Trump just gave a huge gift to an alleged billion dollar Medicare fraudster

Perhaps he should have listened to lawyers who actually know what they are talking about.

IAN MILLHISER   MAR 28, 2019, 1:28 PM

The Trump administration informed a federal appeals court on Monday night that it would no longer defend the Affordable Care Act after a judge in Texas declared that the entire law must be struck down. The judge, Reed O’Connor, is a former Republican Senate staffer with a history of striking down policies opposed by conservatives. O’Connor’s opinion is widely viewed as ridiculous, even by conservative legal scholars and health policy experts.

Yet, while O’Connor’s opinion in Texas v. United States is likely to be reversed, either by the conservative United States Court of Appeals for the Fifth Circuit or by the Supreme Court, the Justice Department’s claim that the Affordable Care Act is unconstitutional already threatens a seemingly unrelated prosecution of a Florida health care executive on trial for allegedly committing $1 billion worth of Medicare and Medicaid fraud.

Notably, Trump reportedly made the decision to not defend Obamacare over the objections of Attorney General William Barr and Secretary of Health and Human Services Alex Azar, himself a highly accomplished lawyer who clerked for the late Justice Antonin Scalia.

The billion-dollar fraud case involves Philip Esformes, who ran a chain of skilled-nursing and assisted living facilities in Miami-Dade. Esformes’ business was apparently quite lucrative — as the Miami Herald noted, the health executive raked “in millions from his healthcare business, gobbling up pricey real estate and darting around the country in chartered jets,” until his arrest in 2016.

Prosecutors claim in Esformes’ indictment that the health care executive paid kickbacks to health providers “in exchange for medically unnecessary referrals” to Esformes’ facilities. Esformes and co-conspirators then allegedly submitted “false and fraudulent claims to Medicare and Medicaid in an approximate amount of $1 billion for services that were medically unnecessary, never provided, and procured through the payment of kickbacks and bribes.” All of Esformes’ co-conspirators plead guilty, according to the Miami Herald.

On Wednesday, Esformes’ lawyers filed a motion in a federal court in Florida arguing that the case against their client must be dismissed — effectively ruining three years of work by prosecutors — because “the Justice Department has admitted that the health care offenses at issue in this trial are unconstitutional.” Alternatively, Esformes’ legal team suggests that the judge should declare a mistrial.

The problem arises because O’Connor did not simply strike down the core provisions of the Affordable Care Act. He declared that every single provision of the law is invalid, including relatively minor provisions amending the statutes governing Medicare fraud and kickbacks paid to health providers. Though Esformes’ alleged actions may also be illegal under the unamended versions of those statutes, Esformes was charged under the amended versions.

According to Esformes’ motion, “every health care statute cited in the Indictment has been identified as among those ruled unconstitutional” by Judge O’Connor.

The crux of Esformes’ legal argument is that “the Due Process Clause will not permit the Justice Department to prosecute the Defendant based upon alleged violations of statutes and regulations that they have independently deemed and declared to be unconstitutional.” It’s an aggressive argument. Nevertheless, it’s an argument that puts the Justice Department in a terrible bind.

Prosecutors must now either contradict the position the Trump administration took in Texas — something that their political bosses will likely forbid them from doing — or concede that their prosecution of Esformes is unconstitutional. Should the court grant Esformes’ motion to dismiss, moreover, the Double Jeopardy Clause of the Constitution would likely prevent a second prosecution.

The consequences of this dispute could reach far beyond this individual case, moreover. Federal law provides that a federal prisoner “claiming the right to be released upon the ground that the sentence was imposed in violation of the Constitution…may move the court which imposed the sentence to vacate, set aside or correct the sentence.”

Thus, other individuals convicted of Medicare or Medicaid fraud under provisions amended by the Affordable Care Act could demand that they be released — including potentially Mr. Esformes’ co-conspirators. Indeed, courts could soon be inundated by petitions seeking these individuals’ release.

As a federal prosecutor who spoke to ThinkProgress on condition of anonymity noted, “Health care fraudsters are among the few federal criminals who can afford high powered lawyers.” So it won’t be long before these individuals’ legal teams start to realize what the Trump administration has done.

Nor are the consequences of the administration’s refusal to defend Obamacare likely to be restricted to fraud cases. As law professor and health policy expert Nicholas Bagley wrote shortly after the Justice Department announced that it would not defend the law, “The notion that you could gut the entire ACA and not wreak havoc on the lives of millions of people is insane. The Act is now part of the plumbing of the health care system.”

The Affordable Care Act was a sweeping statute amending numerous, longstanding provisions of America’s health laws. Anyone prosecuted under any one of these provisions may now claim that they are immune from consequence. And the Justice Department will need to awkwardly explain itself in every single case.