scales of justice

The former head of a nursing home empire that grew quickly and crumbled even more quickly is close to reaching a plea deal with federal prosecutors that would cover all pending criminal charges. 

Joseph Schwartz is under federal indictment in New Jersey, where he was charged with failing to pay $29.5 million in payroll and unemployment taxes, according to court records. 

A potential agreement was announced earlier this month before Arkansas Circuit Court Judge Karen Whatley, who presided over a negligence case there in which Schwartz was involved. Earlier this month, Schwartz was ordered to pay $15.7 million to the family of a woman who died in one of the homes formerly under Skyline’s control, the Arkansas Democrat-Gazette reported. 

Arkansas Deputy Attorney General Lloyd Warford, head of the state’s Medicaid Fraud Control Unit, said prosecutors wanted a “global settlement” to “resolve all of the criminal charges against Schwartz,” which include fraudulently billing Medicaid more than $3.6 million in 2018, the newspaper reported. 

As McKnights Long-Term Care News has reported, there are multiple federal and state cases against Schwartz. He grew his Skyline Healthcare chain after 2015 but quickly found himself facing allegations of gross mismanagement and wrongdoing. In addition to facing 10 felony charges in Arkansas, Schwartz was the subject of civil charges in Nebraska where he was accused of filing $59 million in fraudulent Medicaid charges for 22 facilities there. 

At one point, he was credited with owning or running more than 100 nursing homes. Facilities in Nebraska were sent abruptly into third-party receivership in 2018. Dozens of others in South Dakota, Pennsylvania, Massachusetts and elsewhere were either taken over by the state or found to be bouncing checks or not paying workers or vendors, according to an NBC investigative report, which also detailed complaints about care.

The Department of Justice accused the company of not paying employment and unemployment taxes for more than 15,000 employees at 95 facilities in 11 states. 

In the latest case in Arkansas, Schwartz and the facility defendants did not dispute accusations from the family of Zelma Grissom, 81, who died in May 2018 after an infected bedsore developed into sepsis. Lawyers for the family said there was no documentation to show that Grissom was turned or repositioned to minimize the risk of bedsores and was found “dirty, unkempt … and moaning in pain,” the Democrat-Gazette wrote.

Facility defendants include Highlands of Little Rock Riley Holdings LLC, which conducted business as Hillview Rehabilitation Center, Skyline Highland Holdings LLC, and JS Highland Holdings LLC.

In August, Schwartz personally asked the court to reverse the liability finding, denying any responsibility for Grissom’s injuries saying he was only an “investor” in the facility and was not notified about summary judgment.

Local media reports noted that he wrote, “I am a 60-year-old man in extremely poor health. I am morbidly obese, diabetic and have heart problems. … I never visited Arkansas, and I had no personal connection with the day-to-day operation of any of the nursing homes in Arkansas. The tragedy that had befallen Zelma Grissom was not my fault. I had no control or [oversight] at the premises and I was simply an investor and had no management role in the nursing home at all.”

He said he sold his holdings in Skyline in mid-2018, but the transaction was not completed until 2019 and that the new owner should be held responsible. 

Neither Schwartz’s lawyer nor Arkansas officials returned calls or emails seeking comment Tuesday. A person who answered the phone at the Arkansas nursing home referred McKnight’s to a marketing contact, who also did not respond to a message seeking comment.