A disgraced nursing home owner must pay $7.7 million to a medical supply company, one of many debtors he owed after the collapse of Skyline Healthcare.
A US District Court judge this month ordered Joseph Schwartz to pay $5.1 million in outstanding invoices, $2.4 million in interest and $145,000 in attorneys fees to California-based Twin Med. Skyline contracted with Twin Med for medical supplies to be delivered to its roughly two dozen Arkansas nursing homes, an agreement the company alleged Schwartz personally guaranteed.
Following months of back and forth in which Schwartz tried to delay this case and a deposition until after his multiple criminal charges were resolved, Judge James M. Moody Jr. of the Eastern District of Arkansas granted Twin Med summary judgment on Aug. 18.
Schwartz still faces multiple federal charges in relation to his now-defunct business, which quickly swelled to some 100 nursing homes in 11 states before its collapse in 2018. Skyline crumbled after Schwartz first admitted challenges paying vendors; many of his facilities, including those in Arkansas, Kansas, and Pennsylvania, eventually ended up in receivership.
In January, Schwartz pleaded not guilty to 22 charges in an alleged $29.5 million tax fraud scheme. Federal prosecutors in New Jersey said he failed to pay payroll and unemployment taxes to the IRS from mid-2017 through June 2018 in a case involving 15,000 employees across the Skyline chain.
Schwartz is out on a $2 million bond on the federal charges. He faces up to 10 years in prison if found guilty.
In Arkansas, the attorney general has accused Schwartz of providing false statements in cost reports required by the Medicaid program. He exaggerated Skyline’s costs by $6.3 million, received $3.6 million in excess payments, and failed to pay to the state more than $2 million withheld from employees’ paychecks between July 2017 and March 2018, the attorney general announced in December.
Schwartz’s Arkansas trial is set for March 28, Arkansas Business reported Monday.
The Twin Med case reveals what state and federal prosecutors could be dealing with as those cases proceed.
The business journal outlined how Twin Med, in court filings, accused Schwartz and his companies of engaging “in every maneuver in the book to avoid complying with their discovery obligations,” including sitting for a deposition. Moody eventually ordered the deposition, ruling that a request to delay it until criminal charges were resolved could take years.
A voicemail left for Schwartz’s attorney, Robert Fedor, was not returned by production deadline.
The $7.7 million finding in Arkansas was the second major judgment against Schwartz this year.
Earlier this year, a civil case in Little Rock related to the 2018 death of a 52-year-old woman at a Skyline nursing home led to a $10 million verdict. Schwartz has not appealed, Arkansas Business reported.