Sham and Related Entities

Reuters reported New York’s Attorney General Letitia James 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. The lawsuit seeks to to block new admissions until the facilities provide safe staffing, and hire financial monitors to prevent waste, fraud, and abuse.

Owners Kenneth Rozenberg and Daryl Hagler may need to return the stolen money. James said that Rozenberg, Hagler and others used a complex network of related entities and sham contracts to pocket $83 million in Medicare, Medicaid and other funding meant for patient care. 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. This happens all the time.

Meanwhile, residents suffered horrific neglect and mistreatment. 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 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.