TRENTON—A Superior Court judge appointed an independent receiver on June 17 to run the Deptford Center for Rehabilitation and Healthcare and Hammonton Center for Rehabilitation and Healthcare, following the Office of the State Comptroller’s move to suspend the owners and facilities from New Jersey Medicaid.

The appointment means that the receiver has complete control and authority over the finances and operations of both South Jersey nursing homes. Citing poor conditions in the facilities and evidence of massive Medicaid fraud in the owners’ New York facilities, OSC’s Medicaid Fraud Division had previously notified the owners, Kenneth Rozenberg, Beth Rozenberg, and Daryl Hagler and their entities that they would be suspended effective June 17, 2024 from New Jersey Medicaid unless they completely dissociated from the facilities.

Due to the receivership, OSC temporarily lifted the suspension, pending the outcome of the New York fraud case, OSC’s investigation, or until and if the receiver determines the facilities should be closed, according to a letter OSC sent to Hagler and the Rozenbergs.

The Department of Health had sought the court order, noting that both facilities rely almost exclusively on Medicaid funding and would have been in dire financial straits if suspended from Medicaid. The owners said in court filings that they have found a likely buyer and consent to the appointment of a receiver. Until the Department of Health approves the sale, the receiver is authorized to take any action “necessary or appropriate to conserve the property and promote the health, safety, and welfare” of residents, according to the court order. Additionally, the order bars the owners from “taking any action that could interfere” with the receiver’s responsibilities, such as liquidating assets.

The Rozenbergs and Hagler also agreed to a voluntary suspension of their lab service companies from New Jersey Medicaid.

OSC noted in its January 25, 2024 suspension letter that the New Jersey facilities, Hammonton Center and Deptford Center, have been cited repeatedly for serious health and safety violations that negatively impacted residents’ care. Both Hammonton Center and Deptford Center have received low ratings for health and safety from the federal Centers for Medicare and Medicaid Services.

Hagler and the Rozenbergs also were accused of siphoning $83 million from nursing homes funded by New York Medicaid and Medicare to enrich themselves. In July 2023, a New York State Supreme Court judge found evidence of “repeated and persistent fraud” so credible that she appointed a financial monitor and health monitor to assess and manage the operations of their New York nursing homes. 

“When there is evidence of fraud of this magnitude, and when there is a record of siphoning of public funds and self-dealing, we have a duty to act," Acting State Comptroller Kevin Walsh said. "To protect New Jersey Medicaid and the residents who rely on it, we will stop the flow of Medicaid funds to those involved in fraud and require them to step aside.” 

Read the court order and the letter OSC sent to Hagler and the Rozenbergs.

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To report government fraud, waste, mismanagement, or corruption, file a complaint with OSC or call 1-855-OSC-TIPS.