A lawsuit filed by New York State Attorney General Letitia James Wednesday accuses the Israeli-American operator of four nursing homes of misusing more than $83 million in government funds and neglecting residents, funneling money for their care into purchasing Israeli flagship airline El Al and other investments instead.
The suit filed in Manhattan court alleges that Centers Health Care owner Kenneth Rozenberg, who purchased a controlling stake in the struggling Israeli airline in 2020 for $107 million, and Centers co-owner Daryl Hagler of using Medicaid and Medicare funds to enrich themselves, their relatives and associates instead of for the care of the residents.
James claims understaffing at the homes contributed to the neglect, including residents who were malnourished or were left to sit for hours in their own urine and feces.
“Residents were left alone and on their own, often unaided and unsupervised, leading to dangerous falls and broken bones. Residents lived in squalor, surrounded by neglected food trays, vermin and the smell of human waste,” James said at a news conference held with residents’ relatives.
The company denied the allegations.
“Centers Health Care prides itself on its commitment to patient care. 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,” spokesperson Jeff Jacomowitz said in an emailed statement.
Aside from Rozenberg and Hagler, the suit also names a series of businesses owned by them, family members or business associates as defendants. El Al is not named in the suit.
According to the suit, Rozenberg and Hagler, who owns much of the land the nursing homes sit on, used various illegal and fraudulent schemes to convert the Medicare and Medicaid funds into profits they could use to personally enrich themselves.
In 2020, Hagler transferred $103 million from a bank account holding the ill-gotten money to Rozenberg to finance the El Al purchase.
“This $103 million loan came, at least in part, from Hagler’s fraudulently and illegally obtained profits from Medicaid-funded nursing homes,” the suit charges.
“Rozenberg’s investment in El-Al, which ultimately allowed him to become the controlling shareholder of the airline, was made possible by his and Hagler’s longstanding pattern of fraud and illegality.”
The purchase of El Al raised eyebrows in Israel as well when it took place at the height of the COVID-19 pandemic. Because Rozenberg was not an Israeli citizen at the time, a condition for the controlling owner, he set up his 27-year-old son Eli, who was studying at a religious seminary in Jerusalem, as a front-man for the purchase.
The Rozenbergs, Orthodox Jews from New York, had no known experience in the airline business. According to a report in Hebrew business daily Calcalist, the elder Rozenberg was instructed by his rabbi to buy the Israeli airline.
At the time, El Al’s lawyer Avigdor Klagsbald asked for clarifications from Eli Rozenberg’s Israeli attorney about whether he is actually representing his father and/or other investors in the acquisition process.
Eli Rozenberg’s representatives had insisted repeatedly that he would run the business and not his father or anyone else. However, several months after the purchase, the elder Rozenberg, who continues to live in New York’s Rockland County, took on Israeli citizenship and took over the airline, making Hagler, his next-door neighbor and longtime friend, co-vice chairman.
Klagsbald had also sought clarifications regarding a $1.65 million settlement that Centers Health Care paid to the US federal government and New York state in 2018 for fraudulent billing practices. Some also raised concerns at the time about press reports on Centers Health Care that painted a picture of a business that scoops up not-for-profit nursing homes and turns them into for-profit machines — laying off employees to cut costs, altering the ratio of workers to residents, and diluting the quality of patient care.
The four homes in the New York lawsuit filed Wednesday are Beth Abraham Center for Rehabilitation and Nursing in the Bronx, the Holliswood Center for Rehabilitation and Healthcare in Queens, the Martine Center for Rehabilitation and Nursing in Westchester County and the Buffalo Center for Rehabilitation and Nursing.
The suit claims residents’ meals were late, clothes were stolen and call bells were unanswered. One resident with severe bed sores developed sepsis, was hospitalized and died. Another resident did not have her colostomy bag attached. Others suffered from dehydration.
“My uncle was found sitting in a filthy room, unbathed and only wearing an adult diaper. This wasn’t my uncle. George was a veteran. He was an artist.” said Cynthia Vega, recalling her late Uncle George’s stay at Holliswood.
When the COVID-19 pandemic struck, the homes failed to control its spread. More than 400 residents across the four homes died in 2020, according to James.
James seeks, among other things, a return of the money and a ban on new admissions until staffing is increased at the homes.