Burlington County nursing home with nation’s biggest fine for a safety violation this year faces Medicare and Medicaid crackdown

Sterling Manor Nursing Center, a Burlington County nursing home, received the nation’s biggest fine for patient safety violations this year and is now facing a federal and state crackdown. Regulators have threatened to terminate its participation in Medicare and Medicaid, the government insurance programs that pay for most nursing home care.

Federal regulators fined Sterling Manor $738,590 in connection with a January complaint inspection that uncovered multiple drug overdoses by residents. Separately, in July, Sterling Manor was fined an additional $266,450, but details on why were not immediately available.

The two fines gave Sterling Manor the highest total for financial penalties nationwide out of more than 2,300 nursing homes with fines from January through Oct. 2, an Inquirer review of federal records found.

The facility’s history of “serious quality issues” is reflected in a warning icon posted on a Medicare website that rates nursing homes on quality measures. Sterling has no rating currently.

Last month, about a month after state inspectors cited Sterling for another resident overdose, the federal Centers for Medicare and Medicaid notified Sterling that it would be terminated from the government-sponsored health insurance programs on Jan. 31, unless it produced an adequate improvement plan, according to a Dec. 6 letter from the New Jersey Department of Health.

Thursday the New Jersey Comptroller’s Medicaid Fraud Unit jumped in, announcing its intention to suspend Sterling Manor and a nursing home in Bridgeton, Cumberland County, from Medicaid in 60 days. It’s common for nursing homes to be sold or placed under alternative control under these circumstance, as happened to facilities in Deptford and Hammonton this year.

Both Sterling and South Jersey Extended Care in Bridgeton provided substandard care for years and engaged in a Medicaid fraud by siphoning money to a group of related companies that operated the facilities on behalf of an owner who had no real responsibility, the comptroller’s office said.

Sterling has 124 beds. The number of beds at South Jersey Extended Care is 167.

At the same time as announcing its intention to suspend the two nursing homes and their operators from Medicaid, the comptroller’s office released a 70-page report painting a picture of how a web of related companies allegedly profited from their management of South Jersey Extended Care, which is owned on paper by a man named Mark Weisz.

The reality, according the comptroller, is that Weisz ceded all responsibility for the facilities’ operations to companies owned by his cousin, Michael Konig, and Konig’s brother-in-law, Steven Krausman. Those relationships were not disclosed on nursing home cost reports as required by law, allowing Konig and Krausman to charge inflated rates without exposure to state and federal scrutiny, according to the controller’s report.

“This investigation shows that Krausman and Konig’s broader business model was to funnel as much money as possible to themselves — from a dedicated, taxpayer-funded funding stream — to support their other business interests, while providing low-quality nursing home care,” the report said.

The scheme described by the comptroller has been documented for years throughout the industry by national media and academic studies.

When asked for comment, Peter Slocum, a lawyer for Konig, Krausman, and Weisz, provided copies of his responses to an advance copy of the comptroller’s report.

The report is “defamatory and wholly unsupportable,” he told the comptroller’s office in the Nov. 19 letter. He provided no further comment to The Inquirer.

A new management company, not included in the comptroller’s report, has operated the two facilities since August 2022.

Konig has a checkered record in the nursing home industry. In the mid-1990s, Connecticut banned him from the business for five years, according to the Boston Globe, and later that decade Massachusetts banned him from operating nursing homes for 10 years. In both cases, authorities investigated Konig for Medicaid fraud and poor resident care.

Around that time, Konig set up alternative owners for the nursing home operated in New Jersey, including Weisz at South Jersey Extended Care and Sterling Manor. But his Broadway Healthcare Management continued providing extensive services to the facilities, including staffing them, according to the comptroller’s report.

Konig has a history of receiving reprimands from federal authorities.

A federal judge in 2015 ordered him to pay $636,410 in back wages and overtime to at least 150 direct-care staff who worked at 10 nursing homes throughout New Jersey.

The U.S. Third Circuit Court of Appeals in 1996 upheld a National Labor Relations Board decision ordering Konig to stop interfering with unionization efforts by licensed practical nurses at a Vineland nursing home he owned at the time.