The owners of two New Jersey nursing homes owe the government $124 million after diverting tens of millions of dollars in Medicaid funding to themselves and their associates while intentionally understaffing the facilities, according to a report that the Office of the State Comptroller released Wednesday.
Conditions were grim at the nursing homes owned by Daryl Hagler and Kenneth Rozenberg, friends who have collaborated on business deals for more than two decades, according to the report.
“People who were in their care, many of them in their final days of life, suffered unnecessarily because Hagler and Rozenberg decided to put money in their pockets instead of paying for staff to care for the residents,” Comptroller Kevin Walsh said at a news conference on Wednesday.
“All indications are that what we have identified in this and in earlier reports is just the tip of the iceberg in the nursing home industry,” he added.
Mr. Hagler and Mr. Rozenberg own or are involved with 46 nursing homes in New Jersey, Kansas, Missouri and New York; most are in New York.
Investigators found that both New Jersey nursing homes had less than half the number of direct care staff members required by law in random samples of days between 2021 and 2024.
As a result, residents of the homes, Hammonton Center for Rehabilitation and Healthcare and Deptford Center for Rehabilitation and Healthcare in South Jersey, “were left sitting in their own excrement or crying out in severe pain for hours without assistance,” according to a news release from Mr. Walsh’s office.
Employees also failed to administer medications on time and to prevent sexual assaults of residents, the report said. In one instance, a resident who was limited to a diet of puréed food was wrongly given solid food. The patient apparently asphyxiated and died, the report said, and the staff did not notice for many hours.
Between 2019 and mid-2024, the two nursing homes took in $134.8 million in Medicaid funding, according to the report. In that period, Mr. Hagler and Mr. Rozenberg are accused of moving more than two-thirds of that amount — over $92 million — into a network of companies they and their families owned and controlled. They are also accused of concealing those transactions, which are required to be disclosed by law.
Neither Mr. Hagler nor Mr. Rozenberg responded to requests for comment.
The comptroller’s report repeated recommendations it made in 2024, including that state policies should be adjusted to address the risks of corporate structures in for-profit nursing homes.
“There has been no meaningful progress implementing any of those recommendations,” Wednesday’s report said, adding that the report showed that the changes the comptroller’s office recommended “are desperately needed.”
The report made additional recommendations, including that state lawmakers pass legislation to expand the financial disclosures required of nursing home owners.
The Office of the Comptroller said it would seek $123.9 million from Mr. Hagler, Mr. Rozenberg, their family members and related businesses. The report also said the comptroller planned to seek penalties for failing to have registered nurses at the facilities, in violation of state law, and for filing false claims.
Mr. Walsh declined to comment on whether the matter had been referred to prosecutors for criminal charges.
The comptroller’s office began its investigation after the New York attorney general filed a lawsuit in 2023 alleging that Mr. Rozenberg and Mr. Hagler had defrauded New York’s Medicaid program of about $83 million in four nursing homes they owned in New York.
The suit was settled in 2024, with Mr. Rozenberg, Mr. Hagler and a nursing home chain they owned, Centers Health Care, agreeing to pay a $45 million settlement. A court also appointed an independent monitor to make recommendations to improve care at the nursing homes.
The New York lawsuit also alleged that Mr. Hagler used a bank account that had received fraudulently obtained nursing home profits to lend Mr. Rozenberg $103 million to help a company controlled by his son purchase the Israeli national airline El Al. His son, Eli Rozenberg, took over the airline in 2021, and Kenneth Rozenberg and Mr. Hagler soon joined the board.
Both facilities named in the report remain open. In 2024, the Superior Court of New Jersey ordered the appointment of a receiver to take control of the homes’ operations and finances.
Camille Baker is a Times reporter covering New York City and its surrounding areas.
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