The Schwartz-Skyline Empire, Accountability and Covid-19

WILL THE SCHWARTZ EMPIRE FINALLY BE HELD ACCOUNTABLE FOR THE UNTHINKABLE TRAGEDY AND LOSS OF HUMAN LIFE? WILL THE RINGMASTERS FINALLY HAVE TO SHUT DOWN THEIR MANY-RING CIRCUS?

Today, September 8, 2020, CNN reported on the lawsuit filed against Louis Schwartz, son of Joseph Schwartz and his partner Chaim “Mutty” Scheinbaum and a number of other defendants for the deaths that occurred in the Andover Subacute Rehabilitation Center.

Allegedly New Jersey’s Attorney General Gurbir Grewal is investigating the deaths at the facility. We have our doubts on that investigation as it negates the possibility that New Jersey’s Governor Murphy will not impose what we have referred to as the “Granny Killer Immunity Provisions” on any Covid-19 related deaths at the home, thereby negating any accountability.

But the lawsuit against the Andover facility and its owners is not based upon Covid-19. It is based upon Andover’s sales pitch and how it allegedly is misleading.

The nephew of a man who died during the height of the coronavirus pandemic in New Jersey is suing the nursing home where his uncle was a resident, alleging that the facility failed to provide the legally required level of care while fraudulently claiming to do so.

The nursing home, Andover Subacute Rehabilitation Center II in Lafayette Township, New Jersey, is the same facility where authorities found 17 bodies in April in a morgue meant for four. New Jersey Attorney General Gurbir Grewal is continuing to investigate Covid-19-related deaths at the facility.

https://www.cnn.com/2020/09/08/us/new-jersey-nursing-home-covid-death-suit/index.html

 

Setting the Stage:

Joseph and Louis Schwartz, a father and son team, own a litany of nursing care facilities. Joseph Schwartz was the owner “extraordinaire” of an empire of failed nursing homes, widely covered during the summer of 2019, the Skyline nursing homes.

The most comprehensive article at the time was published by ABC News and entitled: A nursing home chain grows too fast and collapses, and elderly and disabled residents pay the price (https://www.nbcnews.com/health/aging/nursing-home-chain-grows-too-fast-collapses-elderly-disabled-residents-n1025381 )

One would have thought that the demise and devastation he created woud have resulted in strict oversight, that Joseph Schwartz would have been compelled to divest himself of any ownership. But, that is not what happened. Instead, his son took the reins and that ownership is really just an alter-ego for his own name on the facilities. They are, after all, a team.

The 100 plus facilities that in large part failed, thereby ravaging the lives of the elderly in whose care the Schwartz’s were entrusted, should have made both Schwartzs ineligible to continue holding any stake in these homes. For the families of those who died or were displaced, that would have been the right result. But, well… no. That’s not how these thing work.

The Wood Ridge, N.J.-based Skyline at its height owned or operated more than 100 skilled nursing facilities in 11 states, overseeing the care of more than 7,000 seniors, NBC reported. But the chain began to fall apart in the spring of last year, starting with the state of Nebraska, which had to appoint a third-party receiver after Skyline’s owners failed to make payroll. The state of Kansas followed suit soon after, and some weeks later, the company fell apart in South Dakota and in Pennsylvania. (New Investigation Puts Skyline Healthcare Back in the Spotlight) From Skilled Nursing News

(https://skillednursingnews.com/2019/07/new-investigation-puts-skyline-

Ownership as a Flexible and Nebulous Term:

In the nursing and rehabilitation context, there are no governing rules on ownership and men like the Schwartzs have risen the pattern of “flexible and tenuous ownership” to an art form. They are the Ringling Brothers of the nursing home world, but they are not alone. There are others, similar teams of nursing home gymnasts and jugglers. This is a game, after all.

And, where are the tax authorities, the SEC oversight, the Attorney’s General who should be outraged? Where are the rule-makers and legislators who should be creating laws? Well, they are nowhere to be seen. Political campaigns are padded with the money men like the Schwartzs and their partners donate, whether directly or through super PAC’s made possible by Citizens United (https://en.wikipedia.org/wiki/Citizens_United_v._FEC ). There is, of course, the exception of Grewal but we don’t see that gaining traction. We view it as lip-service.  

Ownership is a flexible term. A NJ.com article in April of 2020 suggested that the State of New Jersey “doesn’t exactly know who owns them.” (https://www.nj.com/coronavirus/2020/07/most-nursing-homes-are-for-profit-and-nj-doesnt-exactly-know-who-owns-them-can-they-be-held-accountable.html)  

Well, that’s reassuring, don’t you think?  

Tangible ownership is actually a far-fetched concept. A ventured guess would suggest that there is not a State in the United States that can tell you the exact ownership of any of the Schwartz-related nursing homes, and that’s just a start. He is not alone in the game of hide-and-seek ownership either. Most nursing homes follow the same Schwartz pattern, a nebulous structure of intertwined LLC’s with different owners constantly changing hands. The Schwartz’s did not create the structure, they just learned it well, followed it and built an empire.  

There are very few nursing homes that are not moving targets where ownership is concerned, now-you-see-it-now-you-don’t. It is all an optical illusion and in the Schwartz case, the optics are astounding. These men are theatrical warriors and visionaries, brilliant with smoke and mirrors. They learned their craft well.

Ownership Has an entirely different meaning:

In the nursing and rehabilitation center context, ownership does not mean what we think it means. Nursing homes are generally structured as Limited Liability Corporations, either individually or with a group of other nursing homes. From a legal standpoint, LLC unit shares are easy to transfer. From a Private Equity standpoint, the transfer is a simple document which theoretically should be filed with the tax authorities, but usually never gets filed.

If a nursing home is part of a REIT (Real Estate Investment Trust) which is publicly traded for example, the ownership for accountability purposes is constantly changing hands. Transfers of ownership require minimal paperwork and the moment the ownership changes, so too does the registry associated with that nursing facility, from a loosely reviewed state oversight perspective. It’s like adding colors to the scarves pulled out of the pockets of the circus clowns. It can be a never-ending shell game, assisted by distraction. Covid-19 has been a spectacular distraction for nursing home owners, particularly if you add in the “Granny Killer Immunity Provisions” accepted by most of the States in the US.

Last year Skyline released a statement to a South Dakota reporter blaming Golden for problems in its South Dakota nursing homes. Skyline said the chain was “dedicated to providing quality care” and meeting its obligations, but that Golden had caused the issues.  

(https://www.nbcnews.com/health/aging/nursing-home-chain-grows-too-fast-collapses-elderly-

Consider this, the circus clowns hold onto their scarves. They are tangible, however many there are. But nursing homes are like financial and legal tumbling acts. As tangible entities with any possibility for accountability the nursing home business is all an illusion, a flight of hand, the clowns on the circus stage at play – so to speak.

No Central Ratings Registry or Process for All States:

As for ratings and an organized oversight system where one might look to see if the nursing home is right for his or her family member, this too is all smoke and mirrors. A nursing home with four stars can have significant fines for safety and health-related infractions. A nursing home with one or two stars should be closed down and not permitted to continue to function.  

Few of the Schwartz owned nursing and rehabilitation centers are rated better than three (3) stars and even that is a stretch. The rating system depends, in large somewhat cloudy part, on the state of location of the facility. In other words, there is no unified system of oversight of nursing homes and rehabilitation centers in the United States. States do not mandate a single-rated system. And, to make matters worse, they rarely cross reference other states and when ratings deteriorate. One State has no power or disregards its power to place marks on another facility with the same ownership structure. In other words, a disaster in one state does not adversely affect the ratings of the same ownership of a facility in another state even where the other state has similar infractions. Moreover, if the stars diminish, our “Ringling Brothers” simply change ownership shares and clear the stage.

This is particularly relevant where private equity is concerned and in the Schwartz case, there are investors on the Tel Aviv Stock Exchange trading in their facilities on a listed REIT.

Joseph Schwartz’s Skyline downfall is endemic of the lack of oversight, both financial and healthcare related.

Louis Schwart’s Andover Nursing Home is but one example of the Schwartz’s skill at creating the optical “ownership” illusion. Picture the guy who can balance on the wire over Montreal as passers-by watch from below. Louis, like Joseph is a marvel at shifting responsibility and liability and when people die, he just needs to wait until a life-insurance policy comes due so he can collect the winnings. Oh… did we just type that?

In the case of the Andover Nursing Home, one must consider the possibility that those bodies were waiting for life insurance policies to take effect which is why they were being stored in a makeshift morgue outside the facility. That is more like a horror show than a circus act but we will leave contemplation of that consideration in the hands of readers and… well… investigators.  

(as reported by ABC News) https://abcnews.go.com/Health/wireStory/suit-failed-nursing-homes-operators-stole-employees-68784984

The nursing home industry should be enshrined with oversight. Human lives are at stake. Yet, there are no hard and fast rules. It is all rather loose and even lackadaisical. The circus has many rings. And for the purposes of this story the father and son team of Joseph and Louis Schwartz are the ringmasters.

We are grateful to the class of plaintiffs who are finally trying to hold the ringmasters accountable. We have posted parts of the filings. Anyone who wants to join the class should contact the lawyers or can contact the LM website and we will gladly pass along the information.

New Jersey nursing home where authorities found 17 bodies sued for alleged failures during Covid-19

CNN – https://www.cnn.com/2020/09/08/us/new-jersey-nursing-home-covid-death-suit/index.html

ADDITIONAL READING:

It’s a scheme’: Nursing homes owe thousands to Fall River pharmacy

FALL RIVER — Before the financial collapse of five Skyline nursing homes came to light this week, Fall River pharmacist Thomas Pasternak knew they had money problems.

Three of the facilities owed his Walsh Pharmacy a combined $200,000 by last April, according to a civil lawsuit he filed against the nursing homes and Skyline owner Joseph Schwartz last year.

“This is a scheme,” said Pasternak’s attorney, Kenneth Mello. “It’s clearly a scheme. You don’t shut down nursing homes across the country without paying the bills and abscond with the funds without it being a scheme.”

https://www.southcoasttoday.com/news/20190426/its-scheme-nursing-homes-owe-thousands-to-fall-river-pharmacy

 

Months ago, it was widely reported that Joseph Schwartz and his wife had been accused of stealing from their employees’ paychecks and yet they are still in business.

NEWARK, N.J. — The former operators of a failed multi-state nursing home chain stole more than $2 million from employees’ paychecks that was supposed to pay for their health insurance, according to a lawsuit.

The suit filed last week in U.S. District Court names Joseph Schwartz and wife Rosie Schwartz and their company, Skyline Health Care, which operated more than 100 nursing homes under numerous subsidiary companies. Dozens of those facilities have been taken over by states in the last two years after the company was unable to pay vendors.

https://abcnews.go.com/Health/wireStory/suit-failed-nursing-homes-operators-stole-employees-68784984

An owner of N.J. nursing home where bodies found was once VP of troubled nursing home chain

https://www.nbcnews.com/health/health-care/owner-n-j-nursing-

 

Nursing Home at Center of National COVID-19 Conversation Has Skyline Connection: Report

A facility in New Jersey that made national headlines after the New York Times reported on a wave of COVID-19 deaths among its residents has a connection to the defunct Skyline Healthcare nursing home chain — a company whose spectacular collapse spurred calls for greater transparency around nursing home ownership across the country.

Louis Schwartz, formerly a vice president at Skyline, holds a 50% ownership stake in the Andover Subacute and Rehabilitation Center, NBC News reported. Andover co-owner Chaim Scheinbaum told the outlet that Schwartz was a “silent partner” in the property, which has garnered nationwide attention in the wake of a Times report that the bodies of 17 residents were stored in a small morgue meant for four.

https://skillednursingnews.com/2020/04/nursing-home-at-center-of-national-covid-19-