The Office of the State Comptroller finds Hammonton and Deptford nursing home owners and associates diverted millions as residents suffered and should repay $124 million:
The New Jersey Office of the State Comptroller (OSC) has conducted an in-depth investigation into the operations of two nursing homes, Hammonton Center for Rehabilitation and Healthcare (Hammonton) and Deptford Center for Rehabilitation and Healthcare (Deptford), focused on a five-and-a-half-year period from 2019 to 2024.
OSC stated in its “Medicaid Fraud Report” as follows:
OSC found a troubling pattern of mismanagement, self-dealing, and profiteering by owners Daryl Hagler (Hagler) and Kenneth Rozenberg (Rozenberg), who own 46 nursing homes in four states. Through deceptive financial arrangements with related-party interests they owned, Hagler and Rozenberg inflated rent payments from the nursing homes to their property companies, intentionally understaffed both facilities, and diverted to themselves tens of millions of dollars in Medicaid funding intended to be used to care for vulnerable residents. They furthered their scheme by hiding these actions through false state and federal filings that failed to disclose the extent and profitability of their scams.
Hagler and Rozenberg maximized their profits in part by failing to pay for staff to care for residents. OSC reviewed 146 days from February 1, 2021 to May 31, 2024, and found that Hammonton and Deptford failed to meet the minimum required staff-to-resident ratios for almost all of the days that OSC reviewed. Hammonton was understaffed by an average of almost 52 percent daily, and Deptford was understaffed by an average of 54 percent daily, which means that residents in both facilities received less than half the minimum of direct care they were required by law to receive. The use of inadequately licensed and unqualified staff further imperiled the residents, with both facilities employing Licensed Practical Nurses (LPNs) in roles that should have been filled by Registered Nurses (RNs).
The chronic understaffing resulted in substandard care that stripped residents of their dignity. The nursing homes consistently received ratings of “much below average.” State surveys and inspections, frequent police reports, and witness accounts document the persistent state of misery at the nursing homes – missed medication doses, emergency calls due to inadequate staffing, and unsanitary conditions – leading to preventable suffering and at least one known tragic outcome for residents. Lack of direct care staff meant that call bells went unanswered, residents screamed out for help, residents sat in soiled diapers, and there was generally insufficient staff to feed, bathe, and care for residents in the facility. The poor quality of care they provided led the Centers for Medicare & Medicaid Services (CMS) to designate both nursing homes as “Special Focus Facilities” multiple times during the review period, a category reserved for the lowest performing nursing homes, the worst of the worst.
Hagler and Rozenberg were able to move money off the nursing homes’ books and into their bank accounts using a network of interrelated companies they owned and controlled, including:
· A Bronx, New York-based company called Centers for Care, LLC (Centers), owned by Hagler and Rozenberg;
· Two property companies that own the buildings and real estate for Hammonton and Deptford, owned by Rozenberg and M&J Klein Family Enterprises, LLC (KFE);
· A business consulting company owned by Hagler; Rozenberg; Rozenberg’s wife, Beth Rozenberg; Rozenberg’s daughter, Shoshana Rozenberg Areman; and Rozenberg’s son, Eli Rozenberg;
· An information technology company owned by Hagler and his son, Jonathan Hagler;
· A staffing company owned by Hagler; Rozenberg; Rozenberg’s daughter, Shoshona Rozenberg Areman; Hagler’s son, Jonathan Hagler; Amir Abramchik, Centers’ Chief Operating Officer; and Abramchik’s wife, Deborah Abramchik;
· Another staffing company owned by Rozenberg’s daughter, and Elisabeth Farkas, Rozenberg’s daughter-in-law;
· A building maintenance and construction company owned in part by Hagler; and
· Clinical laboratories owned by Rozenberg and his wife, Beth Rozenberg.
For the five-and-a-half-year period OSC reviewed, Hagler and Rozenberg moved $92 million through these companies, which is more than two-thirds of the $134.8 million they received in Medicaid funding from New Jersey. Because the risk of self-dealing is so great when related parties are involved, state and federal law limit how much related parties can be paid and requires disclosure of costs and profits. Hagler and Rozenberg were required by law to report how much they paid to companies they and their family members own. But they intentionally hid these transactions, reporting just $882,666 of the $92 million – less than 1 percent – to the state and federal governments. This was not a simple error; Hagler himself signed the false cost reports.
By hiding what they paid themselves through their related entities, Hagler and Rozenberg hid the outrageous deals they made with themselves from the government. The most lucrative scams stemmed from the mortgages and rent payments, and they were made possible by the legal separation of the nursing home operations from the nursing home properties. Hagler and Rozenberg bundled the purchase of both the operating companies and the properties into mortgages worth $63.2 million. The property companies then increased the rent charged to the operating companies to cover the mortgage payments. This scheme allowed Hagler and Rozenberg to purchase and own the nursing homes for nearly nothing, a mere 1.5 percent deposit. To avoid showing a profit, Hagler and Rozenberg on cost reports falsely labeled the mortgage payments as all rent, thus concealing the fact that $7.8 million paid toward the rent during the period OSC reviewed was for what should have been Hagler’s and Rozenberg’s private business loans.
They also used rent payments to move extraordinary amounts of money off the nursing homes’ books. Above and beyond the rent payments that paid for the mortgage principal, taxes, maintenance, and reserves, Hagler and Rozenberg paid Rozenberg’s property companies, in just five-and-a-half years, $27.8 million in duplicative and unnecessary “additional rent” payments. Those “additional rent” payments, according to the lease, were supposed to cover the property taxes, insurance, maintenance, and reserves—but those costs were already included in the base mortgage payments. So instead, $27.8 million in duplicative payments were distributed directly to Rozenberg and KFE, the other owner of the property companies.
Hagler and Rozenberg managed Hammonton and Deptford to reap grossly excessive profits for themselves while grievously harming the residents who lived in the facilities. They built a business that systematically redirected public funds intended for resident care to their own and their family members’ bank accounts.
OSC will therefore recover the funds Hagler, Rozenberg, and others wrongly took and impose penalties, where appropriate. OSC will pursue recovery of $86.3 million, an extrapolated overpayment amount, for the grievous lack of direct care staffing at the facilities. The Medicaid program, and taxpayers, paid for one thing—a quality nursing home that provides quality care and allows residents to live in dignity—but they got something else entirely—a nursing home where residents were forced to survive deplorable conditions. The state and federal government did not get what they paid for; taxpayers are entitled to get the money back.
In addition, or in the alternative, OSC is seeking a recovery of $35.5 million related to real estate scams and at least $2.1 million for wholly unsupported and undisclosed payments made to related parties. In total, OSC estimates that it will be seeking approximately $123.9 million in overpayments from Hagler and Rozenberg, their family members, KFE, and their related businesses. OSC will also seek penalties of $980,000 for failing to have RNs present in the facility in violation of state law plus additional penalties for filing false claims. OSC additionally will ensure the appropriate individuals and entities are barred from continuing to participate in Medicaid in New Jersey and advise other states of their misconduct here.
This investigation also revealed deficiencies in the State’s oversight of nursing homes that allowed their scams to continue for so long. It should not take a multi-year investigation to detect fraud of this magnitude. New Jersey must do more to recognize that nursing homes that consistently provide poor quality care, and receive so much money while doing so, provide an unmistakable signal that their owners may be committing fraud. OSC is thus again recommending changes to improve state regulation of nursing homes.
If you or a loved one suffered injuries (or worse) while a resident of a nursing home in New Jersey or in another U.S. state due to nursing home fraud, improper nursing home discharge, improper nursing home transfer, a nursing home fall, nursing home aspiration, nursing home neglect, nursing home negligence, nursing home abuse, nursing home understaffing, or the nursing home failing to properly care for a vulnerable adult, you should promptly find a nursing home claim lawyer in New Jersey or in your state who may investigate your nursing home claim for you and file a nursing home claim on your behalf or behalf of your loved one, if appropriate.
Visit our website to be connected with medical malpractice attorneys (nursing home injury attorneys) in your U.S. state who may assist you with your nursing home claim, or call us toll-free in the United States at 800-295-3959.
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