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Attorney general sues Albion nursing home: 'Egregious history of insufficient and unqualified staffing'

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The Villages of Orleans Health and Rehabilitation Center.

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An Albion nursing home where 23 residents died from Covid-19 in the first few months of the pandemic in 2020 had drastically cut staffing since 2015 as a way to divert funds from the facility to increase its owners' personal profits, according to a lawsuit filed Tuesday by State Attorney General Letitia James.

The state's lawsuit against the Villages of Orleans Health and Rehabilitation Center said the nursing home's owners are responsible for "causing physical and emotional harm to vulnerable people who lived at the nursing home and stripping them of their dignity." 

Since 2015, the facility's operators pocketed more than $18.6 million that should have been spent on "ensuring adequate resident care," according to the lawsuit. 

"The Villages’ egregious history of insufficient and unqualified staffing and poor quality of care is directly traceable to (the) unconscionable conversion of millions of dollars in up-front profit taken from the Villages," according to the lawsuit filed in State Supreme Court in Orleans County.

Under New York law, owners of nursing homes have an obligation to provide a high level of care and quality of life for residents and to ensure the facility is sufficiently staffed.

But the lawsuit accuses the nursing home's owners of engaging in repeated and persistent fraud by converting the Villages’ Medicaid and Medicare reimbursement payments for their own use.

The "persistent violations of their duty to care" for the Villages’ residents began long before the Covid-19 pandemic and continue to the present, according to the lawsuit.

The lawsuit seeks to compel the owners of the for-profit 120-bed nursing home to return $18.6 million, appoint a receiver and financial monitor to stop the alleged self-dealing and a health care monitor to improve care, and to require the Villages to stop admitting new patients until further notice. The state also wants to remove several of those who have ownership and managerial roles at the facility. 

James joined family members of former and current Villages residents in Buffalo to announce the lawsuit. 

"Every individual has the right to live out their golden years in peace and dignity," James said.

Margarette Volkmar said Tuesday she saw her husband sleeping in a bed with no sheets or blankets wearing only a diaper in December.

Darlene Stevens’ 59-year-old brother with a mental disability was frequently dressed in dirty, tattered clothing when she saw him in person or on video calls. He lost 40 pounds while at the Villages and lost his ability to walk and speak, Stevens said. He died in a hospital nine months after he moved into the Villages.

Vicki Juckett's mother is a current Villages resident. Juckett said her mother has suffered "unnecessary and preventable injuries" at the facility, including a sprained ankle, rashes and bed sores.

"I don't want her to suffer anymore," Juckett said of her mother. "There needs to be changes, not just for my mom, but for everyone in a facility like that. This is going to make some changes that are absolutely well overdue."

The "looting" of the Villages began well before the onset of the pandemic," the state's attorneys stressed in the court filing. Of the $18.6 million, the facility's owners took over $10 million before 2020 – leaving the facility in a "precarious position to face the Covid-19 pandemic," according to the lawsuit.

"Through the interviews of residents and employees of the Villages, analysis of medical records of residents and additional evidence as set forth in affidavits, the attorney general’s findings demonstrate that respondents repeatedly prioritized their personal profit over the Villages’ duty to provide required resident care and required staffing," the lawsuit said.  

The state's investigation into the nursing home became public last year when the state took legal action against a fired Villages of Orleans nursing director who had resisted further cooperation with investigators until she could learn whether she was also the target of the investigation. The office sought the court order after Debra Ann Donnelly refused to show if she had any cellphone messages to and from her former co-workers or employer, as well as photocopies or documents she may have saved that might have been relevant to the investigation.

James said a number of staff members from the Villages contacted the Attorney General's Office and have been cooperating with the investigation. 

In 2020, the nursing home was hit with a $66,632 fine for Covid-19 related violations, representing at the time the largest federal penalty issued against a long-term care facility in New York State.

The Albion nursing home also was fined $20,000 in 2020 by state Health Department inspectors for the same violations cited in a May 9, 2020, state inspection of the facility, which has an overall one-star rating, the lowest ranking issued by the U.S. Centers for Medicare and Medicaid Services. 

During 2021, the state Health Department fined Villages an additional $20,000 for failing to have on-site the required amount of Covid-19 personal protective equipment for its workers, as well as other violations.

Almost immediately after new ownership took control of the Villages in January 2015, the facility's five-star quality ratings plummeted, becoming among the worst in the state, according to the lawsuit.

In March 2021, the U.S. Centers for Medicare and Medicaid Services designated the Villages as a special focus facility, a designation reserved for the poorest performing nursing homes in the country. As of November 2021, only three out of 613 facilities in New York State were so designated, according to the lawsuit.

Named in the lawsuit are several corporate entities as well as individuals.

Bernard Fuchs, who lives in Nassau County, is listed as the owner and operator of the Villages, and has been so since the nursing home was purchased from Orleans County in 2015. However, others exercise management authority and control over the Villages and benefit financially, according to the Attorney General's Office. The attorney general's lawsuit named 11 others: Joel Edelstein, Gerald Fuchs, Tova Fuchs, David Gast, Ephram Lahasky and Benjamin Landa, all of Nassau County; Israel Freund and Teresa Lichtschein of Kings County; Sam Halper of Miami, Fla.; Joshua Farkovits, who lives in Israel; and Debbie Korngut of Ocean County, N.J.

The corporate defendants are Telegraph Realty, a real property holding company; CHMS Group, the management company based in Lynbrook; Villages of Orleans LLC, a pass-through entity; and ML Kids Holding LLC, a holding company in Lawrence.

With the exception of Farkovits, all of the other individuals have ownership interests in Telegraph, although Farkovits continues to receive distributions from Telegraph, according to the lawsuit.

Since 2015, through what the state called a self-dealing and predatory lease agreement, the nursing home has paid "exorbitant rent” to Telegraph, the majority of which has gone into the individuals' pockets, according to the lawsuit. Between Jan. 1, 2015 and June 30, 2022, the Villages paid $15.7 million as rent for its use of the real estate owned by Telegraph.

"These excessive payments were anything but fair, did not follow the market, and provided no value to the Villages," according to the lawsuit.

During the same period, the individuals paid themselves $9.8 million directly from Telegraph, the Attorney General's Office alleges.

Bernard Fuchs, Gast, Halper and Lahasky are the individuals who control the Villages’ operations and finances, according to the lawsuit. As individuals with a financial interest in Telegraph, the other individuals colluded with them to siphon taxpayer funds out of the facility and away from residents for personal profit, according to the lawsuit. The state wants to remove Gast, Halper and Lahasky from their ownership and managerial roles at the facility. 

The three own hundreds of other nursing homes across the country, James said. Halper is under federal indictment for committing fraud and covering up deficient staffing and care at two Pennsylvania nursing homes, James said.

Bernard Fuchs has an estimated net worth of nearly $44 million, according to the state's court filing. The state pegged the estimated net worth of Lahasky at $72.7 million, followed by Gast and Halper, each with an estimated net worth of $22 million.  

From 2015 through 2021, the facility collected more than $48 million from the New York State Medicaid program and more than $10.58 million from the Medicare program. The facility's operators encouraged a false impression that the Medicaid reimbursement rates were too low to enable profit, according to the lawsuit.

But the Attorney General’s Medicaid Fraud Control Unit found a "careful orchestration of its financial operations" in which those in control extracted millions of dollars each year through related-party transactions – causing the Villages to pay “rent” to Telegraph well above fair market value, causing the Villages to pay over $2 million in purported “management” fees and other payments to related parties, and using the facility as collateral to secure and cash in on multimillion dollar loans that provided no benefit for the residents, according to the lawsuit.

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