A New York Supreme Court judge threw out all arguments from lawyers for an embattled group of nursing homes that sought to have charges dismissed in a case accusing the owners and operators of $83 million in Medicare and Medicaid fraud.
Judge Melissa Crane ruled that the owners of Centers Health Care, along with numerous other individuals, did not make sufficient arguments for dropping charges of fraud, “saddling” nursing homes with “excessive debts,” colluding to pay “sham vendors,” and paying themselves “inflated” salaries.
The facilities’ lawyers also sought to have 11 defendants dismissed from the case, but that, too, was denied by the judge.
“The petition sufficiently alleges that respondents repeatedly engaged in fraud and illegal behavior by filing false and misleading Medicaid certifications, violating other Medicaid program regulations, paying fraudulent and collusive fees to related party service providers, and orchestrating fraudulent real estate schemes based on fraudulent loans,” Crane wrote in her Aug. 23 ruling.
She found that the group of 11, identified as “nursing home owners,” may be held “liable” under state law.
New York Attorney General Letitia James sued Centers Health Care in June 2023, alleging “repeated and persistent fraud and illegally misusing more than $83 million in taxpayer money. That allegedly resulted in “significant resident neglect, harm, and humiliation” at four, for-profit nursing homes in Queens, the Bronx, Westchester County, and Buffalo. In April, the Albany Times Union reported that Centers Plan for Healthy Living, also owned by Chief Executive Officer Kenneth Rozenberg, was awarded a five-year, multibillion-dollar contract with the state.
A spokesman for Center Health Care declined to comment Tuesday, citing the ongoing litigation.
James has said that the individuals in the lawsuit put into place “multiple ongoing illegal schemes” to divert money that should have been spent on the nursing homes to themselves. She claims the facilities were forced to enter into “collusive real estate arrangements that saddled the homes with excessive debts and forced them to pay falsely inflated rents” to real estate companies owned by Daryl Hagler, who is named in the lawsuit.
The facilities also were also forced to make interest-free loans to other nursing homes owned and operated by Rozenberg “for no discernable business purpose,” per the lawsuit, which noted that the loans were “rarely repaid.” The defendants also are accused of paying salaries to themselves that were “frequently unreported, inflated, and in some instances, indicative of no-show jobs.”
In July 2023, McKnight’s reported that lawyers for Centers Health Care squared off in court against James’ office over the boundaries for a court-appointed, independent monitor who would have access to historical, patient and resident records. Crane ruled that the review would continue but James would not be able to use any of the monitor’s findings in its case.
James alleges that diverting funds from four nursing homes led to the facilities being underfunded and understaffed, resulting in negligent conditions for residents who did not receive proper medical care or hygiene.
The original 318-page petition claims that residents suffered serious injuries, malnutrition and infections, sometimes leading to death at four facilities. They are: Beth Abraham Center for Rehabilitation and Nursing, a 448-bed facility in the Bronx; Buffalo Center for Rehabilitation and Nursing, a 200-bed facility in Buffalo; Holliswood Center for Rehabilitation and Healthcare, a 314-bed facility in Queens; and Martine Center for Rehabilitation and Nursing, a 200-bed facility in White Plains.
