement stems from the civil case of United States v. Jack Jacobo Michel, M.D., et al. The US government filed that suit, alleging violations of the False Claims Act, in 2004. Later in the year, the state of Florida joined the suit.

The government claims that in 1997, Larkin paid physicians kickbacks for patient admissions. Desnick owned Larkin at that time.

The U.S. government maintains that Jack Michel was the primary recipient of the kickbacks, which were paid by himself and Dr. George Michel, his brother. Larkin was sold to Jack Michel in 1998.

Desnick was involved in a $14 million settlement in 2000 for another kickback scheme from 1992 to 2000. That scheme involved another hospital he owned, Doctors Hospital in Hyde Park, a Chicago neighborhood.

Additional allegations against Jack Michel, George Michel, Morris and Philip Esformes, Frank Palacios and Claudia Pace included conspiracy to admit patients into Larkin for unnecessary treatment.

The United States also alleged in the Michel suit that from 1998 to 1999, Jack Michel, George Michel, Morris Esformes, Philip Esformes, Frank Palacios and Claudia Pace conspired to admit patients to Larkin for medically unnecessary treatment.

The government asserted that some of these patients came from assisted living facilities owned and operated by Jack Michel, Morris Esformes and Philip Esformes.

“The Department of Justice is committed to vigorously litigating cases about conduct that undermines the integrity of the Medicare and Medicaid programs,” said Peter D. Keisler, Assistant Attorney General for the Department’s Civil Division. “We will not tolerate health care providers who pay kickbacks or perform medically unnecessary treatments on elderly beneficiaries in order to generate Medicare and Medicaid payments.”

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