Nursing Home Owners In Fraud Probe Must Relinquish Control Of South Jersey Facilities

DEPTFORD, NJ — An independent authority will manage two South Jersey nursing homes while their owners are investigated for fraud.

The independent receiver will control operations at the Centers for Rehabilitation and Healthcare in Deptford and Hammonton, per a court order issued this week. The owners of Centers Health Care, which manages both facilities, were accused of enriching themselves by siphoning $83 million from nursing homes funded by New York Medicaid and Medicare.

New Jersey authorities have also cited poor conditions at the Deptford and Hammonton facilities, threatening to suspend both from state Medicaid funding unless the owners disassociated from them.

But the appointment of a receiver on Tuesday prompted the Office of the State Comptroller (OSC) to halt the suspensions, which were set to go into effect that day.

A Superior Court judge appointed Allen Wilen — a New Jersey-based bankruptcy advisor — as the independent receiver for the Deptford and Hammonton centers. Wilen will manage both facilities as the legal matters get resolved.

The suspension of funding has been temporarily lifted, pending the outcome of the New York fraud case, the OSC's investigation, or if the receiver determines that both facilities should be closed.

"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," Kevin Walsh, the acting state comptroller, said in a 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."

The South Jersey nursing homes rely almost exclusively on Medicaid funding. In January, the state comptroller warned owners Kenneth Rozenberg, Beth Rozenberg, and Daryl Hagler of the looming suspension from funding.

The suspension was originally set for May 24. But on April 1, the Medicaid Fraud Division extended the suspension date to June 17.

Two weeks ago, the New Jersey Department of Health's outside counsel moved for a court-appointed independent receiver, which the judge granted on Tuesday. The health department sought the order because the facilities would've been in dire financial straits without Medicaid funding.

The owners have consented to the receiver's appointment and have also found a likely buyer for the entities, according to court filings. But Wilen will oversee the nursing homes until the health department approves the sale.

The Rozenbergs and Hagler are prohibited from actions that could interfere with the receiver's duties, such as liquidating assets. They also agreed to a voluntary suspension of their lab service companies from state Medicaid funding.

Hammonton Center and Deptford Center are actively working with the state health department on matters of the receivership, according to a Centers Health Care spokesperson.

"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," Jeff Jacomowitz told Patch via email.

Centers Health Care manages about 40 facilities — all but two of which are in the Empire State. Last July, a New York State Supreme Court judge found credible evidence of "repeated and persistent fraud" and appointed a financial monitor and health monitor to oversee operations.