Former N.J. nursing home owner where 17 bodies were found in shed in Andover faces arrest in $3.6M fraud

An arrest warrant has been issued for a former New Jersey-based nursing home operator charged in a $3.6 million Medicaid fraud case involving his facilities in Arkansas, according to the Arkansas attorney general.

Joseph Schwartz, who operated Skyline Health Care, a failed multi-state nursing home chain that once operated out of a second-floor office above a Wood-Ridge pizza parlor in Bergen County which collapsed amid widespread financial problems and allegations of mismanagement, was charged with illegally inflating rates paid at eight Arkansas nursing homes. He was also cited for allegedly failing to pay taxes that were withheld from employees’ paychecks, said Attorney General Leslie Rutledge.

“These charges come after a 44-month-long investigation into Skyline’s wrongdoings, and I will not sit idly by while anyone defrauds the state and federal government out of millions of dollars to line their own pockets,” said Rutledge in a statement.

According to the attorney general’s office, Skyline submitted false statements in cost reports and other documentation to the Arkansas Medicaid Program. Officials said in 2018, Skyline exaggerated its costs by $6.2 million, receiving an overpayment of $3.6 million for the nursing home facilities it operated there.

If convicted, Schwartz would likely be precluded from Medicare and Medicaid participation, forcing him out of the nursing home business.

An attorney for Schwartz told NBC News that his client is expected to surrender in January and that he will plead not guilty to the charges.

Schwartz, 61, of Brooklyn, relinquished most of his nursing homes, including those in Arkansas, because of financial insolvency.

Among the nursing home facilities he owned in New Jersey was the Andover Subacute and Rehabilitation Center in Sussex County, where a makeshift morgue that overflowed with 17 bodies at the height of the COVID pandemic garnered national headlines upon its discovery. He had relinquished ownership of the facility before the incident to a partnership that included his son, Louis Schwartz. Andover has since been renamed the Limecrest Subacute and Rehabilitation Center and Woodland Behavioral and Nursing Center, although Schwartz’s son retains an ownership stake, according to state records.

Federal regulators last year slapped Andover Subacute with $220,235 in fines and penalties, finding significant failures in infection control practices.

No criminal charges have been filed against Andover or Skyline in New Jersey, although the state Attorney General has had an ongoing investigation into the nursing home industry in the state that was announced more than a year ago.

Schwartz, meanwhile, is being sued in federal court by former employees in multiple states who claimed that they were left without health insurance even though money had been deducted from their paychecks. The five plaintiffs worked at Skyline-operated facilities in South Dakota, Kansas, Nebraska and Arkansas.

According to the lawsuit, filed in U.S. District Court in Newark, Schwartz and his wife allegedly stole more than $2 million from employees’ paychecks that was supposed to pay for employee health insurance. It alleged that a dummy corporation was set up to pose as their employer and then used to pocket the collected insurance premiums, accusing the Schwartzes of racketeering, racketeering conspiracy, negligence and other violations as well as of violating fraud laws in the four states.

Attorneys for the former employees, in court filings, said they only learned of the theft. “when they underwent medical procedures, only to be told that despite the appearance of valid insurance on paper, their plan was not funded, and they were liable for significant medical bill.”

Skyline once operated more than 100 nursing homes under numerous subsidiary companies. In addition to New Jersey, those facilities were in Pennsylvania, Florida, Massachusetts,