The Toppling of a Nursing Home Empire and the Elderly and Disabled Residents Who Suffer, Where’s the Oversight?

Image: Terri Thompson

Terri Thompson’s mother has dementia and wandered out of a locked unit through two broken doors and was found in ice and snow at 4:30 in the morning with severe frostbite.Hannah Rappleye / NBC News

A nursing home chain grows too fast and collapses, and elderly and disabled residents pay the price

By Laura Strickler, Stephanie Gosk and Shelby Hanssen

NEW BEDFORD, Mass. — Once a week for two years, police Lt. Jeannine Pettiford had visited the nearby nursing home where her 52-year-old cousin with cerebral palsy lived. But on their daily phone call in early May, her cousin had bad news.

“I’m getting kicked out,” he told her.

In disbelief, Pettiford asked to speak with a nurse, who told her there were rumors of closure. Her alarm rose when she visited the facility and saw nurses crying. The nursing home’s owner, Skyline Healthcare, had told its staff there was no more money.

Skyline’s four other nursing homes in Massachusetts were facing the same crisis. Funds were so short, staff had begun buying toilet paper with money from their own pockets, according to former employees. Residents and their families discovered from local newscasts they had just 30 days to find somewhere else to live.

“Nobody from the nursing home ever called me to tell me,” Pettiford said. She was angry. And, she later learned, so were many others.

At its peak, Skyline Healthcare owned or ran more than 100 facilities in 11 states, overseeing the care of more than 7,000 elderly Americans. But during the past two years, the chain has collapsed, and more than a dozen Skyline-operated nursing homes have shut their doors, throwing residents, vendors, employees and state regulators into chaos.

For more watch Stephanie Gosk tonight on “NBC Nightly News With Lester Holt” at 6:30 p.m. ET / 5:30 p.m. CT (or check your local NBC station).

Many homes ran out of money. Others were shut down over neglect documented in government records. Fourteen homes were forced to close permanently, displacing more than 900 residents to new facilities, sometimes hours away.

The story of Joseph Schwartz and Skyline Healthcare is one of swift expansion, alleged mismanagement and catastrophic failure. An NBC News investigation reveals the scale of the Skyline debacle, in which one man built an empire that quickly crumbled, with painful consequences for vulnerable people.

It also shows the failure of state and federal authorities to keep up with just who owns and runs America’s nursing home facilities, which house 1.3 million elderly and disabled Americans — about three-quarters of them in beds paid for by taxpayers via Medicare and Medicaid. The states are responsible for tracking ownership and conditions at nursing homes within their borders, but only the federal government can monitor the performance of firms that own or operate facilities across the nation. The allegations of negligence at a major nursing-home chain come as the Trump administration is moving to ease, not increase, accountability for the industry, reducing penalties and terminating fewer contracts with problem owners.

Schwartz, meanwhile, still has ownership stakes in 53 nursing homes, according to federal records. He has not returned multiple messages and emails requesting comment from NBC News.

“I just don’t think I’ve ever seen anything like it,” said Stephen Monroe, an industry analyst of three decades who is the managing editor for the nursing home trade magazine Senior Investor. “I have no idea what that family was thinking. To go from 10 to 100 in two years with no real back office? I looked at that and said from day one, ‘Impossible.”

‘The Home Life You Crave’

A Brooklyn, N.Y.-based insurance broker and landlord, Joseph Schwartz entered the nursing home business more than 10 years ago after he sold a Florida-based insurance company.

In a 2017 deposition for a malpractice lawsuit filed by a family alleging neglect at one of his homes in Pennsylvania, Schwartz explained why he’d gotten into the industry. “”Basically, I used to do a lot of servicing in selling insurance policies to long-term care industry,” he said, “and I felt that I could, that I understand the quality care … and I will do a very good job in doing the quality care for residents.”

Image: Joseph Schwartz listed a tiny office above this New Jersey pizzeria in Wood Ridge, NJ as the location where he ran over 100 nursing homes nationwide.Joseph Schwartz listed a tiny office above this New Jersey pizzeria in Wood Ridge, New Jersey, as the location where he ran over 100 nursing homes nationwide.NBC News

He started with a half dozen homes, but after creating Skyline Healthcare he began expanding rapidly in November 2015 with the purchase of 17 homes.

Schwartz ran Skyline out of a tiny office above a New Jersey pizzeria. He was CEO, his wife Rosie co-owned most of the properties and his two sons, Michael and Louis, served as vice presidents. The company had a bare-bones website and a slogan, “Skyline: The Home Life You Crave.”

During the 2017 deposition, he said, “Skyline is an entity that is me.”

His net worth is hard to compute but real estate records show he owns over $9 million worth of real estate in the New York metropolitan area, including a gated house in Suffern, N.Y.

Within a year of his purchase of 17 nursing homes, Schwartz had taken on another 64, and by 2017 was operating more than 100.

Schwartz wouldn’t provide a number when the plaintiff’s attorney asked him repeatedly in June 2017 how many homes he ran. He confirmed it was more than five, but asked if it was more than 100, he said several times that he couldn’t recall.


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Health Headlines of King and Spalding – OIG and Nursing Home Results, Prevalence of Abuse and Reporting Issues

OIG Releases Audit Reports Finding High Prevalence of Nursing Home Abuse, Deficient Reporting Mechanisms

On June 12, 2019, OIG released two audit reports, A-01-17-00513 and A-01-16-00509, as part of its efforts to improve identification, reporting, and investigation of potential abuse and neglect of Medicare beneficiaries. OIG’s audits were prompted in part by investigations showing “a significant number of Medicare claims submitted for the treatment of injuries related to potential abuse and neglect.” OIG found that incidents of abuse and neglect in skilled nursing facilities (SNFs) were not sufficiently tracked, reported, and investigated, and that Medicare’s diagnosis code data could help point to abuse and neglect. The audit reports follow CMS’s recent release of its five-part nursing home plan focused on improving nursing home quality.

In OIG Report A-01-17-00513, titled, “CMS Could Use Medicare Data to Identify Instances of Potential Abuse or Neglect,” OIG identified nearly 35,000 Medicare inpatient and outpatient claims (totaling approximately $100 million worth of services) from 2015 to 2017 containing one of 17 diagnosis codes that may correlate to abuse or neglect, such as potential sexual abuse or nutritional neglect. Of that group, 100 claims underwent an in-depth review.

OIG found that 94 of the 100 claims evidenced potential abuse or neglect; among them, 61 were likely associated with incidents in the beneficiaries’ home and 16 incidents occurred at others’ homes or in public settings like parks and alleys. From this 100-claim data sample, OIG estimated that 89% of the nearly 35,000 cases had underlying medical records evidencing potential abuse or neglect. OIG further estimated that 8% of those cases may have been perpetrated by a healthcare worker, among other findings.

OIG recommended that CMS “compile a complete list of diagnosis codes that indicate potential physical or sexual abuse and neglect,” “conduct periodic data extracts” of Medicare claims with one of those codes, “inform States that the extracted Medicare claims data are available to help States ensure compliance with their mandatory reporting,” and “assess the sufficiency of existing Federal requirements . . . to report suspected abuse and neglect of Medicare beneficiaries . . . .” CMS disagreed that the recommended claims data would timely assist it with addressing acute problems, but OIG “continue[d] to recommend the use of the Medicare claims data” to thwart abuse and neglect.

In OIG Report A-01-16-00509, titled, “Incidents of Potential Abuse and Neglect at Skilled Nursing Facilities Were Not Always Reported and Investigated,” OIG reviewed a set of claims of Medicare beneficiaries residing in SNFs who had emergency room visits in 2016 that resulted in one of 580 “high-risk” diagnosis codes, and whether the SNFs reported those potential instances of abuse or neglect. The audit also focused on the adequacy of CMS’s reporting and tracking of those potential instances of abuse and neglect.

Specifically, OIG pulled a sample of 256 emergency room (ER) cases from over 37,000 high-risk hospital ER claims for nearly 35,000 Medicare beneficiaries residing in SNFs in eight states in 2016. OIG worked with the State Survey Agencies (SSAs) to review the underlying medical records to determine whether the ER cases were the result of abuse or neglect in the SNF. OIG concluded that approximately one in five of the ER claims were the result of abuse or neglect. OIG also found that the SNFs “failed to report many of these incidents” to SSAs, meaning the SSAs could not conduct immediate onsite investigations. The SSAs themselves also, given the opportunity, “failed to report some findings of substantiated abuse to local law enforcement.” OIG also faulted CMS’s recording and tracking mechanisms for failing to capture all fraud and abuse incidents.

OIG recommended that CMS “take action” to ensure that such incidents are properly identified and reported by improving training for SNF staff and requiring SSAs to track all incidents and subsequent referrals to law enforcement. CMS concurred with these recommendations.

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FIGHTING BACK! Pt. 4 – State Oversight of Nursing Facilities, Do Changes in Leadership Mean Changes in Ownership?

Tioga nursing home responds to critical report

PINEVILLE, La. (KALB) – A Tioga nursing home is one of five in the state put on a list for possible increased government surveillance due to quality concerns.

Tioga Community Care Center off of Shreveport Hwy. in Tioga. | Photo Source: KALB

The Advocate reported on Tuesday that Tioga Community Care Center is on that list. The list was put out by the Centers for Medicare and Medicaid Services for nursing homes. It identifies those that fail to meet certain health and safety standards. CMS is governed by the U.S. Department of Health and Human Services.

That means the Tioga Community Care Center could see more frequent inspections. And, if a facility fails to implement changes, they could lose government funding. The list got traction after two U.S. Senators asked for the information from CMS.

Tioga Community Care was added to the list after a December 2018 report said some residents were put in “immediate jeopardy” after one lost 26 pounds in nearly four months and was down to 79 pounds — and that a registered dietician recommended treatment, but it was never implemented.

Tioga community care center did email KALB and said they’re making changes. They said they’ve changed leadership and survey standards. As well as adding more corporate support, education, and monitoring.

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FIGHTING BACK – Pt. 2 – Nursing Home Patients and Their Families, Victims of Abuse, Report and Seek Counsel Representing Victims

Aurora nursing home sued again after resident beats wheelchair-bound 92-year-old woman

Jury awarded other plaintiff beaten by same resident $3.6 million

An Aurora nursing home is being sued for a second time over allegations that a resident with a history of violence continues to injure other residents and that the facility does not have enough staff to properly care for the Alzheimer’s and dementia patients who live there.

The lawsuit filed last week in Arapahoe County District Court accuses Renew Saddle Rock of putting its financial goals over residents’ safety by under-staffing the home.

In October, an Arapahoe County jury awarded a former resident a $3.6 million verdict after he was beaten by a fellow resident, who has been identified as “Anne B.” Two months after the verdict, the nursing home owners changed the facility’s name to Renew Saddle Rock from Peregrine Senior Living at Aurora, the lawsuit said.

The new lawsuit was filed by Denver attorneys Jerome Reinan, Jordana Gingrass and Beth Dombroski on behalf of Joanna Dryva, whose mother, Maria Pallman, was injured in the attack. Dryva is seeking more than $100,000 in damages against Renew and the nursing home’s corporate owners, First Phoenix-Aurora of Wisconsin and Peregrine Management of Colorado.

The latest lawsuit accuses Anne B. of pummeling Pallman, a 92-year-old, wheelchair-bound woman who also suffers from dementia. On May 29, Anne B. hit Pallman in the face as she sat in a wheelchair in a hallway, the lawsuit said. Pallman now suffers from anxiety, and recurring headaches that she didn’t have before the assault, the lawsuit said.

The nursing home has refused to turn over surveillance footage of the assault, it said.

RELATED: These Colorado nursing homes were poorly rated and eligible for federal oversight. Until this week, nobody knew.

Attempts to reach the director of Renew and the facility’s owners were unsuccessful.

The lawsuit also accuses former nursing director, Britny Otto, of violating state law when she denied that Anne B. had assaulted a staff member during testimony about the first lawsuit.

“Despite actual knowledge that it was understaffed, Otto and Peregrine aggressively marketed Peregrine as having higher staffing than its competitors, as well as a better activities program than its competitors,” the lawsuit said. Otto had failed to report Anne B.’s assault on a staff member to police or the Colorado Department of Public Health and Environment as required by Colorado law, the lawsuit said.

Renew Saddle Rock’s website said the memory care facility offers “all of the services and amenities that provide residents and families complete peace of mind, while transcending the status quo with experiential innovations like custom jewelry design and woodworking with local artists or private concerts with wine and cheese pairings.”

Peregrine actually staffed the nursing home with only one worker for up to 28 dementia patients during night shifts and on weekends, the lawsuit said.

Dryva would not have admitted her mother to the nursing home if she had been told about the first assault and the fact that Anne B. was still living in the home, the lawsuit said.

Anne B. has also been accused of assaulting a third Renew resident, who was identified as “Josephine,” and a worker who quit because of the attack, the lawsuit said. The nursing home did not report the assaults to law enforcement or licensing authorities, the lawsuit said.

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