NJ nursing home owners accused of draining at least $92M as residents suffered in dangerous conditions

🏥 NJ nursing-home owners accused of siphoning tens of millions in Medicaid funds while leaving residents in squalid, dangerous conditions.
💰 State comptroller says a duo funneled $92M through shell companies and violated staffing laws.
⚖️ Investigators urge immediate legislative reform as scheme is often NJ 'business model.'

TRENTON — Two business partners and neighbors who own two nursing homes in New Jersey have been accused of pocketing tens of millions of dollars in Medicaid funds while leaving their facilities dangerously understaffed.

As operators of centers in Deptford and Hammonton, Daryl Hagler and Kenneth Rozenberg have been accused of an extensive, years-long scheme and should repay the state $124 million, according to recommendations in a new report issued by the Office of the State Comptroller.

“New Jersey nursing homes are straining under the weight of fraud, waste and abuse,” Acting State Comptroller Kevin Walsh said during a Wednesday remote news conference.

“This problem is systemic, uncontrolled and shows no signs of getting better,” he continued, adding their findings “cry out” for immediate action by state government, including the legislature.

Each center has 240 beds for long term care, according to state records.

The duo initially bought three nursing homes in New Jersey, Walsh said. Their third property in Mount Laurel was shut down in 2017, after losing its Medicaid certification due to poor care.

Report: Real estate schemes and inflated rents fuel multimillion-dollar fraud

From 2019 through mid-2024, the Deptford and Hammonton nursing homes received $134.8 million in Medicaid funds — of which Hagler and Rozenberg are accused of funneling $92 million to their related businesses.

Hagler owns the operations’ companies, while Rozenberg and Klein Family Enterprises (KFE) own the property companies.

About $27.8 million went into Rozenberg and KFE’s bank accounts, the comptroller report said.

They improperly used another $7.8 million of Medicaid funds to buy the nursing home businesses, it added.

According to the investigation by the office’s Medicaid Fraud Division, the duo used complex and improper real estate deals, excessive loans, inflated rents, and undisclosed fees paid to nine “related entities”—companies they or relatives controlled.

Hagler, Rozenberg, relatives, KFE, and related entities owe New Jersey $123.9 million plus penalties, with $87 million due to “pervasive and egregious violations” of staffing requirements, the report found.

“They got rich off the backs of people who were unable to care for themselves, who were the sick, elderly and disabled,” Walsh said.

Neglect, assaults and dangerous understaffing in Deptford and Hammonton

Records show Hammonton and Deptford police received more than 3,400 emergency calls concerning the nursing homes between 2019 and 2024.

During that time span, both facilities were chronically understaffed. Of those who did work, many were unlicensed and unqualified for the jobs they held.

Deptford and Hammonton failed to meet minimum staffing requirements in all but two of the 146 days OSC reviewed.

“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,” Walsh said.

During the review period, the Centers for Medicare and Medicaid Services designated both as “special focus facilities”—a category which signifies the “worst of the worst," Walsh said.

State and federal health reports listed numerous incidents of residents being left to sit in their own bodily waste, or crying out in pain for hours without assistance.

Two residents in Hammonton were sexually assaulted.

A Deptford resident died from choking after being fed solid food instead of a required pureed diet.

Another Deptford resident, an amputee in a wheelchair, was discharged to a motel that couldn’t accommodate a wheelchair, and he was returned. The next day the same patient was dropped in front of a social services office before it opened, the report said.

NJ probe mirrors earlier NY case tied to same owners

The state has been battling with attorneys for Rozenberg and Hagler and their New Jersey nursing homes since at least last year.

In 2023, the New York Office of the Attorney General filed a lawsuit that accused Hagler, Rozenberg, and their related entities of defrauding the New York Medicaid program of about $83 million.

A year ago, their company reached a $45 million settlement with New York, as Politico reported.

In 2024, a Superior Court judge appointed an independent receiver to run both nursing homes in Deptford and Hammonton.

In June, the Appellate Division of the state Superior Court upheld OSC’s authority, to temporarily suspend Medicaid providers based on "good cause," including suspected criminal or civil violations or evidence of lack of responsibility.

Hagler and Rozenberg were both subpoenaed to testify for the comptroller investigation, but declined, citing their Fifth Amendment right against self-incrimination.

They own or are involved with nursing homes in New Jersey, at least 31 properties in New York, Kansas, and Missouri.

These men and others “have built sophisticated systems that extract wealth from taxpayers through related party schemes that enrich themselves while hollowing out care," Walsh said on Wednesday.

The full OSC report on the Deptford and Hammonton facilities can be found online.

Comptroller urges NJ lawmakers to enforce transparency and accountability

“Excessive and unnecessary debt led to exorbitant and wasteful ‘rent’ payments paid primarily with Medicaid funds, diverting millions of dollars that could have been used to hire additional staff, pay existing staff higher wages, upgrade the facilities or offer additional therapies or activities to residents,” OSC’s report said.

The comptroller has made six recommendations, including urging the Legislature to pass Senate Bill 1948, which would require nursing homes to submit audited financial statements for related entities.

Walsh pointed out that almost exactly a year ago, his office released a similar report about different nursing home operators pocketing millions from Medicaid funds, in Bridgeton and Maple Shade.

“We made recommendations to the Legislature and state agencies in that report — the legislature did pretty much nothing. There was a single hearing on a bill in the Senate and no laws were passed.”

Read More: NJ nursing home operators accused by state of millions in fraud

During the same news conference, Long Term Care Ombudsman Laurie Brewer slammed the findings as “sickening" and urged the state to finally act on holding operators accountable.

New Jersey has between 350 and 360 Medicaid-funded long term care facilities, she said.

“Every couple of years, the state legislature decides to shovel more money into this system without the transparency that we need,” Brewer said.

She said that proposed bill (S-1948) which requires audited financial statements for all related parties — remained stalled “for some reason” in the state Senate.

As part of the investigation, the comptroller’s office examined thousands of documents, including financial and real estate records and discovered that Hagler and Rozenberg filed state and federal cost reports.

“It takes a lot of work, it’s difficult - the regulatory framework that exists is not up to the task of actually keeping up with the many schemes that these millionaires and billionaires have created,” Brewer said, adding that the state needs to be united in holding operators accountable.

Among reactions to the comptroller’s report, the New Jersey head of AARP echoed calls for the Legislature to pass the transparency measure.

“New Jersey spends more than $2 billion a year on nursing homes, yet too many of these facilities continue to understaff, underperform, and endanger residents — all while moving public dollars into private pockets through opaque, interconnected companies,” AARP New Jersey State Director Chris Widelo said in a statement.

“Without the ability to follow the money, New Jersey cannot protect residents or hold operators accountable.”

Comptroller calls now-tabled Senate watchdog measure “ill-conceived”

After detailing the nursing home fraud report, Walsh was asked his reaction to Senator Nick Scutari’s decision to ditch a highly criticized state watchdog measure that recently cleared a Senate committee after a highly controversial hearing.

It would have largely gutted the Office of the Comptroller, in favor of giving more investigative powers to the existing state Commission of Investigation, which reports in part to the legislature.

“It was great news to hear that the Senator was not going to move forward with what I think was an ill-conceived bill,” Walsh said.

Walsh said he believed the measure “missed what residents of NJ want to continue - which is an effective watchdog, which the Office of the state Comptroller has been and folks want that to continue.”

The Dec. 1 hearing has also sparked heavy criticism over the behavior of Senator James Beach, a Democrat from Camden County and chairman of the Senate State Government, Wagering, Tourism and Historic Preservation Committee.

In running the session, he enforced strict time limits on some speakers while allowing others to talk for up to 40 minutes, Gothamist reported.

When U.S. Senator Andy Kim complained about the hours-long wait to speak his allotted three-minutes before getting back to obligations in Washington D.C., Beach told him he was not “special.”

“I will say I thought it was incredibly inappropriate — I’ve never been treated like that in the Statehouse, in 26 years of being a civil rights lawyer and an advocate,” Walsh said. “So I think it’s appropriate for folks to pushback on Senator Beach for what was really, really inappropriate conduct.”

In a letter shared with NJ Globe, state Attorney General Matt Platkin said Beach had acted in conflict with first-amendment rights at the federal and state levels.

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