A Nassau County judge has rejected a motion by Cold...

A Nassau County judge has rejected a motion by Cold Spring Hills Center for Nursing & Rehabilitation in Woodbury to dismiss a lawsuit by State Attorney General Letitia James accusing the facility's leadership of diverting millions in government funding away from resident care. Credit: Rick Kopstein

A Nassau County judge has denied a motion by Long Island’s second-largest nursing home to dismiss a lawsuit by State Attorney General Letitia James accusing the facility's leadership of enriching themselves by diverting millions in government funding away from resident care.

In a decision released Monday, State Supreme Court Judge Lisa Cairo found that the 28 entities named in the lawsuit had failed to prove that they were not part of a self-dealing scheme to skirt state laws.

"Knowingly funneling funds through corporate entities does not insulate a recipient of ill-gotten gains from liability," Cairo wrote in the 15-page decision, which allowed the lawsuit to proceed.

The 186-page complaint, filed by James' office in December, alleges that the owners and management of Cold Spring Hills Center for Nursing & Rehabilitation in Woodbury diverted more than $22.6 million in Medicaid and Medicare funds for residents' care by using a fraudulent network of a dozen companies to conceal upfront profit taking.

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

Attorneys for Cold Spring Hills and several of the respondents did not respond to requests for comment  

The lawsuit alleges, Cold Spring Hills deliberately neglected the care of residents, repeatedly cutting staff at the 588-bed facility in the weeks before the COVID-19 pandemic, leading to "heartbreaking and inhumane conditions" that endangered lives.

The suit contends that a female resident, recovering from a stroke and with limited communication ability, was given just one shower in five months because staff did not have the appropriate chair. The suit also cited a resident in his 70s with reduced mobility after a car accident. He lost 30 pounds in less than four months and eventually was hospitalized due to dehydration and severe protein malnutrition, according to the suit.

In another case cited by the attorney general, a diabetic resident who had difficulty walking was given a wheelchair that did not have footrests, requiring him to drag both of his feet on the floor to use it. The resident developed sores on his right foot and he later had to have part of his toe amputated because of the severity of his infections, according to the lawsuit.

It seeks the removal of Philipson from any involvement in the facility’s operations and a court order that he and his partners pay an unspecified amount of restitution. 

The suit also seeks an independent health care monitor to oversee residents' care, and a financial monitor.

In court filings seeking the case’s dismissal, one respondent called the complaint a “publicity stunt disguised as a lawsuit” while another accused James of “obfuscation and poorly conceived sleight of hand.”

In an April 14 response, John Martin, a Great Neck attorney representing Cold Spring Hills, said if the lawsuit is successful, the nursing home would likely be forced to shutter its doors.

“The sudden relocation that will be required will be a logistical nightmare,” Martin wrote. “But the AG is happy to destroy the facility immediately, with little care or forethought about the consequences of her actions.”

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 facility’s place in the owners’ collection of profit-making nursing homes.

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