Rochester-area nursing home accused of $18.6M fraud

New York's top prosecutor accused the owners of a Rochester-area nursing home of stealing $18.6 million in government funds as residents at the understaffed facility suffered years of neglect, culminating in preventable COVID-19 deaths.

Attorney General Letitia James on Tuesday announced her office's lawsuit against Comprehensive at Orleans LLC, doing business as The Villages of Orleans Health and Rehabilitation Center in Albion, Orleans County.

The alleged scheme involved the nursing home's owners illegally funneling Medicaid and Medicare funds to other companies they owned, rather than using those taxpayer-supported funds for the intended purposes of staffing and patient care.

Amid the alleged theft, which began in 2015, workers and residents at the facility faced unhealthy and unsafe conditions, James said during a briefing in Buffalo, detailing complaints of residents being riddled with bed sores, malnourished, and left unattended for hours in soiled diapers.

"Residents were neglected and routinely subjected to inhumane treatment," James said, calling the conditions the worst she has seen.

The lawsuit seeks to recoup the stolen money and appoint a receiver and financial monitor to stop the self-dealing at the facility, James said. It also aims to install a health care monitor to improve care, and halt new resident admissions until further notice.

Several phone messages left with the facility were not immediately returned Tuesday, and an attorney representing the facility in another unrelated lawsuit declined to comment.

Why NY AG sued The Villages

The lawsuit comes after USA TODAY Network reported on residents and workers at The Villages voicing concerns about dangerous conditions at the facility as the pandemic raged in May 2020.

At the time, workers described fearing for their safety due to understaffing and shortages of personal protective equipment, which also fueled COVID-19 outbreaks among residents.

Many of those allegations are echoed in the lawsuit revealed Tuesday, which was part of the Attorney General's Office's ongoing investigation into systemic failures in New York's nursing home industry.

James noted Tuesday that further lawsuits against other for-profit nursing homes across the state are forthcoming. There is also a class-action lawsuit filed by relatives of those allegedly harmed at The Villages, she added.

How alleged fraud unfolded at The Villages

In January 2014, the group of owners named in the case formed Telegraph for the sole purpose of buying the real property on which The Villages sits, which they did a year later in January 2015.

The Villages has since paid rent to Telegraph. A limited liability company called CHMS Group was formed in January 2015, and The Villages has since paid it for administrative services, including accounting, insurance billing, and payroll.

From 2015 through 2021, The Villages received $86.4 million in funding, including millions in taxpayer dollars from Medicare and Medicaid, intended to provide quality health care to vulnerable residents. Instead, the owners cut staffing to increase their personal profits, James said in a statement.

By making payments to Telegraph and CHMS, and by making other transfers to themselves directly and indirectly, the owners were able to divert $18.6 million — more than 20% of The Villages' operating budget, she added.

Who owns The Villages?

The Villages nursing home, which has 120 beds, was sold by Orleans County in 2015 to an entity affiliated with Bernard Fuchs.

James' lawsuit was filed against Fuchs, as well as his son and daughter-in-law Gerald and Tova Fuchs, and his sons-in-law Joel Edelstein and Israel Freund.

Several limited liability companies linked to the owners and alleged fraud are also named in the case. This list included Villages of Orleans LLC; Telegraph Realty LLC, which owns the property where the facility is located; CHMS Group LLC, which provides administrative services to The Villages; and ML Kids Holdings LLC.

Though all official paperwork associated with The Villages represents it is owned entirely by Bernard Fuchs, the attorney general's investigation alleged he had a very limited role. In reality, David Gast, Ephram Lahasky, and Sam Halper managed and controlled The Villages, James said.

How residents at The Villages suffered

The lawsuit asserted residents were subjected to repeated abuse and neglect as the most basic functions of care were abandoned at The Villages.

Residents were forced to sit in their own urine and feces for hours. They suffered malnourishment and dehydration, while developing sepsis, gangrene, and other infections due to gaping bed sores and inadequate wound care, the lawsuit states.

The lawsuit's allegations include:

A woman admitted in January 2021 with a bed sore which was not treated for more than two weeks. Six months later, in June 2021, she suffered from two more severe bed sores and an external wound care consultant ordered a new treatment, which The Villages did not implement until a week later.

A friend of the resident told investigators she got more than 1,000 texts from the woman asking for help with basic necessities like using the restroom or getting food and water. The Villages gave the resident psychotropic medications for severe anxiety, though there was no such diagnosis in her medical records. She was found unresponsive on July 13, 2021 and sent to the hospital, where she died.

A woman admitted to The Villages in January 2020 for rehabilitation of a broken leg soon began refusing her food and medication and spoke of wanting to die. An external psychological consult determined she was at high-risk for self-harm, and ordered staff check on her every 30 minutes. The Villages failed to monitor the woman, and she was found dead in early February 2020, less than a month after she was admitted. Her death was not reported to the state Department of Health as required by law.

The lawsuit also accused The Villages management of trying to keep positive COVID-19 cases secret, while delaying or entirely neglecting to enforce proper protocols for quarantining infected residents.

The owners allegedly forced staff to report to work even when they were sick, provided little to no personal protective equipment and failed to implement infection or isolation protocols, James noted in a statement.

As the pandemic progressed, employees were told that if their temperature check indicated they had a fever, they were to go outside for an hour and come back to take their temperature again, investigators added.

Staff and other witnesses reported times when The Villages was dangerously understaffed, such as an overnight shift with just four employees for all residents in the 120-bed facility.

Still, the owners allegedly prioritized increasing resident admissions at The Villages in order to drive up revenue — even when the facility was providing substantially fewer hours of nursing care per resident than the state's safety average, adding to the dangerous environment, James said.