Embattled nursing home owners lose control of 2 NJ facilities

Troubles are mounting for a trio of nursing home owners facing an ongoing $83 million fraud lawsuit brought last year by New York Attorney General Letitia James (D).

A New Jersey superior court judge Monday appointed an independent receiver to run two nursing homes in the state owned by Kenneth Rozenberg, Beth Rozenberg and Daryl Hagler. The three are collectively associated with approximately 40 nursing homes, mostly in New York and New Jersey.

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The judge, Patrick J. Bartels from the Chancery division of the New Jersey Superior Court, tapped Allen Wilen, partner in corporate restructuring firm Eisner Advisory Group, to serve as the receiver. The receiver has authority and control over the financial operations and management of the nursing homes, including hiring and firing staff, as well as making improvements to the facilities. The judge's order did not specify the length of the receivership.

The Office of the State Comptroller notified Hagler and the Rozenbergs in January that they must dissociate themselves from the two facilities —  the Deptford Center for Rehabilitation and Healthcare and the Hammonton Center for Rehabilitation and Healthcare — by Monday, or be suspended along with their entities from participation in New Jersey's Medicaid program. The notifications alleged poor conditions in the facilities, according to a January news release.

OSC temporarily lifted the suspension because of the receivership, a Thursday news release said.

The Rozenbergs and Hagler operated the two New Jersey businesses as Innova Gloucester Deptford Bridge Operations and Innova Atlantic WH Operations. They are cooperating with the state of New Jersey, according to Jeffrey Jacomowitz, a spokesperson for the owners.

“Hammonton Center and Deptford Center are actively working together with the New Jersey Department of Health in matters of the current receivership. We continue to take all necessary steps to make sure that this receivership process will not impact the continued care of the residents of our community,” Jacomowitz said in an email.

James sued the owners last year, alleging they and other associates misused more than $83 million as part of the operations of four New York nursing homes. The New York facilities are owned and operated by Centers for Care and do business as Centers Health Care.

The lawsuit — pending in the New York State Supreme Court in New York County — claims the nursing home operators allegedly used Medicaid and Medicare funds to enrich themselves, their families and business associates through a network of related companies and allegedly fraudulent transactions.

Acting New Jersey Comptroller Kevin Walsh cited the suit as one reason for taking action against the owners. 

“When there is evidence of fraud of this magnitude, and when there is a record of siphoning of public funds and self-dealing, we have a duty to act," Walsh said in the Thursday news release. "To protect New Jersey Medicaid and the residents who rely on it, we will stop the flow of Medicaid funds to those involved in fraud and require them to step aside.”