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Nursing Home Stole $22.6M In Government Funds, NY AG Says

Millions of dollars in public funding that should’ve gone to caring for residents of a New York nursing home were instead diverted into the pockets of its greedy owners, according to a lawsuit from Attorney General Letitia James.

New York Attorney General Letitia James is suing the owners of Woodbury's Cold Spring Hills Center for Nursing and Rehabilitation, alleging a multimillion-dollar fraud scheme that resulted in resident neglect and abuse.

New York Attorney General Letitia James is suing the owners of Woodbury's Cold Spring Hills Center for Nursing and Rehabilitation, alleging a multimillion-dollar fraud scheme that resulted in resident neglect and abuse.

Photo Credit: Google Maps street view & Facebook/Letitia James

The suit, filed Friday, Dec. 16, alleges a years-long fraud scheme carried out by the owners of Long Island’s Cold Spring Hills Center for Nursing and Rehabilitation, located in Woodbury.

An investigation by the Office of the Attorney General (OAG) found that between 2017 and 2021, the facility diverted more than $22.6 million in Medicaid and Medicare funds from resident care through more than a dozen fraudulent companies.

“This complex network of companies was also used to hide the real owners of the nursing home and to orchestrate multiple deceptive schemes to extract funds for their personal financial benefit, while disregarding the nursing home’s duty to provide required care,” James’ office said in a statement.

According to the lawsuit, Cold Spring Hills paid more than $15.3 million in fraudulent “rent” to a company owned by the same people who operate the nursing home, and paid more than $5.2 million to several deceptive entities for supposed “consulting.”

The owners are also accused of engaging in a $2 million fraudulent promissory note scheme when they bought the facility, of funneling another $10.6 million in hidden self-dealing transactions, and another $8.1 million through an entity that purportedly provided services and supplies.

In all, the investigation found that more than $42.4 million was transferred to the owners and related parties over a five-year period.

As funding was diverted away from the 588-bed facility, staffing levels were cut, according to the lawsuit. It wasn’t long before families began to report that residents were being neglected and abused.

The facility was often found to be dirty and critical care equipment like wheelchairs, beds, and shower chairs were broken, families claimed.

Investigators said residents were routinely left sitting in soiled underwear and went long periods without bathing. Wounds also went untreated, leading to infections, the lawsuit claims.

James’ office highlighted a diabetic resident who had difficulty walking and was given a wheelchair without a footrest, forcing him to drag his feet. The man eventually developed sores and had to have part of his foot amputated because it was so infected, investigators said.

His co-guardian was never informed of his condition and was not notified when he later died at the facility, James said.

Between March and June 2020, 166 residents at Cold Spring Hills died, 98 from COVID-19 and 68 from other causes, investigators said. The lawsuit alleges the owners fraudulently failed to report 51 of the COVID-19 deaths to the Department of Health.

“Cold Spring Hills’ owners put profits over patient care and left vulnerable New Yorkers to live in heartbreaking and inhumane conditions,” James said.

“From Buffalo to Long Island, every nursing home in New York must abide by laws that require the best care for New Yorkers. As Attorney General, I am determined to use the full force of my office to hold nursing homes to that standard, and ensure New Yorkers are protected."

James’ lawsuit is seeking a number of remedies, including prohibiting Cold Spring Hills from admitting any new residents until staffing levels meet appropriate standards, and forcing them to pay for a financial monitor to oversee operations.

James also wants the company to pay for a healthcare monitor to oversee the facility’s healthcare operations, and for it to remove the defendants from having any role at Cold Spring Hills.

Friday’s lawsuit came just days after a suit was filed against another Long Island nursing home, Fulton Commons Care Center in East Meadow, alleging a similar multimillion-dollar fraud scheme that resulted in residents being neglected.

Attorney General James encouraged those who suspect nursing home abuse to file a confidential complaint online or call (833) 249-8499.

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