New York Attorney General Letitia James on Friday filed a lawsuit against Cold Spring Hills Center for Nursing and Rehabilitation for years of financial fraud and self-dealing that led to severe understaffing and resident neglect and harm. NewsdayTV’s Cecilia Dowd reports. Credit: Kendall Rodriguez; File Footage; Photo Credit: Newsday / Steve Pfost; Debra Garofolo, Nancy Gertler, Marcus Santos

The owners and operators of Cold Spring Hills Center for Nursing and Rehabilitation in Woodbury neglected residents’ care and skirted state laws through a fraudulent business setup elaborately designed to enrich themselves, state Attorney General Letitia James alleged in a lawsuit Friday.

The 186-page complaint, obtained by Newsday, said the owners of Long Island’s second-largest nursing home profited by diverting $22.6 million in government funding from resident care.

The operators repeatedly cut staff, including in the weeks before the COVID-19 pandemic, leading to nightmarish end-of-life scenarios, the civil court complaint said.

Noting how nursing homes have a “special obligation” to care for residents under state law, the lawsuit details a series of episodes of neglect, including:

The lawsuit seeks the removal of health care mogul Bent Philipson from any involvement in the facility’s operations and a court order that Philipson and his partners pay an unspecified amount of restitution.

The suit, filed in Nassau County Supreme Court, also seeks an independent health care monitor to oversee residents' care, and a financial monitor.

“Cold Spring Hills’ owners put profits over patient care and left vulnerable New Yorkers to live in heartbreaking and inhumane conditions,” James said. “Elderly and disabled residents suffered preventable harm at Cold Spring Hills because its owners treated the facility like a personal profit machine.”

Attorneys for Cold Spring Hills and Philipson declined to comment.

The attorney general’s lawsuit comes 28 months after Newsday’s investigation — “Crisis, Care and Tragedy on LI” — exposed the impact of the pandemic on the Cold Spring Hills residents, families and staff. The investigation also revealed the 588-bed facility’s place in the owners’ collection of profit-making nursing homes.

“When COVID-19 hit Long Island, Respondents’ exploitative business model simply snapped under the poor working conditions they had created,” the lawsuit said, adding that the facility neglected to report to the Department of Health 51 resident deaths from COVID-19 during the first three months of the pandemic.

Newsday reported in September 2020, a month after its investigation was published, that the state attorney general’s office had launched its own investigation of Cold Spring Hills.

The attorney general's lawsuit named as defendants Philipson and Benjamin Landa, longtime nursing home magnates who, according to Medicare records, had amassed by 2020 -- along with their family members -- interests in 163 facilities across 18 states, including the purchase of Cold Spring Hills in 2016.

They split in 2019 after Landa accused Philipson in a court action of diverting $53 million from their businesses into a Bermuda-based insurance entity.

The lawsuit said Philipson “took sole control of the operations, finances, and management of Cold Spring Hills” after the break with Landa, and they never informed the state health department of a change in the ownership or operating structure of the facility, as state law requires.

Philipson sat for an interview with the attorney general’s office but declined to testify, asserting his right against self-incrimination 685 times, according to the lawsuit. 

An attorney for Landa did not respond to requests seeking comment.

The lawsuit also named as defendants a dozen companies that the owners used “to create the appearance that they were paying for services for the nursing home, but were in fact redirecting Medicaid and Medicare money to themselves and thereby diverting funds away from resident care,” the attorney general’s office said.

Also named were 10 individuals, including Philipson’s son Avi and Landa’s daughter Esther Farkovits, who the attorney general’s office say were “straw owners, put in place to conceal their fathers’ control.”

Families who lost loved ones at Cold Spring Hills in the early days of the pandemic expressed satisfaction that the attorney general sued the facility and exasperation at the allegations in the complaint.

"I’m ecstatic that they’re actually going to go after these guys for what they’ve done, because they took a perfectly good nursing home and they turned it into a hellhole," said Nancy Gertler, of Great Neck, whose mother Florence died April 12, 2020.

Debra Garofolo’s mother, Julie Toves, also died April 12.

“I just find it unconscionable that anybody would take away money, or misappropriate it, that was given by the government to alleviate human suffering,” she said. “I think that and I hope to God that these people are held accountable to the fullest extent of the law.”

Her mother’s death certificate lists coronary artery disease, but Garofolo believes Toves succumbed to COVID-19.

“I trusted them to do the right thing, to keep my mother safe,” Garofolo said. “And then later on I’m learning that was their last intention.”

Cold Spring Hills’ unionized employees expressed concerns about worsening working conditions “multiple times over the past few years,” according to Daine  Williams, executive vice president of 1199 SEIU United Healthcare Workers East.

“Attorney General James’ lawsuit against Cold Spring Hills exposes what nursing home workers at the facility have known for far too long — that staffing conditions exist which jeopardize resident care,” Williams added.

The Cold Spring Hills lawsuit comes three days after the attorney general sued another nursing home, Fulton Commons Care Center in East Meadow. In that suit, James accused the operators of patient neglect, using public money to pad the payroll and underreporting COVID-19 deaths.

Bill Hammond, senior fellow for health policy at the Empire Center think tank, said James’ investigations likely will become broader because many owners of nursing homes in New York have shares of ownership in several homes. He said she is using a novel approach by relying on business fraud measures, rather than health law, to investigate nursing homes.

“She is carving out a legal argument where you combine evidence of bad care with evidence of high profits and you call that Medicaid fraud. I think she has a point,” Hammond told Newsday. “I don’t know how the courts will view this, but these are arguments that could potentially go nationwide if she is successful.”

With Cecilia Dowd and Michael Gormley

The owners and operators of Cold Spring Hills Center for Nursing and Rehabilitation in Woodbury neglected residents’ care and skirted state laws through a fraudulent business setup elaborately designed to enrich themselves, state Attorney General Letitia James alleged in a lawsuit Friday.

The 186-page complaint, obtained by Newsday, said the owners of Long Island’s second-largest nursing home profited by diverting $22.6 million in government funding from resident care.

The operators repeatedly cut staff, including in the weeks before the COVID-19 pandemic, leading to nightmarish end-of-life scenarios, the civil court complaint said.

Noting how nursing homes have a “special obligation” to care for residents under state law, the lawsuit details a series of episodes of neglect, including:

WHAT TO KNOW

  • Cold Spring Hills created a tangled web of owners, operators and consulting companies that served as “fraudulent vehicles" to deliver profits to owners, the lawsuit said.
  • The owners diverted $22.6 million in Medicaid and Medicare funding that the attorney general's complaint said "should have been spent on resident care."
  • The facility neglected to report 51 resident deaths from COVID-19 to the state Department of Health during the first three months of the pandemic, according to the lawsuit.
  • A woman recovering from a stroke with limited ability to communicate regularly was left sitting in a soiled diaper and was given only one shower in five months because staff didn't have the appropriate chair.
  • The daughter of a four-year resident returned for her first visit after the COVID-19 lockdown and was “very upset, angry, and infuriated” to see her mother living in a room with trash stuffed under the bed, no running water and a dirty bathroom.
  • A man in his 70s with limited mobility after a car accident lost 30 pounds in less than four months and eventually was hospitalized due to dehydration and severe protein malnutrition.

The lawsuit seeks the removal of health care mogul Bent Philipson from any involvement in the facility’s operations and a court order that Philipson and his partners pay an unspecified amount of restitution.

The suit, filed in Nassau County Supreme Court, also seeks an independent health care monitor to oversee residents' care, and a financial monitor.

“Cold Spring Hills’ owners put profits over patient care and left vulnerable New Yorkers to live in heartbreaking and inhumane conditions,” James said. “Elderly and disabled residents suffered preventable harm at Cold Spring Hills because its owners treated the facility like a personal profit machine.”

Attorneys for Cold Spring Hills and Philipson declined to comment.

The attorney general’s lawsuit comes 28 months after Newsday’s investigation — “Crisis, Care and Tragedy on LI” — exposed the impact of the pandemic on the Cold Spring Hills residents, families and staff. The investigation also revealed the 588-bed facility’s place in the owners’ collection of profit-making nursing homes.

“When COVID-19 hit Long Island, Respondents’ exploitative business model simply snapped under the poor working conditions they had created,” the lawsuit said, adding that the facility neglected to report to the Department of Health 51 resident deaths from COVID-19 during the first three months of the pandemic.

Newsday reported in September 2020, a month after its investigation was published, that the state attorney general’s office had launched its own investigation of Cold Spring Hills.

The attorney general's lawsuit named as defendants Philipson and Benjamin Landa, longtime nursing home magnates who, according to Medicare records, had amassed by 2020 -- along with their family members -- interests in 163 facilities across 18 states, including the purchase of Cold Spring Hills in 2016.

They split in 2019 after Landa accused Philipson in a court action of diverting $53 million from their businesses into a Bermuda-based insurance entity.

The lawsuit said Philipson “took sole control of the operations, finances, and management of Cold Spring Hills” after the break with Landa, and they never informed the state health department of a change in the ownership or operating structure of the facility, as state law requires.

Philipson sat for an interview with the attorney general’s office but declined to testify, asserting his right against self-incrimination 685 times, according to the lawsuit. 

An attorney for Landa did not respond to requests seeking comment.

The lawsuit also named as defendants a dozen companies that the owners used “to create the appearance that they were paying for services for the nursing home, but were in fact redirecting Medicaid and Medicare money to themselves and thereby diverting funds away from resident care,” the attorney general’s office said.

Also named were 10 individuals, including Philipson’s son Avi and Landa’s daughter Esther Farkovits, who the attorney general’s office say were “straw owners, put in place to conceal their fathers’ control.”

Nancy Gertler, of Great Neck, holds a photograph of her...

Nancy Gertler, of Great Neck, holds a photograph of her late mother, Florence, who and was a resident of Cold Spring Hills Center for Nursing and Rehabilitation in Woodbury. Credit: Kendall Rodriguez

Families who lost loved ones at Cold Spring Hills in the early days of the pandemic expressed satisfaction that the attorney general sued the facility and exasperation at the allegations in the complaint.

"I’m ecstatic that they’re actually going to go after these guys for what they’ve done, because they took a perfectly good nursing home and they turned it into a hellhole," said Nancy Gertler, of Great Neck, whose mother Florence died April 12, 2020.

Debra Garofolo’s mother, Julie Toves, also died April 12.

“I just find it unconscionable that anybody would take away money, or misappropriate it, that was given by the government to alleviate human suffering,” she said. “I think that and I hope to God that these people are held accountable to the fullest extent of the law.”

Her mother’s death certificate lists coronary artery disease, but Garofolo believes Toves succumbed to COVID-19.

Debra Garofolo holds a photo of her late mother, Julie Toves,...

Debra Garofolo holds a photo of her late mother, Julie Toves, who died at Cold Spring Hills. Credit: Newsday/Alejandra Villa Loarca

“I trusted them to do the right thing, to keep my mother safe,” Garofolo said. “And then later on I’m learning that was their last intention.”

Cold Spring Hills’ unionized employees expressed concerns about worsening working conditions “multiple times over the past few years,” according to Daine  Williams, executive vice president of 1199 SEIU United Healthcare Workers East.

“Attorney General James’ lawsuit against Cold Spring Hills exposes what nursing home workers at the facility have known for far too long — that staffing conditions exist which jeopardize resident care,” Williams added.

The Cold Spring Hills lawsuit comes three days after the attorney general sued another nursing home, Fulton Commons Care Center in East Meadow. In that suit, James accused the operators of patient neglect, using public money to pad the payroll and underreporting COVID-19 deaths.

Bill Hammond, senior fellow for health policy at the Empire Center think tank, said James’ investigations likely will become broader because many owners of nursing homes in New York have shares of ownership in several homes. He said she is using a novel approach by relying on business fraud measures, rather than health law, to investigate nursing homes.

“She is carving out a legal argument where you combine evidence of bad care with evidence of high profits and you call that Medicaid fraud. I think she has a point,” Hammond told Newsday. “I don’t know how the courts will view this, but these are arguments that could potentially go nationwide if she is successful.”

With Cecilia Dowd and Michael Gormley

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