Nursing home owners stole $83 million while neglecting residents, NY lawsuit says

By Brendan Pierson

(Reuters) -New York's attorney general on Wednesday accused nursing home operator Centers Health Care and its owners of stealing $83 million in government funds while understaffing its facilities, resulting in widespread neglect, illness and death among residents.

In a lawsuit filed in state court in Manhattan, Attorney General Letitia James sought to block four Centers nursing homes in New York from admitting new residents until they are sufficiently staffed, and to hire financial and healthcare monitors to oversee their compliance.

James is also asking the court to force Centers, its owners Kenneth Rozenberg and Daryl Hagler and others allegedly involved in the fraud to return the stolen money.

Centers spokesperson Jeffrey Jacomowitz said in a statement that the company "prides itself on its commitment to patient care" and "wholeheartedly" denies the allegations.

"We will fight these spurious claims with the facts on our side," he said.

James said that Rozenberg, Hagler and others used a complex network of companies and sham contracts to pocket $83 million in Medicare, Medicaid and other funding meant for patient care over the last decade.

Meanwhile, residents at four New York facilities suffered horrific neglect and mistreatment, according to the lawsuit. Among numerous examples cited in the complaint are a man who died of sepsis from an untreated bedsore; a woman who suffered brain damage after falling out of bed and receiving no treatment; and a man with dementia who left a facility unsupervised.

Residents were routinely left in soiled diapers for hours, and calls for help were ignored, the lawsuit said.

During the COVID-19 pandemic, Centers failed to provide masks to staff or follow infection control measures, James alleged. More than 400 residents died in 2020 in the four New York nursing homes, partly as a result of these failures, the lawsuit said.

The defendants used a variety of schemes to extract money from Centers nursing homes, James alleged.

For example, Hagler, who owned the real estate, charged the operating companies, owned by Rozenberg, exorbitant rent. A staffing company owned by Rozenberg's daughter was paid millions of dollars by Centers-affiliated entities, although it had no contract, the lawsuit added.

The defendants also transferred funds between entities they controlled with no-interest loans, many of which were never repaid, according to the lawsuit.

Centers also operates facilities in New Jersey, Rhode Island and Kansas.

(Reporting By Brendan Pierson in New York, Editing by Alexia Garamfalvi and Aurora Ellis)

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Nursing home owners stole $83 million while neglecting residents, NY lawsuit says