The owner of a fast-rising and even faster-falling nursing home empire has been granted a temporary reprieve in federal court.
Joseph Schwartz, the former head of Skyline Health Care, is under federal indictment in New Jersey for failing to pay $29.5 million in payroll and unemployment taxes as well as 22 criminal counts, including benefit plan fraud. But US District Judge Susan D. Wigenton issued a continuance due to more than 2.5 million documents that are expected through discovery in the case.
The discovery is “expected to be voluminous,” according to an Oct. 6 order noted in an Arkansas Business article published Monday. A trial date has not yet been set.
Schwartz’s empire started to take off in 2015 and, one at point, his companies owned or operated more than 100 nursing homes in multiple states. In 2018, facilities in Nebraska were sent into receivership and dozens of others in Massachusetts, Pennsylvania, South Dakota, and elsewhere were taken over by states or were bouncing checks for employees and vendors, as McKnight’s Long-Term Care News has reported.
Schwartz has since been portrayed by critics as a sign of what can go wrong with nursing home ownership groups, and has been cited as the impetus for numerous reform efforts.
A former insurance agency owner, Schwartz was charged in Nebraska for filing $59 million in fraudulent Medicaid charges at 22 nursing facilities there. He also faces charges in Arkansas where he accused of submitting false cost reports that exaggerated Skyline Health Care’s costs by $6.3 million and receiving overpayments of $3.6 million by Medicaid.
In 2019, Kansas passed a new law requiring nursing homes to provide more details about their finances and owners, partly in response to problems with Skyline Health. The state had taken over 22 nursing facilities, 15 of which were operated by Skyline Health Care, which owned millions of dollars in missed payments to vendors, McKnight’s reported.
In total, the US Department of Justice has accused Skyline Health Care of not paying employment and unemployment taxes for more than 15,000 employees at 95 facilities in 11 states. Earlier this year, a potential deal was announced before Arkansas Circuit Court Judge Karen Whatley, who presided over a negligence case there in which Schwartz was involved. He was ordered to pay $15.7 million to the family of a woman who died in one of the nursing homes his company controlled.
Schwartz has asked the court to reverse that liability finding, saying he is just an investor in the facility and has “never visited Arkansas, and I had no personal connection with the day-to-day operation of any of the nursing homes in Arkansas.” He said he sold all holdings in Skyline Health in mid-2018, but the transaction was not completed until the following year.