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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