NEW YORK – New York Attorney General Letitia James today announced a major settlement with the owners, operators, management company, landlords, and various related parties of four nursing homes managed by Centers for Care, LLC (Centers) that will require them to pay $45 million and address years of resident mistreatment and neglect. The Office of the Attorney General’s (OAG) investigation revealed significant financial fraud and chronically insufficient staffing at four Centers nursing homes: 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.
Centers and its owners will pay a total of $45 million, including $35 million to directly fund improved resident care and staffing. Centers will also increase staffing and continue to make reforms as directed by an Independent Health Care Monitor (IHM). The Independent Financial Monitor (IFM) will also continue to oversee the nursing homes’ finances. The IHM and IFM were appointed by the court in July and August 2023, respectively, as a result of OAG’s lawsuit and have already improved resident care at the nursing homes. Centers and its owners are also prohibited from closing or selling the facilities for at least three years. This is the third case in which OAG has secured major reforms at nursing homes in New York.
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“Residents at these Centers nursing homes endured years of tragic and devastating mistreatment and neglect, while the owners made millions of dollars in profit,” said Attorney General James. “Centers’ owners operated the nursing homes with insufficient staffing so that they could pocket tens of millions of taxpayer dollars meant for resident care. Residents suffered tragic harm and their families were often left in the dark or in despair about their loved ones. Now, Centers and its owners will pay for the harm they caused and will continue to make major reforms at their facilities to ensure residents receive the care they deserve. My office will continue our work to make sure that nursing homes are safe and supportive environments for seniors to live out their years with dignity.”
Attorney General James filed a lawsuit against Centers in June 2023 for significant financial fraud and repeated illegality including resident neglect, insufficient staffing, and failing to limit admissions to residents to whom they could provide adequate care. Shortly after filing the lawsuit, a court granted OAG’s motion for a preliminary injunction to immediately address the ongoing issues at the facilities, including installing both an Independent Health Care Monitor and an Independent Financial Monitor to oversee facility operations and finances. Since those monitors began this oversight work in July 2023, the Independent Health Care Monitor has made recommendations that the nursing homes and Centers have implemented, notably increasing the number of staff and improving resident care at the nursing homes.
Resident Mistreatment and Neglect
The OAG’s lawsuit alleged that Centers’ owners and operators violated laws designed to protect residents. This includes failing to deliver adequate care to their residents, operating the nursing homes with insufficient staffing to provide required care, continuing admissions of residents to the nursing homes even though they operated with insufficient staff to provide required care to existing residents, and committing and tolerating countless acts of neglect against residents of the nursing homes. The lawsuit alleged that overburdened staff members were assigned to more residents than they could care for and often failed to help residents with the basic activities of daily living, such as using the bathroom, eating, and maintaining personal hygiene. Call bells regularly went 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, including hearing aids, dentures, and clothing, were often lost or stolen. Residents, visiting family members, and staff reported unsanitary conditions, including neglected food trays, vermin, flies, and persistent smells of human waste. Examples of alleged neglect included:
- When no one answered a resident’s call bell, she would often fall trying to go to the bathroom. After one fall, staff told the resident’s daughter she was fine, but three days later, the resident was sent to the hospital, and she required emergency 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.
- Another resident’s son was on his way to visit his father when he encountered him wandering down the street disheveled and unsupervised. The man 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.
- After one resident fell from her bed, she was returned to bed without an exam and her family was not notified. When her daughter could not get in touch with her, she attempted to visit but was turned away. Her daughter then called the police and watched as her unconscious mother was wheeled out by paramedics. At the hospital, her mother was diagnosed with a brain bleed caused by the fall.
Financial Fraud
The lawsuit alleged that the owners of Centers Health Care, Kenneth Rozenberg and Daryl Hagler, and related parties engaged in multiple fraudulent schemes to divert tens of millions of taxpayer dollars 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 inflated salaries paid for work that was not performed. Meanwhile, the owners disregarded and violated regulations that required them to operate the homes with sufficient staff to provide all necessary and required care to current residents.
In one alleged scheme, Hagler, as landlord, charged the nursing homes, which were owned by Rozenberg, inflated rents that exceeded necessary mortgage expenses so that Rozenberg and Hagler could take the excess funds for themselves. For example, Buffalo Center reported to the New York State Department of Health (DOH) that the facility would have an annual rent of $600,000. A few months later, when Rozenberg and Hagler purchased Buffalo Center and its real estate, they signed a new lease obligating the facility to pay an annual rent of $2 million.
Penalties and Required Reforms
Monetary Penalties
Centers, Kenneth Rozenberg, and Daryl Hagler will pay $45 million, including $8.75 million in restitution to the Medicaid and Medicare programs and $35 million to a Resident Care Fund to be used to support recommended reforms to the facilities. If necessary to accomplish the IHM’s recommendations, Centers and the owners will contribute another $1 million to the fund.
Independent Health Care Monitor (IHM)
Under the settlement, the IHM installed in July 2023 will continue overseeing the nursing homes through at least July 31, 2026. For two years after that, the nursing homes are required to maintain the staffing levels recommended by the IHM, including increased Registered Nurse positions. In the meantime, the IHM will monitor the nursing homes and make recommendations to increase quality of care, staffing levels, supervision, training, and compensation to prevent poor working conditions. The nursing homes and their owners will be required to implement the IHM’s recommendations. The IHM will also make specific recommendations to further increase direct care and supervisory staff and compensation as needed to ensure residents are receiving proper care and that the nursing homes are not regularly using agency or temporary staff.
Independent Financial Monitor (IFM)
The IFM, also installed in July 2023, will continue to oversee the nursing homes’ financial transactions, including with related parties, to ensure compliance with OAG’s settlement and the law, and to prevent future fraud. The IFM will also oversee the Resident Care Fund, and only approve disbursements from it that are consistent with the IHM’s recommendations. The IFM will continue this work through at least July 31, 2026. If there is any remaining balance in the Resident Care Fund after this point, the IFM will oversee any transfers from it, and approve only those consistent with the IHM’s recommendations.
Compliance Officers
Centers will hire a Chief Compliance Officer and a Facility Compliance Officer at each of the four nursing homes to ensure the facilities fully comply with all federal and state laws to prevent future resident mistreatment, neglect, and financial fraud. The Facility Compliance Officers will work directly with the Chief Compliance Officer, who will report to the owners and operators of the nursing homes.
Cooperation
Centers has agreed to fully cooperate with the IHM and IFM, and fully and promptly cooperate with any investigation or related action by OAG.
Attorney General James has been investigating nursing homes throughout New York based on concerns of patient neglect and other conduct that may have jeopardized the health and safety of residents and employees, both before, during, and after 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 and a lack of compliance with infection control protocols.
In March 2024, Attorney General James secured $8.6 million and significant reforms to the Fulton Commons nursing home on Long Island. In April 2023, Attorney General James co-led a coalition of attorneys general in calling for increased transparency of nursing home ownership. In February and December 2023, Attorney General James and United States Attorney for the Northern District of New York Carla Freedman secured more than $7.8 million from the Saratoga Center for Rehabilitation and Skilled Nursing Care, a former nursing home in Ballston Spa, and its owners, unlicensed operators, and landlord for years of fraud and resident neglect. In December 2022, Attorney General James sued Cold Spring Hills Center for Nursing and Rehabilitation 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.
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.
The settlement discussions were led by OAG and MFCU Executive staff, with assistance from the litigation team of Deputy Chief of Civil Enforcement Konrad Payne and Special Assistant Attorney General Emily Auletta.
The settlement was also brought by the work conducted by a multi-disciplinary investigative team from the Medicaid Fraud Control Unit, led by Regional Director Todd Pettigrew and including Deputy Chief of Civil Enforcement Konrad Payne; Special Assistant Attorney General Emily Auletta, Chief Auditor Dejan Budimir, Special Assistant Attorneys General Edward Ferrity and Edward Bradley; Deputy Chief Auditor Matt Tandle, Regional Chief Auditor Christine Rhody, Principal Auditor-Investigators Kizzy-Ann Waldropt, Lora Pomponio, Meghan Collins, Melissa Stoebling, and John Annunziata; Senior Auditor-Investigators Siobhan O’Leary, Christopher Giacoia, Colin Ware, Sandra Alvarez, Gina Poletto, David Lee; Auditor-Investigators Michael Di Mascio, Jack Lottermoser, and Kate Levins; Supervising Detective Jeff Pitts, Acting Supervising Detective Timothy Bates, Detectives Peter Olsen, David Ras, Scott Petucci, Katie O’Neill, Christopher Canfield, Kerie Elias, Aleksandr Lipkin, and Brendan Ryan; Medical Analysts/Registered Nurses Stephanie Keyser, Wynsum Thompson, Jennifer Cronkhite, and Margaret Walsh; Legal Support Analysts Alexandra Schmit, Lillybeth Ventura, and Natalie Tamblyn and Legal Support Analyst Supervisor Alexandra Schmit; Data Analytics team members Brandon Andrews, Cally Connelly and Elyse Roche, led by Lead Data Scientist Si Lok Chao: and MFCU Electronic Investigative Support Group team member Carlos Martellaro.
The investigative team was supervised by Chief of Civil Enforcement Alee N. Scott, Chief of Criminal Investigations Thomas O’Hanlon, Deputy Chief, Commanding Officer William Falk, and New York City Regional Director Twan Bounds. MFCU is led by Director Amy Held and Assistant Deputy Attorney General Paul J. Mahoney. MFCU is part of the division for Criminal Justice, which is led by Chief Deputy Attorney General José Maldonado and overseen by First Deputy Attorney General Jennifer Levy.
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., the New York State Office for the Aging and Acting Director Greg Olsen, the New York State Office of the Medicaid Inspector General and Acting Medicaid Inspector General Frank T. Walsh, and the United States Department of Health and Human Services, Office of the Inspector General, Assistant Special Agent-in-Charge Naomi Gruchacz.
New York MFCU’s total funding for federal fiscal year (FY) 2025 is $70,502,916. Of that total, 75 percent, or $52,877,188, is awarded under a grant from the U.S. Department of Health and Human Services. The remaining 25 percent, totaling $17,625,728 for FY 2025, 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.
