Feds charge owner of defunct nursing home chain Skyline Healthcare in $30 million fraud

New Jersey’s U.S. Attorney’s Office indicted Joseph Schwartz, the owner of a defunct nursing home chain, including 10 in the Philadelphia area, for allegedly failing to pay $29.5 million in payroll taxes to the IRS from mid-2017 through June 2018.

Schwartz’s Skyline Healthcare LLC, which accumulated more than 100 nursing homes across the country in less than two years, underwent a rapid-fire collapse during the spring of 2018 as the company ran out of cash. Regulators in Pennsylvania and several other states put emergency operators in place to protect thousands of residents.

Schwartz’s meteoric rise and fall turned into a rallying point for advocates pushing for more thorough reviews of applicants for nursing home licenses, including an evaluation of an applicant’s financial strengths and abilities, as well as their track record in other states.

» READ MORE: Skyline Healthcare's rapid growth drew questions from industry experts.

Now, prosecutors are catching up to Schwartz, 62, a former insurance broker from Suffern, N.Y.

Last month, Schwartz faced criminal charges in Arkansas for allegedly overbilling Medicaid by $3.6 million.

On Wednesday, Nebraska’s attorney general filed a civil complaint alleging that Schwartz defrauded the state’s Medicaid program of $59.7 million because his nursing homes did not keep proper records of care, failed to disclose payments to related companies, and engaged in other violations of Medicaid regulations.

A spokesperson for the U.S. Attorney’s Office in New Jersey identified Schwartz’s attorney as Robert Fedor, of Cleveland, Ohio. Fedor did not respond to a request for comment Friday. The U.S. Attorney’s Office filed the indictment under seal on Jan. 12. It was unsealed Thursday.

» READ MORE: Skyline ran out of money to operate.

Federal authorities arrested Schwartz on Thursday. He is now under home confinement in Suffern, though Schwartz is scheduled to be arraigned on criminal charges in Arkansas next week, the U.S. Attorney’s spokesperson said.

The businessman’s unwinding has some in the industry wondering why Schwartz didn’t retire after selling his insurance brokerage, Oxford Coverage Inc., in 2015 for $22 million to Hub International Northeast Ltd.

Instead, he remained an employee of Hub, with a $300,000 annual salary. Plus, he collected commissions on insurance policies he sold to Skyline’s growing empire of nursing homes. Schwartz listed the company’s headquarters as an office above a pizza shop in Wood-Ridge, N.J.

As Skyline took over dozens of nursing homes in at least 11 states — many of them from a company that retained ownership of the real estate — between mid-2016 and December 2017, Schwartz made himself a salaried employee at some of them, according to the indictment in New Jersey.

» READ MORE: Chaos at Skyline nursing homes in the final days.

That was the case at Rosemont Care & Rehabilitation Center on the Main Line, where he collected $2,500 from every biweekly payroll, The Inquirer reported in 2018.

The Pennsylvania Department of Health ousted Skyline from Rosemont and eight other nursing homes in April 2018 after determining that Skyline “could no longer fiscally operate the facilities.” All are under new management.

In addition to not remitting payroll taxes to the federal government, as alleged by the federal prosecutor, Schwartz failed to pay health insurance premiums for employees and remit union dues at some Pennsylvania facilities where SEIU Healthcare Pennsylvania represents nursing assistants and licensed practical nurses, The Inquirer reported.