Centers Health Care Allegedly Deprived the Nursing Homes of More Than $83 Million in Taxpayer Funding, Resulting in Resident Neglect, Suffering, Humiliation, and Even DeathLawsuit is Fourth Filed by AG James to Stop Financial Fraud in Nursing Homes and Protect Vulnerable New YorkerNew York Attorney General Letitia James today filed a lawsuit against the owners, operators, and landlords of four nursing homes for years of repeated and persistent fraud and illegally misusing more than $83 million in taxpayer money that resulted in significant resident neglect, harm, and humiliation. The nursing homes, owned and operated by Centers for Care LLC, doing business as Centers Health Care, include Beth Abraham Center for Rehabilitation and Nursing (Beth Abraham Center) in Bronx County, Buffalo Center for Rehabilitation and Nursing (Buffalo Center) in Erie County, Holliswood Center for Rehabilitation and Healthcare (Holliswood Center) in Queens County, and Martine Center for Rehabilitation and Nursing (Martine Center) in Westchester County. Residents at these facilities were forced to sit for hours in their own urine and feces, suffered from severe dehydration, malnutrition, and increased risk of death, developed infections and sepsis from untreated bed sores and inconsistent wound care, sustained life-changing injuries from falls, and died.Following an investigation by the Office of the Attorney General’s (OAG) Medicaid Fraud Control Unit (MFCU), the lawsuit alleges that the nursing homes’ owners and operators converted more than $83 million in Medicaid and Medicare funds to enrich themselves, their families, and business associates through an elaborate network of related companies and collusive, fraudulent transactions, rather than use the funds for their intended purposes of providing sufficient staffing and required resident care. To stop further harm and suffering, Attorney General James is seeking to prohibit the nursing homes from admitting new residents until staffing meets appropriate standards, to implement a financial monitor and a healthcare monitor, and to disgorge any and all wrongfully received government funds.
“Nursing homes are meant to be safe spaces where the most vulnerable members of our community receive the care and dignity they deserve. Instead, the owners of Centers Health Care allegedly used these four nursing homes — and the vulnerable New Yorkers who lived there — to extract millions of dollars for their personal use, leading to elderly residents and those with disabilities suffering unconscionable pain, neglect, degradation, and even death,” said Attorney General James. “Rather than honor their legal duty to residents to provide the highest possible quality of life, Centers leadership and their associates seized every opportunity to put personal profit over resident care. My office will always protect and defend nursing home residents statewide, and I encourage anyone who has witnessed disturbing conditions, neglect, or abuse at a New York nursing home to contact my office.”
Under New York law, owners of nursing homes have a “special obligation” to ensure the highest possible quality of life for residents, and to sufficiently staff the facility to provide adequate care to all residents. The lawsuit alleges that the owners, operators, and landlords of the nursing homes and related companies wove a complicated web of fraudulent financial schemes to siphon money from the nursing homes, while they ignored and violated numerous laws designed to protect nursing home residents, resulting in preventable neglect and harm of vulnerable New Yorkers.
Nursing Homes and Owners
The nursing homes are allegedly all controlled and managed by Centers for Care LLC doing business as Centers Health Care (Centers Health Care), a multistate network of nursing, rehabilitation, and senior care services and facilities. Beth Abraham Center is a 448-bed facility in the Bronx; Buffalo Center is a 200-bed facility in Buffalo; Holliswood Center is a 314-bed facility in Queens; and Martine Center is a 200-bed facility in White Plains. Centers Health Care is co-owned by Kenneth Rozenberg and Daryl Hagler.
The companies named in the lawsuit are Abraham Operations Associates LLC, Delaware Operations Associates LLC, Hollis Operating Co. LLC, and Schnur Operations Associates LLC, doing business as Beth Abraham Center, Buffalo Center, Holliswood Center, and Martine Center, respectively. These companies are owned by Rozenberg. Also named are Light Property Holdings Associates LLC (Light Property), Delaware Real Property Associates LLC (Delaware Property), Hollis Real Estate Co. LLC (Hollis Real Estate), and Light Property Holdings II Associates LLC (Light Property II), which own the real property on which the nursing homes are located. These property companies are owned by Hagler.
Also named in the lawsuit are: Light Operational Holdings Associates LLC (Light Operational), an entity that owns 98 percent of Beth Abraham Center and 65 percent of Martine Center; CFSC Downstate LLC (CFSC); BIS Funding Capital LLC (BIS Funding); and Skilled Staffing LLC (Skilled Staffing) — all companies owned by Rozenberg, Hagler, their family members, and business associates that received payments from the nursing homes for purportedly providing services.
Rozenberg and Hagler are named in their individual capacities, as are several of their family members and business partners.
Resident Abuse and Neglect
The lawsuit alleges a pattern of residents not receiving adequate care and suffering neglect, mistreatment, and humiliation as a result of the owners, operators, and landlords depriving the nursing homes of over $83 million intended for resident care. Due to insufficient staffing, staff members were often unable to assist residents with basic activities of daily living, such as help using the bathroom, getting in and out of bed, eating, and maintaining personal hygiene. Call bells were routinely ignored or unanswered, residents were forced to sit in their own urine and feces for hours, meals were not provided in a timely manner, and personal belongings were lost or stolen, including hearing aids, dentures, clothing, and even an electronic piano. Residents, family members, and staff reported unsanitary conditions, including neglected food trays, vermin, flies, and persistent smells of human waste.
The horrors endured by the nursing homes’ residents began well before the COVID-19 pandemic and resulted from Rozenberg and Hagler repeatedly operating the facilities with insufficient staffing in order to increase their own profits. Allegations of mistreatment, neglect, and humiliation at the nursing homes detailed in the lawsuit include:
- A resident at Beth Abraham Center experienced multiple falls while trying to take herself to the bathroom when her call bell went unanswered. Following a fall in October 2020, the facility’s staff informed the woman’s daughter that she had not been injured. Three days later, the resident complained of pain and was sent to the hospital, where the emergency room doctor discovered she had a dislocated hip that required emergency hip replacement surgery. Doctors at the hospital also found that the resident was suffering from a severe diaper rash covering the majority of her lower torso, indicating a lack of proper care. The resident has since left Beth Abraham.
- A man was a new resident in the dementia unit at Buffalo Center. When the resident’s son was on his way to visit his father, he passed someone who “looked like a zombie or a ghost,” wandering down the street. When the son arrived at Buffalo Center, he was asked to wait to see his father. When staff finally brought his father out, the son realized the person he had seen wandering the streets earlier was his father, and that he had managed to leave the facility without staff noticing. His father was sent to the hospital that same day, where he was diagnosed with severe dehydration. Upon his release from the hospital, his son moved him to a different nursing home. He was a resident at Buffalo Center for just three weeks.
- A woman fell from her bed at Holliswood Center and was returned to bed without a medical examination or treatment. No notice was sent to her family. When her daughter was unable to get in touch with her, she visited Holliswood Center but was turned away by staff and told she could not visit her mother. Her daughter called the police, and then watched as her unconscious mother was wheeled out by paramedics. Staff at the nursing home would not provide an explanation for her mother’s condition, and a CT scan at the hospital showed her mother suffered a brain bleed caused by traumatic impact requiring emergency surgery. The woman no longer resides at Holliswood but continues to suffer from speech defects and emotional extremes as a result of the injury.
- A woman at Martine Center appeared to be in pain while she was visited by her daughter. When the daughter pulled her mother’s hand out from under her blanket, it was covered in feces. The daughter found that her mother, who used a colostomy bag, was wrapped in a towel filled with feces and without a colostomy bag. When she unwrapped the towel, she saw her mother’s exposed intestines and the surrounding area covered in feces. While staff attempted to clean her mother, she complained that the area burned, and when they were done, there was still visible feces smeared around the wound.
- A resident at Martine Center did not receive adequate care for his bed sores. When his wife visited in October 2021, she was shocked to find that his wounds had progressed to Stage III and Stage IV ulcers, one of which was eating away most of his buttocks. His wife began the process of having her husband removed from Martine Center to be cared for at home. Before she got the chance to bring him home, he developed sepsis, was hospitalized, and died.
Financial Fraud
The owners of Centers Health Care engaged in multiple fraudulent schemes to divert more than $83 million in government funds from the nursing homes, including collusive real estate arrangements, unnecessary and exorbitant loans with inflated interest rates, phony fees paid to companies they and their family members own, and paying themselves inflated salaries for work that was not performed.
Rozenberg and Hagler controlled the nursing homes using a partnership model that turned nursing homes into money-making machines. Hagler, as landlord, charged the nursing homes, which were owned by Rozenberg, inflated rents that well exceeded necessary mortgage expenses. They concealed this scheme by submitting much lower proposed rents to the New York State Department of Health (DOH) when applying to become the nursing homes’ licensed operators. After becoming licensed operators, the Rozenberg-owned and controlled operating companies imposed much higher rent payments on the nursing homes so Rozenberg and Hagler could take the excess funds for themselves. For example, in September 2015, Buffalo Center reported to DOH that the facility would have an annual rent of $600,000. A few months later, when Buffalo Center closed on its purchase of the facility, Rozenberg, as Buffalo Center’s owner, and Hagler, as Buffalo Center’s landlord, signed a new lease obligating the facility to pay an annual rent of $2 million — 233 percent greater than the rent reported to DOH.
Rozenberg and Hagler also caused the nursing homes to transfer money through loans to other facilities affiliated with or controlled by Centers Health Care, at no benefit to the nursing homes, staff, or residents. These loans, contrary to the mortgage and property loans, were often made without interest and were seldom repaid. In 2018 and 2019, the owners transferred nearly $5 million from Buffalo Center — money intended for New York Medicaid beneficiaries — to Centers Health Care facilities in other states. The loan was offered without interest, and $3.6 million of that debt remains outstanding, to the detriment of Buffalo Center.
The nursing homes regularly paid invoices from companies that were also controlled by Rozenberg, Hagler, and their families for services that either were not necessary or were not provided at all. BIS Funding, which is owned by Hagler and his son, received approximately $17.2 million from Centers Health Care-affiliated facilities from 2019 through 2021, including more than $3.3 million from these four nursing homes. There are no contracts detailing the scope of services provided to the facilities in exchange for the funds, and the services BIS Funding purportedly provided appear to overlap with work performed for the nursing homes by Centers Health Care’s other contractors, and thus, were duplicative and unnecessary, and also included baseless management fees.
Similarly, Skilled Staffing, which is owned by Rozenberg’s daughter, earned approximately $38.5 million from 2017 to 2021, 90 percent of which came from Centers Health Care-affiliated nursing homes. No contracts exist for the work, and the extent of services provided is not clear. Holliswood Center never hired any staff from Skilled Staffing, but nonetheless paid the company more than $170,000 over a period of one and half years. Skilled Staffing also paid $5 million to Rozenberg’s wife between 2019 and 2021 and transferred another $3 million to various Centers Health Care executives.
COVID-19 Pandemic
The COVID-19 pandemic exposed and exacerbated the deficient resident care and poor working conditions that resulted from Rozenberg and Hagler’s decisions. Under the added stress of the pandemic, the nursing homes’ already-tenuous management model snapped, leading to devastating consequences.
In addition to operating with insufficient staffing, the nursing homes failed to ensure proper infection control, such as quarantining sick residents, providing adequate and reliable health screenings, and equipping staff with personal protective equipment. Residents’ family members reported seeing staff without medical gowns, gloves, or face masks while on video calls with their loved ones.
As COVID-19 spread throughout the nursing homes, insufficient staffing was further reduced to skeleton crews, and the facilities were unable to adequately care for residents. Just two months into the pandemic, 70 residents — nearly a quarter of Holliswood Center’s population — had died from COVID-19. More than 400 residents died across all four nursing homes in 2020.
At Martine Center, the Assistant Director of Nursing (ADON) continued to report to work after exhibiting symptoms of COVID-19 in early April 2020, telling her colleagues that she did not want to abandon them while they were so understaffed. On April 17, 2020, she punched out of work at Martine Center for the last time. By April 21, 2020, she was hospitalized and tested positive for COVID-19. She died in the hospital a few weeks later.
Throughout the pandemic, while both residents and staff died, suffered, and were otherwise neglected, Rozenberg and Hagler denied the nursing homes’ administrators’ requests for more staffing, fewer resident admissions, and salary increases for overburdened staff.
Individual Respondents
The individual respondents named in the petition are Kenneth Rozenberg, who owns half of Centers Health Care, majority stakes in the four nursing homes and Light Operational, and part of CFSC; Daryl Hagler, who owns half of Centers Health Care, majority stakes in the property companies, BIS Funding, and part of CFSC; and their family members: Rozenberg’s wife Beth Rozenberg, a former 50 percent shareholder of Centers Health Care and minority owner of Martine Center, and who, until recently, co-owned Beth Abraham Center with her husband; and Hagler’s adult son Jonathan Hagler, who owns a percentage of each of the property companies, BIS Funding, and CSFC.
Also named are Jeffrey Sicklick, Director of Operations at Centers Health Care who owns minority stakes in Buffalo Center, Holliswood Center, and several other Centers Health Care-affiliated facilities; Amir Abramchik, Chief Operating Officer at Centers Health Care who owns a percentage of Martine Center and stakes in several other Centers Health Care facilities; Elliot Kahan, Chief Marketing Officer at Centers Health Care and part-owner of Martine Center; David Greenberg, who has served as Administrator at other Centers Health Care facilities and is part-owner of Martine Center; Sol Blumenfeld, who has served as Administrator at other Centers Health Care-affiliated facilities and is part-owner of Martine Center; Aron Gittleson, who is a Director of Finance at Centers Health Care and was a part-owner of Martine Center until 2022; Aharon Lantzitsky, who was a Division President at Centers Health Care and part-owner of Martine Center until 2022; Leo Lerner, who owns a minority stake in Holliswood Center; Reuven Kaufman, who was a 10 percent owner of Holliswood Center until September 30, 2021; and Mordechai Hellman, who owns a 10 percent stake in Hollis Real Estate.
Remedies
In the lawsuit filed today, Attorney General James seeks a preliminary injunction requiring the nursing homes to obtain and pay for a financial monitor and a healthcare monitor to oversee the facilities’ operations, and a permanent order from the court that would, among other measures:
- Prohibit the nursing homes from admitting any new residents unless and until staffing meets appropriate standards for sufficient care;
- Require the nursing homes to engage and pay for a financial monitor to oversee the nursing homes’ financial operations;
- Require the nursing homes to engage and pay for a healthcare monitor to oversee the nursing homes’ healthcare operations and ensure residents’ outcomes improve;
- Direct all respondents to fully disgorge the more than $83 million wrongfully received as part of the scheme and return the money to Medicaid; and
- Direct all respondents, corporate, and individual, with the exception of the nursing homes, to pay statutory costs and reimburse the state for the cost of the investigation.
Investigations into other nursing homes and facilities throughout New York state are ongoing.
Attorney General James has been investigating nursing homes throughout New York state based on concerns of resident neglect and other conduct that may have jeopardized the health and safety of residents and employees, 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 and a lack of compliance with infection control protocols.
This is the fourth lawsuit Attorney General James has filed against nursing home owners and operators in New York in the past year. In April, Attorney General James co-led a coalition of attorneys general in calling for increased transparency of nursing home ownership. In February, Attorney General James and United States Attorney for the Northern District of New York Carla Freedman secured more than $7.1 million from the Saratoga Center for Rehabilitation and Skilled Nursing Care, a former nursing home in Ballston Spa, and its owners, unlicensed operator, and landlord for years of fraud and resident neglect. In December 2022, Attorney General James sued Cold Spring Hills Center for Nursing and Rehabilitation and Fulton Commons Care Center, two nursing homes on Long Island, for diverting millions in government funding from resident care, causing widespread resident neglect and abuse. In November 2022, Attorney General James filed a lawsuit against The Villages of Orleans Health and Rehabilitation Center, a nursing home in Albion, New York, for years of financial fraud that resulted in significant resident neglect and harm. These lawsuits are a direct result of OAG’s nursing home investigations, which are ongoing.
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 MFCU hotline at (833) 249-8499.
Attorney General James thanks the New York State Department of Health and Commissioner James V. McDonald, M.D., M.P.H., the New York City Department of Health and Mental Hygiene and Commissioner Ashwin Vasan, M.D., Ph.D., and the United States Department of Health and Human Services, Office of the Inspector General, Assistant Special Agent-in-Charge Naomi Gruchacz.
The 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.
Following an investigation by the Office of the Attorney General’s (OAG) Medicaid Fraud Control Unit (MFCU), the lawsuit alleges that the nursing homes’ owners and operators converted more than $83 million in Medicaid and Medicare funds to enrich themselves, their families, and business associates through an elaborate network of related companies and collusive, fraudulent transactions, rather than use the funds for their intended purposes of providing sufficient staffing and required resident care. To stop further harm and suffering, Attorney General James is seeking to prohibit the nursing homes from admitting new residents until staffing meets appropriate standards, to implement a financial monitor and a healthcare monitor, and to disgorge any and all wrongfully received government funds.
“Nursing homes are meant to be safe spaces where the most vulnerable members of our community receive the care and dignity they deserve. Instead, the owners of Centers Health Care allegedly used these four nursing homes — and the vulnerable New Yorkers who lived there — to extract millions of dollars for their personal use, leading to elderly residents and those with disabilities suffering unconscionable pain, neglect, degradation, and even death,” said Attorney General James. “Rather than honor their legal duty to residents to provide the highest possible quality of life, Centers leadership and their associates seized every opportunity to put personal profit over resident care. My office will always protect and defend nursing home residents statewide, and I encourage anyone who has witnessed disturbing conditions, neglect, or abuse at a New York nursing home to contact my office.”
Under New York law, owners of nursing homes have a “special obligation” to ensure the highest possible quality of life for residents, and to sufficiently staff the facility to provide adequate care to all residents. The lawsuit alleges that the owners, operators, and landlords of the nursing homes and related companies wove a complicated web of fraudulent financial schemes to siphon money from the nursing homes, while they ignored and violated numerous laws designed to protect nursing home residents, resulting in preventable neglect and harm of vulnerable New Yorkers.
Nursing Homes and Owners
The nursing homes are allegedly all controlled and managed by Centers for Care LLC doing business as Centers Health Care (Centers Health Care), a multistate network of nursing, rehabilitation, and senior care services and facilities. Beth Abraham Center is a 448-bed facility in the Bronx; Buffalo Center is a 200-bed facility in Buffalo; Holliswood Center is a 314-bed facility in Queens; and Martine Center is a 200-bed facility in White Plains. Centers Health Care is co-owned by Kenneth Rozenberg and Daryl Hagler.
The companies named in the lawsuit are Abraham Operations Associates LLC, Delaware Operations Associates LLC, Hollis Operating Co. LLC, and Schnur Operations Associates LLC, doing business as Beth Abraham Center, Buffalo Center, Holliswood Center, and Martine Center, respectively. These companies are owned by Rozenberg. Also named are Light Property Holdings Associates LLC (Light Property), Delaware Real Property Associates LLC (Delaware Property), Hollis Real Estate Co. LLC (Hollis Real Estate), and Light Property Holdings II Associates LLC (Light Property II), which own the real property on which the nursing homes are located. These property companies are owned by Hagler.
Also named in the lawsuit are: Light Operational Holdings Associates LLC (Light Operational), an entity that owns 98 percent of Beth Abraham Center and 65 percent of Martine Center; CFSC Downstate LLC (CFSC); BIS Funding Capital LLC (BIS Funding); and Skilled Staffing LLC (Skilled Staffing) — all companies owned by Rozenberg, Hagler, their family members, and business associates that received payments from the nursing homes for purportedly providing services.
Rozenberg and Hagler are named in their individual capacities, as are several of their family members and business partners.
Resident Abuse and Neglect
The lawsuit alleges a pattern of residents not receiving adequate care and suffering neglect, mistreatment, and humiliation as a result of the owners, operators, and landlords depriving the nursing homes of over $83 million intended for resident care. Due to insufficient staffing, staff members were often unable to assist residents with basic activities of daily living, such as help using the bathroom, getting in and out of bed, eating, and maintaining personal hygiene. Call bells were routinely ignored or unanswered, residents were forced to sit in their own urine and feces for hours, meals were not provided in a timely manner, and personal belongings were lost or stolen, including hearing aids, dentures, clothing, and even an electronic piano. Residents, family members, and staff reported unsanitary conditions, including neglected food trays, vermin, flies, and persistent smells of human waste.
The horrors endured by the nursing homes’ residents began well before the COVID-19 pandemic and resulted from Rozenberg and Hagler repeatedly operating the facilities with insufficient staffing in order to increase their own profits. Allegations of mistreatment, neglect, and humiliation at the nursing homes detailed in the lawsuit include:
- A resident at Beth Abraham Center experienced multiple falls while trying to take herself to the bathroom when her call bell went unanswered. Following a fall in October 2020, the facility’s staff informed the woman’s daughter that she had not been injured. Three days later, the resident complained of pain and was sent to the hospital, where the emergency room doctor discovered she had a dislocated hip that required emergency hip replacement surgery. Doctors at the hospital also found that the resident was suffering from a severe diaper rash covering the majority of her lower torso, indicating a lack of proper care. The resident has since left Beth Abraham.
- A man was a new resident in the dementia unit at Buffalo Center. When the resident’s son was on his way to visit his father, he passed someone who “looked like a zombie or a ghost,” wandering down the street. When the son arrived at Buffalo Center, he was asked to wait to see his father. When staff finally brought his father out, the son realized the person he had seen wandering the streets earlier was his father, and that he had managed to leave the facility without staff noticing. His father was sent to the hospital that same day, where he was diagnosed with severe dehydration. Upon his release from the hospital, his son moved him to a different nursing home. He was a resident at Buffalo Center for just three weeks.
- A woman fell from her bed at Holliswood Center and was returned to bed without a medical examination or treatment. No notice was sent to her family. When her daughter was unable to get in touch with her, she visited Holliswood Center but was turned away by staff and told she could not visit her mother. Her daughter called the police, and then watched as her unconscious mother was wheeled out by paramedics. Staff at the nursing home would not provide an explanation for her mother’s condition, and a CT scan at the hospital showed her mother suffered a brain bleed caused by traumatic impact requiring emergency surgery. The woman no longer resides at Holliswood but continues to suffer from speech defects and emotional extremes as a result of the injury.
- A woman at Martine Center appeared to be in pain while she was visited by her daughter. When the daughter pulled her mother’s hand out from under her blanket, it was covered in feces. The daughter found that her mother, who used a colostomy bag, was wrapped in a towel filled with feces and without a colostomy bag. When she unwrapped the towel, she saw her mother’s exposed intestines and the surrounding area covered in feces. While staff attempted to clean her mother, she complained that the area burned, and when they were done, there was still visible feces smeared around the wound.
- A resident at Martine Center did not receive adequate care for his bed sores. When his wife visited in October 2021, she was shocked to find that his wounds had progressed to Stage III and Stage IV ulcers, one of which was eating away most of his buttocks. His wife began the process of having her husband removed from Martine Center to be cared for at home. Before she got the chance to bring him home, he developed sepsis, was hospitalized, and died.
Financial Fraud
The owners of Centers Health Care engaged in multiple fraudulent schemes to divert more than $83 million in government funds from the nursing homes, including collusive real estate arrangements, unnecessary and exorbitant loans with inflated interest rates, phony fees paid to companies they and their family members own, and paying themselves inflated salaries for work that was not performed.
Rozenberg and Hagler controlled the nursing homes using a partnership model that turned nursing homes into money-making machines. Hagler, as landlord, charged the nursing homes, which were owned by Rozenberg, inflated rents that well exceeded necessary mortgage expenses. They concealed this scheme by submitting much lower proposed rents to the New York State Department of Health (DOH) when applying to become the nursing homes’ licensed operators. After becoming licensed operators, the Rozenberg-owned and controlled operating companies imposed much higher rent payments on the nursing homes so Rozenberg and Hagler could take the excess funds for themselves. For example, in September 2015, Buffalo Center reported to DOH that the facility would have an annual rent of $600,000. A few months later, when Buffalo Center closed on its purchase of the facility, Rozenberg, as Buffalo Center’s owner, and Hagler, as Buffalo Center’s landlord, signed a new lease obligating the facility to pay an annual rent of $2 million — 233 percent greater than the rent reported to DOH.
Rozenberg and Hagler also caused the nursing homes to transfer money through loans to other facilities affiliated with or controlled by Centers Health Care, at no benefit to the nursing homes, staff, or residents. These loans, contrary to the mortgage and property loans, were often made without interest and were seldom repaid. In 2018 and 2019, the owners transferred nearly $5 million from Buffalo Center — money intended for New York Medicaid beneficiaries — to Centers Health Care facilities in other states. The loan was offered without interest, and $3.6 million of that debt remains outstanding, to the detriment of Buffalo Center.
The nursing homes regularly paid invoices from companies that were also controlled by Rozenberg, Hagler, and their families for services that either were not necessary or were not provided at all. BIS Funding, which is owned by Hagler and his son, received approximately $17.2 million from Centers Health Care-affiliated facilities from 2019 through 2021, including more than $3.3 million from these four nursing homes. There are no contracts detailing the scope of services provided to the facilities in exchange for the funds, and the services BIS Funding purportedly provided appear to overlap with work performed for the nursing homes by Centers Health Care’s other contractors, and thus, were duplicative and unnecessary, and also included baseless management fees.
Similarly, Skilled Staffing, which is owned by Rozenberg’s daughter, earned approximately $38.5 million from 2017 to 2021, 90 percent of which came from Centers Health Care-affiliated nursing homes. No contracts exist for the work, and the extent of services provided is not clear. Holliswood Center never hired any staff from Skilled Staffing, but nonetheless paid the company more than $170,000 over a period of one and half years. Skilled Staffing also paid $5 million to Rozenberg’s wife between 2019 and 2021 and transferred another $3 million to various Centers Health Care executives.
COVID-19 Pandemic
The COVID-19 pandemic exposed and exacerbated the deficient resident care and poor working conditions that resulted from Rozenberg and Hagler’s decisions. Under the added stress of the pandemic, the nursing homes’ already-tenuous management model snapped, leading to devastating consequences.
In addition to operating with insufficient staffing, the nursing homes failed to ensure proper infection control, such as quarantining sick residents, providing adequate and reliable health screenings, and equipping staff with personal protective equipment. Residents’ family members reported seeing staff without medical gowns, gloves, or face masks while on video calls with their loved ones.
As COVID-19 spread throughout the nursing homes, insufficient staffing was further reduced to skeleton crews, and the facilities were unable to adequately care for residents. Just two months into the pandemic, 70 residents — nearly a quarter of Holliswood Center’s population — had died from COVID-19. More than 400 residents died across all four nursing homes in 2020.
At Martine Center, the Assistant Director of Nursing (ADON) continued to report to work after exhibiting symptoms of COVID-19 in early April 2020, telling her colleagues that she did not want to abandon them while they were so understaffed. On April 17, 2020, she punched out of work at Martine Center for the last time. By April 21, 2020, she was hospitalized and tested positive for COVID-19. She died in the hospital a few weeks later.
Throughout the pandemic, while both residents and staff died, suffered, and were otherwise neglected, Rozenberg and Hagler denied the nursing homes’ administrators’ requests for more staffing, fewer resident admissions, and salary increases for overburdened staff.
Individual Respondents
The individual respondents named in the petition are Kenneth Rozenberg, who owns half of Centers Health Care, majority stakes in the four nursing homes and Light Operational, and part of CFSC; Daryl Hagler, who owns half of Centers Health Care, majority stakes in the property companies, BIS Funding, and part of CFSC; and their family members: Rozenberg’s wife Beth Rozenberg, a former 50 percent shareholder of Centers Health Care and minority owner of Martine Center, and who, until recently, co-owned Beth Abraham Center with her husband; and Hagler’s adult son Jonathan Hagler, who owns a percentage of each of the property companies, BIS Funding, and CSFC.
Also named are Jeffrey Sicklick, Director of Operations at Centers Health Care who owns minority stakes in Buffalo Center, Holliswood Center, and several other Centers Health Care-affiliated facilities; Amir Abramchik, Chief Operating Officer at Centers Health Care who owns a percentage of Martine Center and stakes in several other Centers Health Care facilities; Elliot Kahan, Chief Marketing Officer at Centers Health Care and part-owner of Martine Center; David Greenberg, who has served as Administrator at other Centers Health Care facilities and is part-owner of Martine Center; Sol Blumenfeld, who has served as Administrator at other Centers Health Care-affiliated facilities and is part-owner of Martine Center; Aron Gittleson, who is a Director of Finance at Centers Health Care and was a part-owner of Martine Center until 2022; Aharon Lantzitsky, who was a Division President at Centers Health Care and part-owner of Martine Center until 2022; Leo Lerner, who owns a minority stake in Holliswood Center; Reuven Kaufman, who was a 10 percent owner of Holliswood Center until September 30, 2021; and Mordechai Hellman, who owns a 10 percent stake in Hollis Real Estate.
Remedies
In the lawsuit filed today, Attorney General James seeks a preliminary injunction requiring the nursing homes to obtain and pay for a financial monitor and a healthcare monitor to oversee the facilities’ operations, and a permanent order from the court that would, among other measures:
- Prohibit the nursing homes from admitting any new residents unless and until staffing meets appropriate standards for sufficient care;
- Require the nursing homes to engage and pay for a financial monitor to oversee the nursing homes’ financial operations;
- Require the nursing homes to engage and pay for a healthcare monitor to oversee the nursing homes’ healthcare operations and ensure residents’ outcomes improve;
- Direct all respondents to fully disgorge the more than $83 million wrongfully received as part of the scheme and return the money to Medicaid; and
- Direct all respondents, corporate, and individual, with the exception of the nursing homes, to pay statutory costs and reimburse the state for the cost of the investigation.
Investigations into other nursing homes and facilities throughout New York state are ongoing.
Attorney General James has been investigating nursing homes throughout New York state based on concerns of resident neglect and other conduct that may have jeopardized the health and safety of residents and employees, 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 and a lack of compliance with infection control protocols.
This is the fourth lawsuit Attorney General James has filed against nursing home owners and operators in New York in the past year. In April, Attorney General James co-led a coalition of attorneys general in calling for increased transparency of nursing home ownership. In February, Attorney General James and United States Attorney for the Northern District of New York Carla Freedman secured more than $7.1 million from the Saratoga Center for Rehabilitation and Skilled Nursing Care, a former nursing home in Ballston Spa, and its owners, unlicensed operator, and landlord for years of fraud and resident neglect. In December 2022, Attorney General James sued Cold Spring Hills Center for Nursing and Rehabilitation and Fulton Commons Care Center, two nursing homes on Long Island, for diverting millions in government funding from resident care, causing widespread resident neglect and abuse. In November 2022, Attorney General James filed a lawsuit against The Villages of Orleans Health and Rehabilitation Center, a nursing home in Albion, New York, for years of financial fraud that resulted in significant resident neglect and harm. These lawsuits are a direct result of OAG’s nursing home investigations, which are ongoing.
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 MFCU hotline at (833) 249-8499.
Attorney General James thanks the New York State Department of Health and Commissioner James V. McDonald, M.D., M.P.H., the New York City Department of Health and Mental Hygiene and Commissioner Ashwin Vasan, M.D., Ph.D., and the United States Department of Health and Human Services, Office of the Inspector General, Assistant Special Agent-in-Charge Naomi Gruchacz.
The 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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