Acting New Jersey State Comptroller Kevin Walsh continues to present a model for effective enforcement of nursing home standards of care – barring the poorest quality operators and their multiple related parties and affiliates from receiving any Medicaid funds. Walsh suspends the owners, straw owner, and related parties of the state’s worst-rated nursing facility in New Jersey (South Jersey Extended Care) and of the New Jersey nursing facility with the same owners that had the largest federal fine (more than one million dollars in 2024) (Sterling Manor Nursing Center). In a new report, An Investigation of Fraud, Waste, and Abuse in New Jersey’s Lowest-Rated Nursing Home (Dec. 12, 2024) and Press Release, Investigation Uncovers Multimillion Dollars of Fraud, Waste, and Abuse at New Jersey’s Worst Nursing Home, Walsh exposes “a pattern of waste and abuse of public funds, financial mismanagement, disregard of federal and state oversight requirements, and substandard care” at South Jersey Extended Care during a five-year review period, April 1, 2018-March 17, 2023.
The states of Massachusetts and Connecticut barred Michael Konig from owning nursing homes because of poor quality care. As a result, in about 1997, Konig transferred ownership of a New Jersey nursing facility, South Jersey Extended Care (SJEC), to Mark Weisz (his cousin), with management by Steven Krausman (his brother-in-law) through Krausman’s company Comprehensive Health Care Management Services, LLC. Weisz was a straw owner, Krausman and Konig had full control of the facility.
The Comptroller’s investigative report documents how Krausman and Konig entered “multimillion-dollar, inflated-cost contracts with businesses they owned and controlled,” spending $38.9 million on these contracts over the five-year review period. SJEC received $35.6 million from Medicaid in the same period.
SJEC was the worst-rated facility in New Jersey, receiving a one-star rating in almost every rating period. In a 75-day period reviewed by the Office of the State Comptroller (OSC), the facility “failed to provide sufficient, qualified staff on every single day.” For example:
On July 4, 2021, SJEC had 106 residents, requiring 13 CNAs to staff the day shift and 8 direct care staff for the night shift. Instead, SJEC had only three CNAs from 7:00 am to 9:00 am, four CNAs from 9:00 am to 3:00 pm, zero direct care staff from 11:00 pm to 12:00 am, and two direct care staff from 12:00 am to 7:00 am. This means that SJEC only had 4 of 13 required CNAs for the day shift and 2 of 8 direct care staff for the night shift.
The executive summary reports:
SJEC employed unqualified and unlicensed direct care staff and failed to consistently fill critical roles, such as a licensed Director of Nursing and a licensed social worker. Not surprisingly considering these glaring failures, SJEC’s medical records were disorganized and missing crucial documents, including residents’ care plans, medication administration records, and documentation of whether residents had received any assistance with activities of daily living like eating, walking, or going to the bathroom. Health inspection surveys also documented numerous deficiencies—more than double the state average in the last three inspection cycles—including serious issues such as neglect, abuse, unsanitary conditions, and inadequate medical care.
OSC’s detailed and comprehensive recommendations include
- Adjusting state policies and practices “to address and mitigate the risks that accompany the corporate structures used by for-profit nursing homes.” Describing multiple layers of limited liability companies operating nursing facilities and calling for more than just disclosure and transparency, OSC recommends that the state conduct a comprehensive analysis of ownership, management, and control of facilities and then adjust its regulations and oversight to more effectively address the problems that it finds.
- Enacting legislative reforms “to guard against fraud, waste, and abuse in nursing homes.” Among the six specific issues addressed in this recommendation, OSC calls for (1) preventing owners/operators from “delegating substantial management control to management companies or other consultants or vendors who have not been vetted;” (2) strict criteria for “withdrawing equity from nursing homes;” (3) authorizing and requiring state agency review and approval (or rejection) of “all leases and all transfers of ownership, mortgages, and other interests involving nursing home properties;” (4) conducting “more stringent reviews of transfer of ownership applications;” (5) active monitoring of facilities for “financial distress or potential insolvency;” and (6) ensuring that an individual or entity that is excluded from Medicaid is not involved in choosing the successor owner.
- Reevaluating and amending the state patient care ratio law enacted in 2020 “to better identify excessive profits, including by applying a stricter standard to higher risk nursing homes.”
As reported in “A Model for Nursing Home Enforcement” (CMA Alert, Mar. 21, 2024), Walsh issued three reports ( February 2022, September 2022, and March 2023) identifying the worst performing facilities in the state and the millions of dollars they received in Medicaid funding. The reports recommended stronger sanctions and barring facilities from Medicaid if they fail to improve. Since issuing the reports, Walsh has been implementing his recommendation to suspend the poorest quality facilities from the Medicaid program. Other states should follow Walsh’s model. Removing the worst owners/operators from any ownership or management of nursing facilities would be a critical step forward in improving nursing home quality.
December 19, 2024 – T. Edelman