Nursing Homes Defrauded Taxpayers of $83 Million, Lawsuit Says

The owners and operators of four nursing homes siphoned off more than $83 million in taxpayer funds and neglected residents, leading to injuries and at least one death, according to the New York State attorney general, Letitia James, who filed a lawsuit against the owners on Wednesday.

“They put profit over people again and again and again while vulnerable New Yorkers were reduced to skeletons,” Ms. James said at a news conference on Wednesday, noting in an earlier statement that the co-owners of the nursing homes, Kenneth Rozenberg and Daryl Hagler, had turned the facilities into “moneymaking machines,” “leading to elderly residents and those with disabilities suffering unconscionable pain, neglect, degradation and even death.”

The four nursing homes named in the lawsuit, filed after an investigation by the Office of the Attorney General’s Medicaid Fraud Control Unit, are run by Centers Health Care, and include two in New York City, Holliswood Center for Rehabilitation and Healthcare in Queens and Beth Abraham Center for Rehabilitation in the Bronx; as well as Martine Center for Rehabilitation and Nursing in White Plains and Buffalo Center for Rehabilitation and Nursing in Buffalo.

The schemes, in which the two owners misappropriated Medicaid and Medicare funds, the lawsuit says, date back to at least 2013 and involved charging the nursing homes inflated rents of up to 233 percent greater than the rent reported to the State Department of Health; transferring money to nursing homes associated with Centers Health Care in other states through unnecessary and interest-free loans; and paying large invoices to companies owned by Mr. Hagler, Mr. Rozenberg and their families. In some cases, according to the lawsuit, it is unclear what services, if any, these invoices were for.

The misuse of these funds resulted in the degradation of care for nursing home residents, according to the attorney general.

Jeff Jacomowitz, a spokesman for Centers Health Care, denied the allegations in the lawsuit. “Centers Health Care prides itself on its commitment to patient care,” he said in a statement on Wednesday. “Centers denies the New York attorney general’s allegations wholeheartedly and attempted to resolve this matter out of court. We will fight these spurious claims with the facts on our side.”

At the Martine Center in White Plains, the daughter of a resident discovered that staff members had neglected to provide a colostomy bag for her mother, and had instead wrapped her in a towel that was filled with feces, the woman told investigators.

At the same center, another woman told investigators that her husband’s untreated bedsores had turned into severe ulcers that had eaten away most of the man’s buttocks. While she began the process of removing her husband from the nursing home, he developed sepsis and was hospitalized, but later died.

At Holliswood, the child of one resident called the police after struggling to contact her mother both in person at the nursing home and over the phone. She later saw paramedics wheeling her unconscious mother out of the nursing home and learned her mother required surgery for a brain bleed resulting from a traumatic fall. While she removed her mother from Holliswood, the woman still suffers from speech defects and emotional disturbances.

Family members of residents at Beth Abraham and the Buffalo Center also reported other injuries related to falls, as well as severe diaper rash and dehydration.

All four nursing homes received complaints of unsanitary conditions, vermin, flies and lingering smells of human waste, according to the lawsuit.

Ms. James is seeking to prohibit the four nursing homes from admitting any new residents until they hire an adequate number of staff members, hire for positions intended to monitor the nursing homes’ finances and quality of care, pay back the entirety of the $83 million and reimburse the attorney general’s office for the cost of the investigation. This is the fourth lawsuit Ms. James’s office has filed against nursing homes.