The Reading Eagle had an incredible story about Joseph Schwartz who grew his New Jersey-based nursing home chain, Skyline Healthcare LLC, from about two dozen homes to 120 scattered across 10 states until the chain collapsed amid allegations of fraud, abuse, and waste. Skyline’s financial collapse forced the state Department of Health to remove managers at seven of its homes in Pennsylvania only a year after it approved the company to operate them.Schwartz had a history of unethical and illegal behavior prior to Skyline. In Florida, he was accused of diverting insurance premiums that should have been spent on employee health care claims. In addition to the Florida lawsuit, that record includes a 2009 Pennsylvania lawsuit from a pharmacy claiming breach of contract, several business liens and a $2,500 New York State Insurance Department fine from a decade ago, levied when Schwartz, without a license, helped a company act as an insurance broker.
“I want to know how the state didn’t know,” said Robinson, who works at Rose City Nursing and Rehabilitation in Lancaster. “These people are doing business in your state.”
Documents obtained under Pennsylvania’s Right-to-Know Act prove that Pennsylvania relied on unverified and incredible self-reported information. Consequently, hundreds of nursing home residents in Pennsylvania were put at risk and employees were put in an untenable position, attempting to care for patients that Skyline could no longer afford to feed or medicate.
The conditions became so dire that Skyline employees tried to shield their residents from the fallout. Employees interviewed for this story described purchasing, at their own expense, snacks for sick patients and gasoline for company vans to transport them. Staff also reported hiding cash in a freezer to pay wary vendors who refused to accept Skyline’s checks.
In Kansas, Department of Aging and Disability Secretary Timothy E. Keck filed a lawsuit alleging that Schwartz and his wife and sons “deliberately withheld premium payments from employees’ paychecks for health insurance and other benefits but did not purchase health insurance for the employees.”
The Schwartzes either lacked the capital to meet their payroll obligations, the suit alleged, “or converted the funds to their own use,” according to the complaint.