Revenge of the Tipping Point: Chapter 2 Summary & Analysis

On September 12, 2019, Philip Esformes was found guilty in one of the biggest Medicare fraud cases ever. He oversaw several nursing homes and implemented his scam by cutting corners at the homes. Philip’s lawyers tried to make the case that he was just trying to live up to the legacy of his father, Morris Esformes, an Orthodox rabbi who also owned a nursing home empire and was legendary for his charitable donations.

Philip Esformes’s lawyers tried to portray him as a caring man who was always stopping by to check his nursing home facilities in person and getting celebrities to come meet the residents. The prosecution, however, focused on the vast amount of kickback Esformes handed out. One witness for Philip, a family friend, made an argument that was essentially a version of small-area variation. The witness claimed Philip had indeed been a virtuous man in his hometown of Chicago, but that he changed when he moved to Miami to start his new nursing home empire.

Gladwell notes that from the period of 1998 to 2012, heart surgery in Boulder, Colorado and in Buffalo, New York had very different treatment styles, due to an expensive device called a “cardiac cath” being used more often in Boulder. A scholar studying these variations in treatment style wondered whether a Boulder doctor would become more like a Buffalo doctor after moving there. While the doctor who moved didn’t transform 100 percent, there was an immediate and noticeable change in the doctor’s actions.

To explain small-area variation, Gladwell brings up the concept of an overstory, a term that originally referred to the upper layer of foliage in a forest. In Gladwell’s definition, an overstory is a high-level narrative that drives the way people in an environment act, perhaps without even being aware that they are following this narrative. Gladwell thinks that, for example, Waldorf schools and Miami both have overstories that affect the people within those places. After researching, he finds that Miami is a hub for Medicare fraud and is curious why it became that way.

A book called The Year of Dangerous Days, authored by Nicholas Griffin, introduced a concept called the 1980 Theory. He suggests that in 1980, everything changed in Miami as it went from a small city to a major center of the drug trade. Murders spiked, and corruption grew in the police force. Then, in April 1980, Fidel Castro opened Cuba’s borders, causing a massive shift in Miami’s demographics due to new Cuban immigrants. Gladwell goes to visit Miami himself, where he learns that while Medicare fraud happens across Florida, it can be particularly blatant in the southern part of the state.

Philip Esformes’s fraud was only discovered by accident, when the prosecution of a pharmacist involved kickbacks to Willy and Gaby Delgado, a pair of brothers with connections to Esformes. Nevertheless, Esformes maintained his innocence throughout the trial and refused a plea deal, and the trial became national news and made its way to the Supreme Court. The Delgado brothers’ testimony in court was damning to Esformes, but Willy Delgado mentioned at one point that Esformes never worried because he had “aces up his sleeve.” Esformes would brag about having political connections, including making a large presidential campaign donation. In December 2020, Donald Trump, who also had ties to south Florida, commuted Esformes’s sentence.