The U.S. attorney's office in Miami filed a civil False Claims Act lawsuit against for-profit Larkin Community Hospital, South Miami, Fla., and several individuals over alleged kickbacks and unnecessary services.
Among other charges, the suit accused the 122-bed hospital and its owners of "churning" patients from long-term-care facilities into Larkin for unnecessary care from 1997 to 1999. The suit named three men-James Desnick, Morris Esformes and Jack Michel-who owned Larkin or some of the long-term-care facilities involved. Also named in the lawsuit were Philip Esformes, George Michel, Claudia Pace and Francisco Palacios, as well as companies owned by the defendants. Attempts to contact the individual defendants were unsuccessful, but Larkin attorney Craig Brand said the hospital denies the charges. The government made its allegations without reviewing Larkin records, and hospital officials believe the allegations are nothing but hearsay, Brand said.
In the complaint, the government alleged that while Desnick owned Larkin, the facility paid $70,000 per month in kickbacks to Jack Michel and his company, Oracle Health Systems, disguising the kickbacks as legitimate payments for operating the hospital's emergency room, radiology program and house-call services. In 1997, brothers Jack and George Michel, both physicians, admitted half of the hospital's patients. The suit also alleges that Larkin paid kickbacks to other physicians in the form of phony medical directorships. Jack Michel and Morris Esformes bought the hospital from Desnick in 1998.
Desnick previously owned Doctors Hospital of Hyde Park, Chicago. Desnick and Doctors Hospital paid nearly $20 million in civil fraud settlements before the hospital filed for bankruptcy and closed in 2000. In the subsequent federal investigation of the bankruptcy, several individuals were convicted of criminal charges. Desnick has not been charged in that case.