Arkansas accuses former owner of nursing home chain of Medicaid and tax evasion

The former owner of a national nursing home chain that collapsed amid widespread allegations of negligence and financial mismanagement detailed in a previous NBC News investigation has been charged by the Arkansas attorney general eight counts of Medicaid fraud and two counts of tax evasion.

The man, Joseph Schwartz, who lives in Brooklyn, New York, is expected to surrender to Arkansas authorities in early January, his Arkansas attorney Bill James said.

All 10 counts are felonies.

Arkansas is working with a group of other state attorneys general who are also considering possible civil action against Schwartz, a person familiar with their discussions said.

At one point, Schwartz oversaw the care of more than 7,000 older Americans through his company, Skyline Healthcare, which at its peak owned or operated more than 100 facilities in 11 states. Along with a handful of staff, Schwartz managed them from a small office above a New Jersey pizzeria.

Joseph Schwartz speaking to attorneys during a June 2017 sworn deposition in a negligence case he settled. He told the attorneys, “All of our facilities are very, very, very, very compliant with all of the clients. They have all of the programs necessary for patient care.”have journalists

From 2017 to 2019, the chain collapsed and more than a dozen Skyline-operated nursing homes closed, throwing residents, vendors, employees and state regulators into chaos, according to court documents, state officials and former employees.

Arkansas Attorney General Leslie Rutledge alleges that by refusing, the company not only failed to pay its bills, but also committed fraud.

“These charges come after a 44-month investigation into Skyline’s wrongdoings, and I will not sit idly by while anyone swindles the state and federal government out of millions of dollars to line their pockets,” Rutledge said. “It is important for Arkansans to know if they suspect Medicaid fraud they should contact my office immediately.”

The charges allege Schwartz misrepresented Skyline’s monthly Medicaid cost reports to the state, causing the state to overpay Schwartz-controlled companies by more than $3 million, a person familiar with said. of the investigation.

The tax charges relate to allegations that Schwartz failed to pay public funds withheld from its employees’ paychecks and also failed to pay income taxes.

Schwartz received tens of millions of dollars in gross income from his Arkansas facilities in 2018 and 2019, but did not file an Arkansas tax return as required by law, Rutledge said.

Image: Joseph Schwartz listed a small office above this New Jersey pizzeria in Wood Ridge, NJ as where he ran more than 100 nursing homes nationwide.
Joseph Schwartz listed a small office above this pizzeria in Wood Ridge, NJ, as where he ran more than 100 nursing homes nationwide.BNC News

James said Schwartz will aggressively fight the charges and plans to plead not guilty. “I haven’t heard or seen anything to believe these allegations are true,” James said.

Schwartz went from owning no retirement homes to owning over 100 in a short time. In a September sworn deposition recently obtained by NBC News, Schwartz said that prior to owning them, he had no experience working with nursing homes other than selling them liability insurance. The deposition was taken by lawyers representing a plaintiff alleging wrongful death.

Maggots and gangrene

The company has left a trail of documented cases of extreme negligence. In Arkansas, maggots were found in a resident’s catheter, documents show when the state’s attorney general issued fines.

In 2017, Skyline took over Ashton Place, a retirement home in Memphis, Tennessee. Less than two months later, a resident whose leg had just been amputated was transported from the nursing home, where he was found lying in feces, to a hospital, where nurses discovered maggots and a gangrene in his leg, according to the police report obtained by NBC Affiliate WMC.

His death two days later sparked a state investigation, which found the man’s bandage had not been changed for two days. Staff members told investigators that problems arose in part when Skyline told nurses to ditch electronic medical records and return to paper record keeping.

A month after the death, the Centers for Medicare and Medicaid Services, the federal agency that oversees the nursing home industry, terminated Medicare certification for the facility and another Skyline property in Tennessee. It ended a third in the state in 2018.

During the investigation, the company’s medical director told inspectors: “I have no support, no direction.

In the September deposition, which related to a wrongful death lawsuit filed last year in Arkansas on behalf of a resident named Lois Rack, Schwartz insisted Skyline provided high-caliber long-term care. A lawyer for the plaintiffs, Blake Fromang, asked him, “Did you monitor the quality of care your facilities were providing? He replied, “I didn’t watch but I did. [staff] aware that this is what I want.”

Fromang also asked, “Do you have a system in place to ensure [residents] receiving quality care?” Schwartz replied, “I’m sure.” Fromang continued, “Do you remember what that was about?” Schwartz replied, “No.”

Former employees have alleged in an ongoing lawsuit that they discovered the company stopped paying health care premiums, leaving them to find they were uninsured, and they sued Skyline. Schwartz denied the allegations in court.

The Massachusetts attorney general cited Schwartz for failing to pay hundreds of employees their salaries.

Ashton Square
Ashton Place Rehabilitation and Care Center in Memphis, Tennessee.Google Maps

In another sworn deposition in the Arkansas wrongful death case, recently obtained by NBC News, Skyline’s chief financial officer told an attorney that he would not put his own mother in a Skyline nursing home.

In several lawsuits against Schwartz, including the Rack case, plaintiffs’ attorneys claimed that Schwartz and his wife, Rosie, withdrew money from nursing homes as the business collapsed, leaving little or no money to pay for pharmaceuticals, food and liability. Assurance. Schwartz’s attorneys have denied the allegations.

Schwartz controlled the nursing homes through a complex network of more than 100 shell companies, according to state business records and federal nursing home ownership records.

According to state officials, the ultimate corporate collapse led to the introduction and adoption of laws and regulations in at least three states, Ohio, Kansas and Arkansas, to requiring increased vetting of new care home owners before they obtain licenses.

Andover Mortuary

Despite Skyline’s well-documented implosion, Schwartz continues to own at least four retirement homes, according to federal property records. Schwartz also confirmed in the August sworn deposition that even after selling the facilities he owned in Arkansas, he had a profit-sharing agreement that allowed him to continue to make money from them. A month later, when asked about the profit-sharing deal, Schwartz said he was using the profits to pay off debts, not for personal gain.

Schwartz’s son, Louis Schwartz, a former Skyline vice president, also continues to own nursing homes, such as the Andover, New Jersey, facility formerly known as Andover Subacute II, which was renamed Woodland Behavioral and Nursing Center.

Nineteen months ago, 17 bodies were discovered crammed into a tiny morgue in Andover Subacute II at the start of the Covid pandemic, police said.

The facility is now part of a state attorney general’s investigation of “facilities with a high number of Covid-related deaths and below-average records for health inspections, staffing, and quality of facilities.” care”.

Andover Township police officer Kyle Wilson visited the facility days before residents began dying in large numbers.

Wilson wrote in a memo to his sheriff that there was no Covid testing at the facility and staff did not segregate patients suspected of having Covid-19. He wrote: “I am of the opinion that the acquisition of [personal protective equipment] alone will not solve the rate of spread in this facility. … [S]staff are undoubtedly contaminated throughout their shift. Although the staff have a tangible fear, a culture of safety is not present in this establishment. They have not been educated. They don’t even know what they don’t know.”

After nationwide coverage and the payment of a $221,000 fine for an ‘immediate peril’ violation, as well as a pause in accepting new residents, the owners of Andover Subacute have changed the name to Woodland Behavioral and began to accept new residents.

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