The calls to 911 were frequent.
Residents and their family members and even staff of the Deptford Center for Rehabilitation and Healthcare and Hammonton Center for Rehabilitation and Healthcare — two troubled nursing homes in South Jersey that share ownership — would reach out for help.
“Call after call documented pleas of assistance from residents experiencing severe neglect,” said the New Jersey Office of the State Comptroller.
Investigators for the state agency said one resident was left sitting in their own urine and feces for hours. Call bells were disregarded. Pleas for assistance from nurses and staff were ignored. Two residents were allegedly sexually assaulted.
But while all this was happening, the comptroller said the operators of the two long-term care facilities were pocketing millions of dollars.
In a new report issued on Wednesday, the comptroller said its Medicaid Fraud Divisionfound what the watchdog agency called “a troubling pattern of mismanagement, self-dealing, and profiteering” by New York owners Daryl Hagler and his next-door neighbor and friend, Kenneth Rozenberg who own 46 nursing homes in four states.
“Through deceptive financial arrangements with related-party interests they owned, Hagler and Rozenberg inflated rent payments from the nursing homes to their property companies, intentionally understaffed both facilities, and diverted to themselves tens of millions of dollars in Medicaid funding intended to be used to care for vulnerable residents,” the comptroller said in a scathing 53-page report on the operations of two nursing homes. “They furthered their scheme by hiding these actions through false state and federal filings that failed to disclose the extent and profitability of their scams.”
The report was chilling in its description of the sometimes-deadly shortcomings of the facilities.
One Deptford resident who should have been on a pureed diet was served solid food anyway and died of asphyxiation, the report stated. Another resident, an amputee using a wheelchair, was discharged to a motel that immediately returned him because it couldn’t accommodate a wheelchair. The next day, he was discharged again and deposited in front of a social services office before it opened, investigators said.
According to the comptroller, more than 3,400 emergency calls were placed to Hammonton and Deptford police about the nursing homes from 2019 to 2024.
“Vulnerable people suffered unnecessarily because the owners decided to put the money in their pockets instead of paying for the staff to care for them,” said Acting State Comptroller Kevin Walsh.
His office will seek to recover $123.9 million in Medicaid funding in addition to penalties.
“The Medicaid program, and taxpayers, paid for one thing—a quality nursing home that provides quality care and allows residents to live in dignity—but they got something else entirely—a nursing home where residents were forced to survive deplorable conditions,” the comptroller’s report said. “The state and federal government did not get what they paid for; taxpayers are entitled to get the money back.”
Attorneys for the nursing homes in a statement said that Hammonton Center and Deptford Center both maintain “strong, above-average quality measure ratings” by the Centers for Medicare and Medicaid Services and play a vital role in serving their local communities.
“The comptroller’s report overlooks this reality and significantly misstates both the facts and the law,” said Lee Vartan and Matthew Boxer, the lawyers who represent the facilities. “We look forward to addressing the report in the appropriate forum.”
An investigation earlier this year by NJ Advance Media and its sister newsrooms across the country found that the use of side businesses with related or even overlapping owners has become widespread. While legal, advocates say it often blurs where the money went, although in some cases, critics say operators have siphoned funds intended for resident care to their personal and business interests.
“They use management entities to get money out of the facility and into the owners’ pockets,” said Mark Davis an elder care attorney in New Jersey who noted that nursing homes often pay inflated costs to those related companies.
The Deptford Center and the Hammonton Center came under scrutiny by the comptroller last year in the wake of charges by New York Attorney General Letitia James. She accused the owners of siphoning $83 million in Medicare and Medicaid funding from nursing homes to enrich themselves, their relatives and associates.
The New Jersey comptroller, who investigates fraud within the Medicaid program, took action in June that led to the facilities to come under the control of a state-appointed receiver.
The comptroller said Hagler and Rozenberg took money “off the nursing homes’ books and into their bank accounts” by using a network of interrelated companies they owned and controlled. Among those companies were a company in the Bronx the owned called Centers for Care.
In addition, two property companies that own the buildings and real estate for the Hammonton and Deptford nursing homes were also owned by Rozenberg and M&J Klein Family Enterprises, the comptroller found.
Other side businesses were a consulting company owned by Hagler and Rozenberg and Rozenberg’s wife and children, the report noted. There was also an information technology company owned by Hagler and his son, along with a staffing company owned by Hagler and Rozenberg and other family members, and a building maintenance and construction company owned in part by Hagler.
The comptroller said it issued subpoenas for testimony to Hagler and Rozenberg, but they declined to be interviewed, citing their right against self-incrimination under the Fifth Amendment.
Acting State Comptroller Kevin Walsh at Wednesday’s live-streamed press briefing on his office’s investigation into two South Jersey nursing homes.NJ Advance Media
According to the comptroller’s report, Hagler and Rozenberg moved $92 million through these companies over a five-and-a-half-year period. That represented more than two-thirds of the $134.8 million they received in Medicaid funding from New Jersey.
State and federal law limit how much related parties can be paid because of the risk of self-dealing and require the disclosure of costs and profits, the comptroller pointed out, noting that Hagler and Rozenberg were required by law to report how much they paid to companies they and their family members own.
“But they intentionally hid these transactions, reporting just $882,666 of the $92 million – less than 1% to the state and federal governments,” the report emphasized. “This was not a simple error. Hagler himself signed the false cost reports. By hiding what they paid themselves through their related entities, Hagler and Rozenberg hid the outrageous deals they made with themselves from the government.”
Mortgages and rent
The big money came from the mortgages and rent payments, which were made possible by the legal separation of the nursing home operations from the nursing home properties, explained the comptroller, who said Hagler and Rozenberg bundled the purchase of both the operating companies and the properties into mortgages worth $63.2 million. The property companies then increased the rent charged to the operating companies to cover the mortgage payments.
“That allowed Hagler and Rozenberg to purchase and own the nursing homes for nearly nothing,” the report said. To avoid showing a profit, it charged that the two men falsely labeled the mortgage payments as all rent, concealing the fact that $7.8 million paid toward the rent during the five plus years reviewed was for what should have been Hagler’s and Rozenberg’s private business loans.
“Hagler and Rozenberg managed Hammonton and Deptford to reap grossly excessive profits for themselves while grievously harming the residents who lived in the facilities. They built a business that systematically redirected public funds intended for resident care to their own and their family members’ bank accounts,” said the comptroller.
In fact, the comptroller said the nursing homes failed to pay for adequate staff to care for residents. From Feb. 1, 2021, to May 31, 2024, investigators found that Hammonton and Deptford failed to meet the minimum required staff-to-resident ratios for almost all of the days that were reviewed. Hammonton was understaffed by an average of almost 52% daily and Deptford was understaffed by an average of 54% daily.
The staffing issues were further exacerbated both facilities employing Licensed Practical Nurses in roles that should have been filled by Registered Nurses.
Laurie Facciarossa Brewer, New Jersey’s Long-Term Care Ombudsman, called the comptroller’s report a bombshell in its detailing of “financial trickery and substandard care” at Deptford and Hammonton.
“It sickens me that people who are responsible for the care of so many people are so callous about their well-being,” she said. “I suspect that the operational and financial issues uncovered in this report are widespread throughout the long-term care system.”
Facciarossa Brewer said New Jersey nursing homes received more than $4 billion in taxpayers’ money through Medicaid and Medicare in 2023 alone.
“The public deserves to know where every dollar went and the harsh truth is that we don’t. What we do know is that many nursing homes routinely divert money away from resident care and into the pockets of the owners or the owners’ families,” she said. “We need real financial transparency for nursing homes in New Jersey.”
Hagler and Rozenberg own or are involved with nursing homes in New Jersey, New York, Kansas, and Missouri. Their largest presence is in New York, where they are involved with at least 31 nursing homes, according to the comptroller.