Former Bronx County Nursing Home Owner Indicted For $3 Million Medicaid Larceny

Attorney General Spitzer today announced that an Albany County grand jury has indicted former nursing home owner Abe Zelmanowicz for stealing more than $3 million from the Medicaid program. In addition to criminal charges, the Attorney General’s office has filed a lawsuit against Zelmanowicz seeking treble damages – civil penalties of three times the amount of his larceny.

Zelmanowicz, 52, of Scarsdale, is the former owner of two Bronx nursing homes: Eastchester Health Care Center, LLC and Split Rock Multi-Care Center, LLC. According to the charges in the indictment, from January 1, 1997, to August 27, 2003, Medicaid payments were made to the homes based on submissions by Zelmanowicz, which claimed that the nursing homes were properly reserving or "holding" a resident’s room when the resident was temporarily hospitalized.

Under state law, nursing homes are only allowed to temporarily bill for "bed holds" when the home is 95% occupied and when the hospitalized residents had lived in the nursing home for at least 30 days before their hospitalization. It is alleged that Zelmanowicz knowingly billed for "bed holds" when he knew that he was not entitled to receive those payments under these regulations.

It is further alleged that Zelmanowicz fraudulently submitted claims for payment to the Medicaid program which falsely claimed that Medicaid patients were receiving ventilator treatment when the patients were not. Medicaid pays nursing homes significantly more for nursing home patients who receive ventilator care.

Zelmanowicz and the entities which formerly owned the two homes were arraigned yesterday in Albany County Court on a 21-count indictment charging with one count of Grand Larceny in the First Degree and 20 counts of Offering a False Instrument for Filing in the First Degree. If convicted, Zelmanowicz faces up to 25 years in prison.

Zelmanowicz and his partner, Rebecca Rich, of Purchase, sold the nursing homes in September 2002. The current owners of the nursing homes cooperated with the Attorney General’s investigation and were not accused of any misconduct.
A related civil lawsuit filed by the Attorney General seeks asset forfeiture from Zelmanowicz and Rich and seeks repayment by Zelmanowicz of three times the amount he fraudulently overbilled. The civil complaint alleges that Zelmanowicz, who took an $800,000 annual salary from the nursing homes, ignored the repeated admonitions of his accountants to end his wrongful billing practices and repay the Medicaid program. The complaint further alleges that Zelmanowicz was warned by his staff that he was violating the rules governing Medicaid reimbursement but that he nonetheless instructed them to continue submitting the fraudulent claims. Altogether, the civil complaint seeks more than $12 million from Zelmanowicz.

Attorney General Spitzer noted that the case demonstrated how Medicaid fraud is not only a matter of phantom patients and fly-by-night operations. "In this case, two substantial facilities, in business for many years, with real patients, were used as a means to extract money from Medicaid by hiding crooked billings among the mass of real services. We are committed to uncovering this sort of fraud and abuse and to using all tools, criminal and civil, to punish those who cheat the Medicaid system."

The charges against Zelmanowicz and the nursing home companies are merely accusations, and the defendants are presumed innocent until and unless proven guilty.

Special Assistant Attorneys General Gilbert Epstein and Thom O’Hanlon, of the Medicaid Fraud Control Unit’s Pearl River Regional Office, are prosecuting the case. Special Investigators Tim Connolly and Jeffrey Pitts, Supervising Auditor Investigator Jean Moss and Associate Auditor Investigator David Lee are assisting in the investigation.

Special Assistant Attorney General James Cudden is handling the civil litigation.