Suit: Failed nursing homes' operators stole from employees

NEWARK, N.J. (AP) — 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.

Five plaintiffs who worked at Skyline-operated facilities in South Dakota, Kansas, Nebraska and Arkansas filed the suit, which seeks class-action status for what it estimates were more than 1,000 employees who were affected.

Employees allegedly only found out they didn't have health insurance when they were billed for medical procedures. One woman allegedly was left with a $50,000 bill.

“Under the mistaken belief that they had health and dental insurance, Class members underwent medical and dental procedures, which would have otherwise been paid for with insurance, only to be billed for the same after being advised that no insurance had in fact been purchased,” the suit claims.

The lawsuit accuses the Schwartzes of racketeering, racketeering conspiracy, negligence and other violations as well as of violating fraud laws in the four states. It seeks unspecified compensatory and punitive damages, and estimates the amount of health insurance premiums stolen at more than $2 million.

Court documents didn't list an attorney for Schwartz. At several numbers listed for Schwartz and Skyline — including Skyline's second-floor office above a pizza parlor in the northern New Jersey town of Wood-Ridge — no one answered the phone Wednesday or the numbers were disconnected.

The company or its subsidiaries also operated nursing homes in New Jersey, Pennsylvania, Florida, Massachusetts, Kentucky and Tennessee, according to an Associated Press review.

The suit claims the Schwartzes acquired more than 100 nursing homes from 2015 to 2017 in order to generate large amounts of money through Medicare and Medicaid, insurance companies and nursing home residents and their families, and then redirected much of the money to themselves.

The Schwartzes "designed a scheme to acquire as many facilities as possible, pocket as much revenue as possible, as quickly as possible and then wash their hands of the whole thing," the lawsuit alleges.

Theresa Dante, a plaintiff in the lawsuit who worked for a Schwartz-operated facility in South Dakota, told The Associated Press that she and a co-worker sometimes would hide cash in a freezer to ensure they could pay vendors who had stopped accepting the struggling facility’s checks for necessities like milk and orange juice.

Over the last several years, Skyline and other Schwartz-controlled companies have been sued in several states, according to a review by The Associated Press. In 2018, a court in Illinois ruled they owed more than $23 million to a bank that had loaned them money.

One of the other lawsuits, filed in Florida, claimed that between 2009 and 2011, Schwartz-controlled companies failed to pay nearly $1 million in medical claims for employees of health care facilities — similar to what the current lawsuit alleges happened several years later.

“There were so many affected by this situation, I do hope this possibly can help them,” Dante said Wednesday. “Also I hope the states will take notice and work to prevent these things from happening again.”