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Post date: June 30 2003

Upstate Nursing Home Chain Admits To Criminal Charges Relating To Understaffing And Falsification Of Records

Attorney General Spitzer today announced that a nursing home chain with facilities located throughout New York State has pleaded guilty to criminal charges stemming from its failure to provide an adequate level of skilled nursing care to patients at its flagship nursing home in the city of Schenectady.

Hallmark Nursing Centre, Inc. (Hallmark), entered a plea of guilty Friday in Schenectady County Court to one count of Falsifying Business Records in the First Degree, a class E felony, and one count of Wilful Violation of the Public Health Laws, a misdemeanor.

In pleading guilty, Hallmark admitted that during 2000 and early 2001 it knowingly operated its 224-bed nursing home, located on Altamont Avenue in Schenectady, without employing sufficient skilled nursing staff to provide appropriate care to each of its elderly residents as required by law. Hallmark also admitted that its employees falsified its business records to conceal that licensed practical nurses were unlawfully performing medical assessments.

As part of its plea agreement, Hallmark will pay $1 million in restitution to the state’s Medicaid program prior to sentencing, and a total of $17,000 in fines. Moreover, Hallmark and its owners, James Durante and Joseph Nichols, will divest themselves of their nursing home operations. Durante also will be required to forfeit his nursing home administrator’s license, and he and Nichols will be permanently enjoined from having any further involvement in the management, operation or ownership of any nursing home in New York State. In addition, Hallmark agreed to enter into a compliance agreement, which will be overseen by an independent monitor approved by the State Department of Health. Hallmark will pay all costs relating to the monitor.

Spitzer said, "This prosecution demonstrates that nursing homes will be held criminally accountable when corporate management willfully fails to follow important laws designed to protect nursing home residents. It also signals that my office will work aggressively to ensure that basic quality care is a priority for every nursing home in this state. When a nursing home continues to admit residents when its staff cannot adequately care for them, it unnecessarily endangers residents’ health and well being and violates state law."

Prosecutors noted that although understaffing at the Altamont Avenue nursing home during 2000 and 2001 resulted in harm to some residents, the Department of Health has informed the Attorney General’s office that current Hallmark residents are receiving adequate care. The Attorney General’s office is working closely with the Health Department to structure a disposition that will protect current residents by allowing for an orderly and closely monitored divestiture of the defendant’s nursing homes.

Today’s plea follows a lengthy investigation by the Attorney General’s Medicaid Fraud Control Unit, which focused on the operation of the Altamont Avenue nursing home during 1999 to 2001. The investigation was sparked, in part, by the facility being repeatedly cited by the state Department of Health (DOH) for deficiencies that the home failed to correct. Specifically, DOH inspectors found that the nursing home failed repeatedly to prevent and treat dangerous pressure sore wounds, to give patients medications on a timely basis, and to provide treatments and evaluations, as well as other quality of life care requirements. DOH concluded that numerous residents had suffered actual harm because of these deficiencies.

DOH further found, in three inspections conducted between May 2000 and August 2001, that the facility did not have sufficient nursing staff to provide required care and that the lack of staff had contributed to the harm suffered by its residents.

According to the felony complaint filed in court, the administrator of the Hallmark Altamont Avenue nursing home knew as early as April 2000 that staffing was at a critically low level and that resident care was at risk. Although Hallmark assured DOH that it would address staffing issues at the facility, staffing continued to plummet until it reached its lowest levels in January and February 2001. According to prosecutors, the nursing home’s administrator reported to Hallmark in February 2001 that the resident population at the Schenectady facility had been too much to handle given the number of staff employed at the facility. Throughout this same period, however, patient admissions at the Altamont Avenue nursing home were aggressively pursued and the facility, according to its financial filings with DOH, had the financial resources to employ additional staff. Indeed, in 2000, the owners of the facility withdrew more than $1 million in profit and equity attributed to the Altamont Avenue Home.

The Attorney General thanked the State Health Department for its assistance during the investigation.

Hallmark Nursing Centre, Inc.’s corporate headquarters is located at 26 North Broadway in Schenectady. In addition to the Altamont Avenue home, Hallmark operates seven other nursing homes in upstate New York. They are located at 152 Sherman Avenue in Glens Falls (Warren County); 10421 State Route 40 in Granville (Washington County); 1940 Hamburg Street in Schenectady (Schenectady County); 49 Marvin Avenue in Troy (Rensselaer County); 217 East Avenue in Minoa (Onondaga County); 1045 West Street in Carthage (Jefferson County); and 1 Jansen Road in New Paltz (Ulster County). Durante and Nichols have owned the Hallmark corporation since 1978.

The case was prosecuted by Deputy Attorney General William J. Comiskey, Director of the Attorney General’s Medicaid Fraud Control Unit, and Special Assistant Attorneys General John P. Miller and Michael C. Clarke. Assisting in the investigation were former Special Assistant General John M. Meekins, Supervising Special Investigator Richard J. Morrissey, Senior Special Investigator Paul F. Sheehan, Principal Special Auditor Investigator Michael S. Watchorn, Supervising Associate Auditor Investigator Anthony R. Mangini, and Medical Analyst Stephanie Keyser.