“This Can’t Happen Again”: NJ Nursing Home Report Reveals Abuse, Fraud, and Neglect

The nursing home system is, unfortunately, rife with abuse, neglect, and unethical actors looking to profit off of an incredibly vulnerable population. A recent report identified a shocking example of what can go wrong when bad actors are in charge. The findings indicate how important it is for families to take a proactive approach toward protecting their loved ones in nursing home facilities. When something does go wrong, it’s critical that families take steps to hold these facilities accountable so that they don’t continue to abuse and neglect their residents.

The South Jersey Extended Care case exposes systemic neglect

Kevin D. Walsh, the acting state Comptroller, stated that his Medicaid fraud team began investigating the for-profit nursing home South Jersey Extended Care (SJEC) because it had the worst ratings in New Jersey. Out of 350 nursing homes in the state, it had earned more one-star reviews than any of its competitors. The investigation lasted from April 2018 through March 2023 and uncovered shocking revelations about the facility’s conditions.

“Our report lays bare in great detail how unscrupulous nursing home operators are able to exploit weaknesses in the system and fleece the Medicaid program,” said Walsh. “We owe it to nursing home residents and taxpayers to take this moment seriously, to learn from this investigation, and to ensure this can’t happen again.”

The leadership at the home should have raised red flags as well – even before the investigation. Mordechay Weisz, who goes by Mark, was the listed owner of the facility, but apparently, he served only as a “straw owner,” with two other men, Michael Konig and Steven Krausman, serving as the true operators. Konig and Krausman were the ones in charge of operations, finances, and administration at the facility, but both have histories of operating facilities that failed to serve residents. In fact, Massachusetts and Connecticut banned Konig from owning facilities in those states because of serious issues, which included abuse. Not only did the investigation find that the owners were continuing mistreatment, but it also identified a fraud scheme that allowed those involved to bring in millions as they failed to properly care for the residents.

The fraud scheme

While SJEC received $35.6 million from Medicaid, the report found that $38.9 million was funneled to companies owned by Konig and Krausman. These transactions involved inflated charges for goods and services, which allowed them to earn significant profits. Both Konig and Krausman allegedly served as vendors and buyers for the nursing home, charging “exorbitant prices” while offering substandard service and care.

The scheme relied on the use of Weisz as the false owner to avoid reporting “related-party” transactions. This fraudulent conduct allowed them to evade rules that require reporting of related-party transactions and to cap their costs at fair market value.

Profits rolled in as residents suffered

While the owners collected millions, the residents they were meant to care for suffered. The report found a number of unacceptable conditions, including:

• Rooms that smelled of urine
• Toilets without running water
• Stained walls
• Dirty refrigerators with hair and debris

Abuse of residents was also reported, including a dementia patient found confined to a room with a plastic trash bag used to secure the door. Injuries from neglect, like a fall from a wheelchair, also highlighted the harm to patients at the facility.

Another issue was understaffing. Every day of the 75 that the Office of the State Comptroller (OSC) was investigating, there were too few people to care for the residents. Important positions like the Director of Nursing and Director of Social Work were filled by employees without the appropriate credentials. The Director of Nursing was even working on a suspended license. She had been arrested and charged with forging prescriptions. Poor record-keeping, including those related to patient care and medication, also placed residents at risk.

Misallocation of resources exposes severe inadequacies at NJ nursing homes

Konig and Krausman were in control of multiple homes in the state. Each one exhibited poor ratings. Together, the facilities paid $253 million—or 76%—of the Medicaid funds for patient care to these two owners’ businesses. Just $3.6 million went to medical supplies. Six million dollars in “consulting/management” fees went to another of Konig’s businesses, while $800,000 went to a religious charity that he controlled rather than toward patient care.

Legal actions and consequences

Following the OSC findings, Konig, Krausman, Weisz, SJEC, and some related facilities have been suspended from receiving NJ Medicaid funds. The investigation is continuing, and it’s possible that OSC will pursue recovery of overpayments, administrative sanctions, and civil penalties related to the findings. State agencies are now involved in protecting residents as these changes take effect.

What families can do

Nursing home abuse is rampant because it often goes unnoticed. Vulnerable residents may not even be able to express what is happening to them in these facilities. Families can help to protect their loved ones by looking for indications of abuse. Some signs include:

• Poor hygiene
• Unexplained injuries
• Understaffing

Hiring an attorney if you suspect abuse or neglect can help you uncover more information and fight to protect your loved one.

Contact Ferrara & Gable to speak to a lawyer today

Nursing home abuse is cruel and unacceptable. The law can help protect against this unconscionable treatment, which is, unfortunately, more common than anyone would expect. At Ferrara & Gable, our compassionate attorneys are ready to fight back when residents in these facilities are harmed or neglected by those who are meant to care for them. Call us today or fill out our contact form to schedule a free consultation with an experienced New Jersey nursing home abuse lawyer.