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The Nebraska Attorney General’s Office has accused a New York couple of carrying out a $59.6 million Medicaid fraud involving the ownership of a chain of nursing homes in Nebraska.

In the complaint filed in Lancaster County District Court, Joseph Schwartz, Rosie Schwartz and Skyline Healthcare LLC are accused of surreptitiously directing and controlling the major operations and management of 22 Nebraska facilities under the Cottonwood Healthcare LLC umbrella and making decisions that were detrimental to the facilities and financially beneficial to the Schwartzes and Skyline.

The facilities ultimately were put in receivership in 2018 after failing to make payroll.

Assistant Nebraska Attorney General Vicki Adams said Skyline, through the Schwartzes, acquired operational ownership of well more than 100 nursing homes in Nebraska and a half-dozen other states starting in 2016.

The 22 in Nebraska previously had operated as Golden Living.

Adams said business office managers, many of whom had worked for Golden Living before the transfer of ownership, were told the facilities would function much the same as they had before.

She said the managers went to Skyline, which had no more than 15 employees at any given time, when they needed assistance or direction managing the facilities.

According to the lawsuit, some expressed concern about Skyline’s ability to successfully manage the Nebraska Cottonwood facilities. 

While local facilities hired staff for day-to-day operations, the financial operations weren’t within their control. They had no operating budget or monthly financial reports tracking expenses.

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Adams said Skyline determined which bills got paid. Often vendors that were owned by Joseph Schwartz or his business associates were paid while others weren’t.

In some cases, employees at the Nebraska nursing homes would use their own money to pay vendors for the residents’ sake.

In December 2017, Cottonwood’s regional director had a meeting in Omaha to discuss cuts to reduce expenses at the Nebraska facilities.

By March 23, 2018, Skyline informed state officials that it couldn’t make payroll for its Nebraska employees, and the state sought to place the Cottonwood facilities into receivership.

Adams said a number of employees at the local level learned they didn’t have health insurance through their jobs despite paying premiums through Skyline.

Shortly after the Nebraska Cottonwood facilities went into receivership, the same thing happened in South Dakota, Kansas and some of the Arkansas facilities.

Adams said the business’s cost reports, which are required to be provided by long-term care facilities for payment by Nebraska Medicaid, used false numbers that led to the payment of $3 million above the approximately $30 million it should have received for the operation of the Nebraska Cottonwood nursing homes. 

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The company now is accused of making false records, failing to maintain documentation and fraudulent misrepresentation, which resulted in payments to which it wasn’t entitled.

“As a result of the defendants’ breach of their agreements with Medicaid, the plaintiff suffered damages in the amount of $59,652,388.90,” the attorney said in the lawsuit.

Violations of the False Medicaid Claims Act are subject to up to three times damages and up to a $10,000 penalty per claim submitted.

Adams said in addition to the $59.6 million amount, Nebraska is seeking treble damages of $178,957,167, plus attorney fees.

In December, 61-year-old Joseph Schwartz, of Brooklyn, was charged in Arkansas with eight counts of Medicaid fraud for the alleged overbilling there that resulted in an overpayment of $3.6 million for the eight nursing home facilities.

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Reach the writer at 402-473-7237 or lpilger@journalstar.com.

On Twitter @LJSpilger

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