Acting State Comptroller Kevin Walsh stated that owners Daryl Hagler and Kenneth Rozenberg diverted Medicaid funds through affiliated companies while residents endured suffering. The nursing homes were the source of more than 3,400 police calls and consistently failed to meet staffing requirements. Both owners have been suspended from Medicaid.
Fraud probe of South Jersey nursing homes triggers new call for legislative action
by Dana DiFilippo, New Jersey Monitor
December 10, 2025
The owners of two South Jersey nursing homes scammed the state out of more than $100 million in Medicaid funds during a yearslong scheme in which they intentionally understaffed their facilities, resulting in widespread neglect of residents, two sexual assaults, a death, and 3,400 calls to police for help, a state watchdog found in a new report.
Investigators with the state comptroller’s office found “a troubling pattern of mismanagement, self-dealing, and profiteering” by Daryl Hagler and Kenneth Rozenberg, who own Hammonton Center for Rehabilitation and Healthcare and Deptford Center for Rehabilitation and Healthcare, according to the report released Wednesday.
Kevin Walsh, the acting state comptroller, blasted the men for getting “rich off the backs of people who were unable to care for themselves.” Hagler and Rozenberg could not immediately be reached to comment.
He also bashed legislators for failing to act on recommendations his office has made for years to tighten oversight of the state’s 350 long-term care homes.
“The facts we uncovered in this report cry out for state government, including the Legislature, to finally recognize that New Jersey nursing homes are straining under the weight of fraud, waste and abuse. The problem isn’t limited to just a few nursing homes. This problem is systemic, uncontrolled, and shows no signs of getting better,” Walsh said.
In December 2024, Walsh pushed legislators to act after his office found similar fraud by the owner and operators of a Bridgeton for-profit nursing home. He also recommended reforms to state health officials after examining the state’s 12 lowest-rated nursing homes in a March 2023 report.
Yet little has changed in the industry since those reports, Walsh said. Legislators in June even cut a program in the state Department of Human Services that had allowed state officials to bar new admissions at low-rated nursing homes that failed to improve, Walsh noted.
“Report after report, both in New Jersey and nationally, has shown the extent of the problem,” he said, adding that “the Legislature did pretty much nothing.”
Wednesday’s report was Walsh’s first since state legislators tried to strip his office of its investigative powers.
Sen. Nicholas Scutari (D-Union), who led that effort, has said he merely intended to streamline the state’s watchdogs, but critics called his legislation payback for Walsh’s investigations of state Democrats and other Scutari allies. Scutari on Tuesday said he would no longer pursue that bill after uproar from critics, including Attorney General Matt Platkin and U.S. Sen. Andy Kim (D), who warned it would defang a key New Jersey watchdog and fuel corruption.
Scutari’s failed legislation loomed large Wednesday, with advocates applauding Walsh’s office for its latest and prior reports and condemning legislative inaction.
Laurie Brewer, New Jersey’s long-term care ombudsman, said New Jersey nursing homes received more than $4 billion in taxpayer funds through Medicaid and Medicare in 2023 alone.
“The public deserves to know where every dollar went, and the harsh truth is that we really don’t,” Brewer said, adding: “Too often, we have allowed unscrupulous owners with poor track records to set up shop and do business or continue to do business in New Jersey. The only entity that’s saying no and closing that door is the state comptroller, and good for them.”
Walsh on Wednesday urged lawmakers to pass a bill that would require disclosures by all nursing home owners and related companies, including audited, consolidated financial statements. The measure has been stalled in the Statehouse since it was introduced in January 2022.
Brewer said her office has pushed for the bill’s passage since then.
“The Legislature needs to act rather than continually passing rate increases for nursing homes with no transparency,” she said.
The South Jersey probe
Walsh’s office began investigating Hagler and Rozenberg in 2023 after New York’s attorney general sued them and accused the two of defrauding New York’s Medicaid program of $83 million. The men own 46 nursing homes in New Jersey, New York, Kansas, and Missouri.
During their two-year probe, investigators from Walsh’s Medicaid fraud division found that the men, who were next-door neighbors and friends, grew rich off Medicaid by using complex and improper real estate deals, excessive loans, inflated rents, and undisclosed fees paid to nine “related entities,” which were companies they or their relatives owned and controlled.
Their nursing homes received $134.8 million in Medicaid funds from 2019 through mid-2024, but the men funneled $92 million of it to their related businesses, according to the report. Almost $28 million of that went into bank accounts that belonged to Rozenberg and a related company, while Hagler and Rozenberg illicitly spent nearly $8 million of Medicaid money to help them buy the nursing homes, the report says. The men also misrepresented their finances on state and federal forms, reporting just $882,666 in payments instead of the $92 million actually paid, the report says.
At both homes, investigators found chronic understaffing, as well as staff who were unlicensed and unqualified for their jobs. The homes failed to meet required staffing minimums on all but two of 146 days investigators reviewed, the report says.
The few staff members at the homes left residents sitting in their own waste and ignored cries for help for hours, investigators discovered.
The problems went beyond neglect. Two residents of the Hammonton home were sexually assaulted in 2021. A Deptford resident died of asphyxiation in 2022 after staff served them a sandwich and cookie even though their diet was restricted to pureed foods. Another Deptford resident, an amputee who used a wheelchair, was discharged to a motel in 2021 but got immediately sent back because the motel couldn’t accommodate a wheelchair. The next day, Deptford’s staff discharged him again and dumped him outside a social services office that was closed, the report says.
More than 2,400 emergency calls were placed from inside the homes to Deptford police, and another 1,000 to Hammonton police, alleging severe neglect and negligence, including one resident who went missing “all day,” investigators found.
Both homes had been repeatedly declared “special focus facilities” by the federal Centers for Medicare & Medicaid Services for their persistent, serious shortcomings.
“Rampant profiteering leads to poor quality care and often misery, as the most vulnerable people in our society press call buttons and scream for help without anyone answering — hour after hour, day after day, year after year,” Walsh said.
Officials suspended Hagler, Rozenberg, and their related entities from the state’s Medicaid program in 2023 and installed an independent receiver in 2024 to oversee both facilities, the report says. Walsh declined to comment on whether anyone was referred to police or prosecutors for possible criminal charges.
Walsh said Hagler, Rozenberg, their family members, and related entities owe the state $123.9 million plus penalties, with $87 million of it stemming from “pervasive and egregious violations” of staffing requirements.
Both men have refused to talk with investigators, citing their constitutional right against self-incrimination, the report says. The investigation remains ongoing.
A ‘pervasive business model?’
Chris Widelo, the New Jersey state director of AARP, said Walsh’s report exposes “a level of dysfunction and lawlessness in New Jersey’s nursing homes that is nothing short of shocking.”
He also called on legislators to pass the stalled bill to mandate expanded disclosures by long-term care homes.
“This is not mismanagement — it is a systemic, dangerous breakdown in oversight and accountability that is putting residents’ lives at risk while operators enrich themselves at taxpayer expense,” Widelo said in a statement.
He singled out investigators’ finding that the owners took out mortgages on the nursing homes, transferred the mortgages to their real estate companies, and then charged the nursing homes inflated rents.
“This practice has long been suspected, but this is the first time it has been publicly documented. And given how widespread excessive ‘rent’ payments are across the industry, this is almost certainly not an isolated scheme, but a pervasive business model,” Widelo said.
Brewer said state lawmakers must increase funding for the state Department of Health, which inspects nursing homes, and the state Department of Human Services, which administers the Medicaid program, so that both can better monitor nursing home conditions and scrutinize their finances.
Facilities with persistent failures to fix problems should not only face fines, but also be barred from accepting new admissions, she added.
“Today’s report makes one thing painfully clear: nursing home residents are living in unsafe conditions, operators are exploiting financial loopholes for profit, and taxpayers are footing the bill,” Widelo agreed. “This must end.”
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Walsh criticized state lawmakers for their prolonged inaction regarding nursing home oversight reforms. Advocates have urged the Legislature to finally enact a long-delayed bill that mandates complete financial disclosures from long-term care owners, cautioning that the fraud indicates a “systemic” issue within the industry.
