Attorney General James Secures $656,000 from Unlicensed Nursing Home Operator for Years of Fraud and Neglect

Chaim Scheinbaum Allowed Widespread Resident Neglect and Abuse in Saratoga County Nursing Home
Settlement Follows Four Prior Settlements Against Nursing Home’s Operators For $7.1 Million

NEW YORK – New York Attorney General Letitia James and the United States Attorney for the Northern District of New York (USAO-NDNY) Carla Freedman today announced they have secured $656,000 in a settlement with Chaim “Mutty” Scheinbaum, an unlicensed operator of the Saratoga Center for Rehabilitation and Skilled Nursing Care (Saratoga Center) for years of fraud and resident neglect. From 2017 to 2021, Scheinbaum operated the nursing home without a license from the state, in violation of New York law. Under his control, conditions at Saratoga Center rapidly declined. The facility lacked hot water and clean linens, and residents suffered falls, pressure sores, and other significant lapses in care. Today’s settlement follows four prior settlements as part of a resolution in February 2023 with Saratoga Center’s owners, a second unlicensed operator, and the facility’s landlord, for over $7.1 million. As part of the settlement, Scheinbaum will return $656,000 to Medicaid, with $393,600 going to New York. 

“Every resident of New York’s nursing homes deserves high-quality care and proper staffing to meet their needs,” said Attorney General James. “Rather than ensure vulnerable residents got the care they deserved, this individual mismanaged Saratoga Center’s finances and failed to adequately staff the facility, causing residents to suffer the consequences of neglect and unsanitary conditions. I want to thank United States Attorney Carla Freedman and our partners in law enforcement for their assistance in bringing this unacceptable situation to light and to justice. My office will continue to ensure nursing home residents are protected, and I encourage anyone who has witnessed alarming conditions, resident neglect, or abuse at a nursing home to contact my office.”

“Nursing homes should protect the health and well-being of every resident,” said U.S. Attorney Carla Freedman for the Northern District of New York. “That did not happen at Saratoga Center. An individual with no lawful authority controlled the finances and failed to pay vendors. This unlawful arrangement resulted in false claims to Medicaid for worthless services. We will continue to hold responsible people accountable when they receive federal funds while providing substandard care. Thank you to Attorney General James and her office for collaborating on this case.”

Saratoga Center operated as a 257-bed nursing home from 2015 until it closed in 2021. In 2017, the landlord pressured the owners to relinquish control of Saratoga Center to unlicensed operators, including Scheinbaum, but did not report the change to the Department of Health (DOH).

The conditions at Saratoga Center declined under the control of the new, unlicensed operators, leading to a breakdown in the quality of care provided to residents. From when they took over in 2017 to when Saratoga Center closed in 2021, Scheinbaum and the other unlicensed operator mismanaged the nursing home’s finances and failed to adequately staff the facility, causing residents to suffer the consequences.

The investigation revealed that residents at Saratoga Center experienced excessive and unnecessary falls and injuries, including the development of pressure sores that went untreated. Under the management of Scheinbaum, Saratoga Center also failed to:

  • Maintain consistent and reliable hot water throughout the facility; 
  • Properly maintain the fire alarm system;
  • Keep a sufficient stock of clean bed linens for residents; and
  • Manage trash and waste removal in a timely fashion, subjecting residents to unsanitary and unhealthy conditions.

Scheinbaum and the other operators then billed New York’s Medicaid program for services provided to the residents. However, as the investigation revealed, these were claims for worthless services, and amounted to hundreds of thousands of dollars of fraudulent claims.  

Under New York law, owners of nursing homes have a “special obligation” to ensure the highest possible quality of life for residents, and to staff the facility at a level sufficient to provide adequate care. Nursing home operators are also prohibited from delegating key duties to other individuals who have not been approved as operators by DOH.

In 2018, both DOH and the Centers for Medicare & Medicaid Services (CMS) fined Saratoga Center for serious deficiencies and violations, and in 2019, CMS designated Saratoga Center a “Special Focus Facility,” signifying it was among the poorest performing nursing homes in the country. 

The parties to the settlement announced today are Chaim Scheinbaum, Alliance NJ Care LLC, and Alliance HC II LLC, the entities through which Scheinbaum conducted business. Under the settlements, Scheinbaum will pay $656,000 to Medicaid, of which $393,600 will go directly to New York state. The remaining $262,400 will be paid to the federal government.

Attorney General James has been investigating nursing homes throughout New York based on concerns of resident neglect and other unacceptable conduct, both before and during the COVID-19 pandemic. In January 2021, Attorney General James released a report revealing that many nursing homes were ill-equipped and ill-prepared to deal with the pandemic crisis because of poor staffing levels, which resulted in a lack of compliance with infection control protocols and increased risk to residents. In November and December 2022 and June 2023, Attorney General James filed four special proceedings against skilled nursing facilities and their owners due to findings of repeated and persistent fraud, resident neglect, and false and misleading representations to DOH. These facilities include: The Villages of Orleans Health and Rehabilitation Center in Orleans CountyFulton Commons Care Center in Nassau CountyCold Spring Hills Center for Nursing and Rehabilitation in Nassau County, and four Centers Healthcare facilities throughout New York state.

Attorney General James encourages anyone with information or concerns about alarming nursing home conditions, or resident abuse or neglect, to file a confidential complaint online or call the Office of the Attorney General's (OAG) Toll-Free Tip Line 1-866-697-3444, option 1. 

The investigation and settlements were the result of a coordinated effort among OAG, USAO-NDNY, the Civil Division of the United States Department of Justice (DOJ), and the Department of Health and Human Services Office of the Inspector General (HHS-OIG). Attorney General James thanks USAO-NDNY, DOJ, HHS-OIG, and DOH for their partnership and assistance.

The MFCU investigation was conducted by Detective Supervisor John Benshoff under the supervision of Deputy Chief, Commanding Officer William Falk, with Principal Auditor-Investigator Cheryl Abraham and Senior Auditor-Investigator Nathaniel J. Wood, both under the supervision of Regional Chief Auditor Sarah Finning, and with assistance from Medical Analyst Stephanie Keyser, R.N.

The settlements were handled for MFCU by Special Assistant Attorney General Emily Auletta of the Civil Enforcement Division, under the supervision of Deputy Chief of Civil Enforcement Konrad Payne. The MFCU Albany Regional Office is led by Albany Regional Director Kathleen Boland and the Civil Enforcement Division is led by Chief Alee N. Scott. MFCU is led by Director Amy Held and Assistant Deputy Attorney General Paul J. Mahoney. MFCU is a part of the Division for Criminal Justice, which is led by Chief Deputy Attorney General José Maldonado and overseen by First Deputy Attorney General Jennifer Levy.

New York MFCU’s total funding for federal fiscal year (FY) 2024 is $68,997,928. Of that total, 75 percent, or $51,748,448, is awarded under a grant from the U.S. Department of Health and Human Services. The remaining 25 percent, totaling $17,249,480 for FY 2024, is funded by New York state.

Through MFCU’s recoveries in law enforcement actions, it regularly returns more to the state than it receives in state funding.