NJ Nursing Home Owners Owe $124M After Medicaid Fraud Investigation Finds Neglect

A state investigation has uncovered a multimillion-dollar scheme at two South Jersey nursing facilities, where owners allegedly siphoned nearly $92 million in taxpayer funds through shell companies while patients faced dangerous understaffing and horrific abuse.

Acting State Comptroller Kevin Walsh announced last week that Daryl Hagler and Kenneth Rozenberg must repay $123.9 million for systematically draining resources from Hammonton Center for Rehabilitation and Healthcare and Deptford Center for Rehabilitation and Healthcare over a five-year period.

The Medicaid Fraud Division’s probe revealed that from 2019 through mid-2024, approximately 70% of the $134.8 million these facilities collected from the state health program flowed to companies controlled by the two men and their associates. Rozenberg and Klein Family Enterprises personally received $27.8 million through these arrangements.

Meanwhile, staffing levels plummeted to dangerous lows. Investigators found adequate staffing on just two out of 146 days examined. The Centers for Medicare and Medicaid Services placed both locations in the “special focus facilities” category multiple times, “a category reserved for the ‘worst of the worst’ nursing homes,” the press release said.

Health records document patients left crying in pain without help. At Hammonton, two people were sexually assaulted, according to the press release. A Deptford patient choked to death after staff served solid food instead of their required pureed diet. Police responded to more than 3,400 emergency calls at the two locations between 2019 and 2024.

One wheelchair user was discharged to a motel unable to accommodate disabilities, then dropped at a government office before opening hours the following day.

“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 Walsh.

After bundling facilities into a single mortgage in 2014, the operators repeatedly refinanced and doubled rental charges, pushing Hammonton’s annual rent from $1.1 million to $2.2 million and Deptford’s to $2.3 million. These inflated costs added $31.4 million in charges. Cost reports filed with state and federal agencies disclosed only $882,666 in related-party payments when actual transfers totaled $92 million. 

Both operators declined interviews after receiving subpoenas, citing Fifth Amendment protections. The pair faces separate allegations in New York, where the attorney general claims they defrauded that state’s Medicaid system of $83 million. Their portfolio spans at least 31 facilities in New York, plus operations in New Jersey, Kansas, and Missouri.

Walsh called on legislators to approve pending transparency requirements for nursing home financial disclosures involving affiliated businesses.
The full report can be read here.