New York Attorney General Letitia James and the United States Attorney for the Northern District of New York (USAO-NDNY) Carla Freedman today announced they have secured more than $7.1 million from the Saratoga Center for Rehabilitation and Skilled Nursing Care (Saratoga Center), a former nursing home in Ballston Spa, and its owners, unlicensed operator, and landlord for years of fraud and resident neglect. In 2017, following a financial dispute, Saratoga Center’s landlord pressured the owners, who were the licensed operators, to relinquish control of the nursing home to the unlicensed operator, and never reported the change to the New York State Department of Health (DOH). Under the control of this unlicensed operator and his associates, conditions at Saratoga Center rapidly declined. The facility failed to provide medication to residents, lacked hot water and clean linens, and residents suffered falls, pressure sores, and other significant lapses in care.
As part of the settlements, the owners, unlicensed operator, and landlord have admitted wrongdoing, and together, will return $7.1 million to Medicaid, with $4.3 million going to New York. In addition, the owners, unlicensed operator, as well as the entities that owned the nursing home’s real property, are excluded from participating in Medicaid and Medicare for at least 10 years. This action is the fourth taken in as many months by Attorney General James to protect vulnerable New Yorkers in nursing homes.
“We trust nursing homes to protect New Yorkers during their most vulnerable days, but the owners, unlicensed operator, and landlord of Saratoga Center repeatedly violated the law for their own benefit,” said Attorney General James. “Instead of providing the quality care and compassion that residents deserved, the owners of Saratoga Center deceived regulators and left residents to suffer deplorable conditions and neglect. I am grateful to U.S. Attorney Freedman and team for their partnership in holding Saratoga Center accountable for putting New Yorkers in harm’s way. My office will continue to ensure nursing home residents are protected, and I encourage anyone who has witnessed alarming conditions, resident neglect, or abuse at a nursing home to contact my office.”
“Nursing homes should protect the health and well-being of every resident,” said U.S. Attorney Freedman. “That did not happen at Saratoga Center. Instead, a business dispute between the operators and landlord led to dangerous conditions for residents and staff and caused the submission of false claims to Medicaid for worthless services. This case demonstrates that we will hold responsible people accountable when they pocket federal funds while providing substandard care. Thank you to Attorney General James and her office for collaborating on this case.”
Under New York law, owners of nursing homes have a “special obligation” to ensure the highest possible quality of life for residents, and to staff the facility at a level sufficient to provide adequate care to all residents. In addition, prospective owners of nursing homes are required to make truthful disclosures to DOH in their applications to become operators. Nursing home operators are also prohibited from delegating key duties to other individuals who have not been approved as operators by DOH.
Saratoga Center operated as a 257-bed nursing home from 2015 until it closed in 2021. The Office of the Attorney General's (OAG) investigation found that when the owners applied to DOH in 2014 to get a license to operate Saratoga Center, they and the landlord deceived DOH about their relationship, claiming it was at “arm’s length,” and that the owners were seeking private loans to fund their acquisition of the nursing home. In reality, the owners and the landlord were already in business together, and the landlord was funding the purchase of Saratoga Center. In 2017, the landlord pressured the owners to relinquish control of Saratoga Center to the unlicensed operator and other associates but did not report the change to DOH.
The conditions at Saratoga Center declined under the control of the new, unlicensed operator and associates, leading to a breakdown in the quality of care provided to residents. From when they took over in 2017 to when Saratoga Center closed in 2021, the unlicensed operator and associates mismanaged the nursing home’s finances and failed to adequately staff the facility, causing residents to suffer the consequences.
Residents at Saratoga Center suffered significant medication errors. The investigation also revealed that residents experienced excessive and unnecessary falls and injuries, including the development of pressure sores that went untreated. Under the management of the unlicensed operator and associates, Saratoga Center failed to:
- Maintain consistent and reliable hot water throughout the facility;
- Keep a sufficient stock of clean bed linens for residents; and
- Manage trash and waste removal in a timely fashion, subjecting residents to unsanitary and unhealthy conditions.
In 2018, both DOH and the Centers for Medicare & Medicaid Services (CMS) fined Saratoga Center for serious deficiencies and violations, and in 2019, CMS designated Saratoga Center a “Special Focus Facility,” signifying it was among the poorest performing nursing homes in the country.
The individuals and entities party to the settlements are Alan “Ari” Schwartz and Jeffrey Vegh, the owners and licensed operators of Saratoga Center; Saratoga Center for Care LLC, the entity through which Schwartz and Vegh owned the nursing home; Jack Jaffa, the unlicensed operator; Saratoga Care and Rehabilitation Center LLC, the entity through which Jaffa operated Saratoga Center; Leon Melohn, the landlord; and 149 Ballston Ave LLC and Ballston Two LLC, entities Melohn controls that owned the real property on which Saratoga Center was located.
Under the settlements announced today, the owners, unlicensed operator, and landlord will collectively pay $7,168,000 to Medicaid, of which $4,300,800 will go directly to New York state. The remaining $2,867,200 will be paid to the federal government. The owners, unlicensed operator, and the entities that own Saratoga Center’s real property will also be excluded from Medicare, Medicaid, and all other federal health care programs for at least 10 years.
Attorney General James has been investigating nursing homes throughout New York state based on concerns of resident neglect and other unacceptable conduct, both before and during the COVID-19 pandemic. In January 2021, Attorney General James released a report revealing that many nursing homes were ill-equipped and ill-prepared to deal with the pandemic crisis because of poor staffing levels, which resulted in a lack of compliance with infection control protocols and increased risk to residents. In November and December 2022, Attorney General James filed special proceedings against three separate skilled nursing facilities and their owners due to findings of repeated and persistent fraud and illegality, including resident neglect, illegal conversion of government funds, and false and misleading representations to DOH. These facilities include: The Villages of Orleans Health and Rehabilitation Center in Orleans County, Fulton Commons Care Center in Nassau County, and Cold Spring Hills Center for Nursing and Rehabilitation in Nassau County.
Attorney General James encourages anyone with information or concerns about alarming nursing home conditions, or resident abuse or neglect, to file a confidential complaint online or call the Medicaid Fraud Control Unit (MFCU) hotline at (833) 249-8499.
The investigation and settlements were the result of a coordinated effort among OAG, USAO-NDNY, the Civil Division of the United States Department of Justice (DOJ), and the Department of Health and Human Services Office of the Inspector General (HHS-OIG). Attorney General James thanks USAO-NDNY, DOJ, HHS-OIG, and DOH for their partnership and assistance.
“This settlement demonstrates the Department of Justice’s ongoing commitment to ensuring that nursing home residents receive the quality of care to which they are entitled,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of DOJ’s Civil Division. “When individuals or entities put the welfare of these vulnerable residents in jeopardy, they will be held accountable.”
“Ensuring safety and quality of care for nursing home residents is a top priority,” said Inspector General Christi A. Grimm, HHS-OIG. “When nursing home owners, operators, and landlords are responsible for substandard care in their facilities, HHS OIG will not hesitate to pursue their exclusion and bar them from future participation in federal health care programs.”
Assistant U.S. Attorney Christopher R. Moran and Civil Division Attorneys Carol Wallack and Lyle Gruby handled this matter for the United States.
New York MFCU’s total funding for federal fiscal year (FY) 2023 is $65,717,936. Of that total, 75 percent, or $49,288,452, is awarded under a grant from the U.S. Department of Health and Human Services. The remaining 25 percent, totaling $16,429,484 for FY 2023, is funded by New York state. Through MFCU’s recoveries in law enforcement actions, it regularly returns more to the state than it receives in state funding.
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