‘Red Flags’ Pile Up as N.J. Watchdog Blocks Nursing Home Buyer From Medicaid Participation
After New Jersey’s top financial inspector prevented the buyer from entering Medicaid, a shaky South Jersey nursing home deal is in jeopardy. The Office of the State Comptroller’s decision raises issues about openness, fraud, and the persistent ties between the would-be buyer and the owners who were removed from the program for gross mismanagement.
The comptroller found that Bridgeton SNF, the acquirer, failed to disclose who will own and control South Jersey Extended Care in Bridgeton. Investigators found rampant mismanagement, questionable financial practices, and unhealthy conditions at the nursing home, which was removed from Medicaid last year. The new purchasing group raises many of the same concerns, state officials say.
Bridgeton SNF received a formal notification from Acting State Comptroller Kevin Walsh that investigators found a web of trusts and LLCs that appeared to hide ownership. The investigation also found financial ties to Medicaid-banned individuals and discrepancies in buyers’ declarations.
Walsh said these issues were too important to ignore and that the state must reject any ownership transfer that hides who runs a facility entrusted with taxpayer dollars and vulnerable elders.
After claims that the former owners stole millions of Medicaid money, a court-appointed receiver took over the nursing home in April. The comptroller earlier revealed that monies for staffing, equipment, and resident care were diverted to outside businesses, exaggerated consulting fees, and connected groups.
That prior inquiry found unqualified or unlicensed staff in key administrative and clinical positions. One senior staff member, the director of social work, did not have a license, and the director of nursing were suspended for criminal charges.
Problems continued. Investigators discovered that a former nursing home employee who had been operating under a seller agreement claimed a 30% ownership position in the purchasing group while reviewing the new buyer’s papers. The man indicated he didn’t know the purchase price, couldn’t identify who did, and didn’t remember signing state forms.
A $2 million plus interest arrangement to a Nebraska foundation tied to a cousin of the nursing home’s previous owner was another surprise. Another $2.7 million wire payment was issued to the same organization to obtain property lease rights. The buyer’s counsel eventually stated that the nonprofit owned a lease option, but state regulators argued the buyers’ paperwork never justified the organization’s involvement.
Investigators also uncovered a trend of low-quality reviews at nursing homes in Texas, Florida, Pennsylvania, New York, Nebraska, and Georgia from individuals connected to the purchase. Many of these operators’ facilities were among the worst in their jurisdictions, prompting worries about whether the proposed ownership group could deliver safe and reliable care in New Jersey.
The comptroller’s office banned Medicaid participation due to unreported ties, financial irregularities, and a history of substandard treatment, putting residents and the public at danger. Since most South Jersey residents are Medicaid recipients, the selling of Extended Care is improbable without Medicaid.
Bridgeton SNF’s attorney said the group will appeal the judgment, alleging that halting the sale endangers residents’ treatment. State officials stressed that strong monitoring is needed to protect people and taxpayer monies, especially in a sector that receives billions in public expenditures.
New Jersey’s Long-Term Care Ombudsman commended the comptroller’s actions, calling the findings alarming but predictable. She said the state’s strong oversight of nursing home ownership prevents unqualified or unethical operators from taking over institutions with thousands of vulnerable people.
With over 40,000 New Jerseyans in nursing homes, state officials believe rigorous oversight is a critical concern. The watchdog’s decision shows how forcefully the state will enforce accountability.
Sources
New Jersey Office of the State Comptroller
New Jersey Long-Term Care Ombudsman
Statements from Bridgeton SNF legal counsel
