Updated Jan 27 @ 16:30

by James C. Sherlock

New-found evidence points to New Jersey-operated business plans that may result in severe threats to patient health and safety in up to 56 Virginia nursing homes. At least one person has already died.

Current government allegations in the wrongful death scandal surrounding Colonial Heights Rehabilitation and Nursing Center (Colonial Heights) specify that a patient, lying helpless with cerebral palsy and diabetes, was criminally neglected at Colonial Heights (Medicare view) resulting in her death. She died in late October last year after prolonged suffering from sepsis alleged to be a result of that neglect. Criminal charges were filed in December against 18 members of Colonial Heights staff.  

This month a physician with responsibilities at that hell hole has been arrested and charged with abuse and neglect of a vulnerable adult.

Strong evidence in both cases points to deliberate operating decisions made by the New Jersey private-equity firm and owners that control Colonial Heights. Colonial Heights is the harbinger of a much broader problem.  

Those 56 facilities are operated by small New Jersey groups using a business model that maximizes profits by severe understaffing.  

• Affiliated entities (chains) and their investors/owners in the towns of Lakewood and nearby Brick in central New Jersey control 37 including Colonial Heights;  
• another chain headquartered and owned in Lakewood controls four; and
• yet another with managers and owners in Montvale and Clifton controls fifteen more.

Virginia has 291 nursing homes certified for Medicare and Medicaid. Those guys control almost 20% of our total state portfolio.  

They run absolutely awful nursing homes in Virginia and elsewhere.

What is the evidence of purposeful understaffing?

• Forty-eight of them are rated much understaffed (1 star) by Medicare. Virginia as a whole only has 101 in that category.  So ,they own less than 20% of Virginia facilities but 48% of those in the “much understaffed” category.
• Six more are rated understaffed (2 stars).
• Only one is rated with average staffing.

How deeply understaffed are they in key positions?

• Only four of those 56 meet the federal minimum standard of .55 hours per patient per day of registered nurse staffing. Virginia nursing homes on average exceed that standard.
• Virginia is a laggard nationally in nurse aide staffing. But not one of those 56 New Jersey-owned Virginia nursing homes comes close to meeting the federal minimum standards for nurse aide staffing. Not one even rises to the level of the current average nurse aide staffing both nationally and in Virginia. Not one. 

In the case of the patient died from alleged neglect at Colonial Heights.  

• The Virginia Department of Health (VDH) found extensive neglect there to a complaint inspection report in 2021 and reported it in detail.  
• The federal and state governments could have predicted it from extensive CMS data. Either could have stopped it. Neither did.

Reports suggest that the physician charged in the second Colonial Heights case never actually saw the patient.  Colonial Heights corporate managers and owners share a common disregard for the Social Security Act requirements for Medical Directors, other physicians, advanced nurses, dietitians and pharmacists. That facility’s daily non-nurse staffing records for Q2 of 2024 (latest available) show not a single minute of physician time in three months.  So, the current case cannot be considered a one-off.

Why Virginia? Easy answer. If an investor’s sole goal is to maximize profits with nursing home investments and he is not squeamish about patients’ wellbeing, Virginia is an easy mark.

1.  CMS levies fines and imposes new patient payment pauses on individual facilities based on inspection data. The VDH inspection team is so understaffed it can only inspect with half the frequency required. The General Assembly at the direction of the nursing home lobby has kept it that way for decades. Result: half the inspections – half the penalties.
2. CMS takes no action based on reported staffing even though the staffing data are auditable.
3. The authorities provided by the General Assembly to the Health Commissioner include: restricting or prohibiting new admissions; petitioning the court to impose a civil penalty or to appoint a receiver, or both; and revoking or suspending the license.  But my research indicates no Health Commissioner has ever used any of those authorities no matter how dramatically dangerous the facility.  
4. VDH’s Office of Licensure and Certification (OLC) is very well led, but simply does not have the staff to carry out its Social Security Act inspection and oversight capabilities. It has not had the funding to hire sufficient staff for more than four decades.  As a result, it has a half of the people it needs. It is lucky to carry out combined state licensure and federal certification inspections every two years. They are required annually. The staffing issue is not a secret. It has been publicized every year and every year the General Assembly has done what they have been told by the hospital and nursing home lobbies who has not liked to be inspected.  
5. By law, VDH actually makes Virginia nursing homes more profitable by its enforcement of Virginia’s Certificate of Public Need (COPN) law that protects incumbents from competition.

So, they invest here.

As a direct result, there are 101 nursing homes with Medicare one-star staffing ratings in Virginia. That lowest-possible rating is awarded on a Bell curve in comparison to all nursing homes nationally. They represent 35% of the Virginia’s total nursing home portfolio, making the Commonwealth a bottom feeder among the states in that crucial metric.  

Half of Virginia’s one-star staffed facilities are controlled by small groups of people in those two small parts of New Jersey.

The players, the playbook and the profits. Four, now three remaining, New Jersey entities have played the same game.

The same Lakewood-based managers operate what CMS records now inaccurately show to be two chains of nursing homes, Medical Facilities of America (MFA) and Innovative Healthcare Management (IHM). They share the same Lakewood/Brick majority ownership. About the time of the Colonial Heights indictments in the wrongful death case, IHM properties were consolidated under the Medical Facilities of America flag and advertised that they were “under new management,” as readers see in the Colonial Heights link. The sprig of leaves in the upper lefthand corner is the MFA logo.

The Innovative Healthcare Management that ran and owned Virginia nursing homes exists no more. Phone unanswered. Website dark. Yet government data are as yet unchanged.

Lakewood-centered YAD Healthcare runs the exact same business plan in Virginia and North Carolina. It is also majority-owned by Lakewood-area owners. Clifton-based Eastern Healthcare Group, with nursing homes in Virginia only, is run the same way for Clifton/Montvale New Jersey owners.  

The average staffing rating for the 65 facilities they collectively control in Virginia and North Carolina was 1.27. Out of a possible 5.

That playbook is very profitable. Colonial Heights’ financial information from FYE (fiscal year end) 2022 (latest available) filed with the state shows an operating margin of 17.5%, total margin of 15.3% and profits of over $3.5 million. The average American nursing home in 2022 had a negative 4.7% operating margin.

Note there that the 2022 net worth of Colonial Heights was amazingly low. It would be interesting to know the details of the liabilities. More recent records show that corporate official Moshe Rajchenbach holds a mortgage on the property.

What about the Colonial Heights criminal cases? No charges have been filed against any corporate manager or owner in either of the two Colonial Heights cases.

Yet Colonial Heights nursing staff personnel complained of understaffing in a VDH 2021 complaint inspection report.  Historical staffing and patient occupancy records show that the corporate owners and managers took no action to fix the problem.

In the latest case a physician has been charged with neglect at Colonial Heights.  The Q2 2024 Payroll-Based journal (PBJ) daily non-nurse staffing report from Colonial Heights listed not a single minute of the time of a Medical Director, other physician, pharmacist or dietician across that entire three-month period. The Social Security Act requires specific work from those specialists.

What about Medicare and Medicaid? Extensive government records evidence may lead federal and state investigators to suspect Medicare and Medicaid fraud and abuse across the entire portfolios of the New Jersey managers owners discussed above. 

The quarterly Payroll-Based Journal (PBJ) reports of daily nurse and non-nurse staffing show those facilities have been understaffed to the point that it may not have been possible for the required care for which Medicare and Medicaid paid. 

Nurses overwhelmed. The Q2 2024 PBJ daily nurse staffing report showed nurse staffing to be so low at Colonial Heights at 18 minutes per patient per 24 hours that it may not have been physically possible for RNs to do their jobs.

• to admit and assess patients both upon entry and at prescribed intervals;
• to manage the facility 24 hours a day; and
• to directly deliver the types of required care exclusively licensed to RNs with an average of 180 patients per day.  

That may explain, and be explained by, the RN turnover rate in the past year of 89% when the state average was 50%.

Colonial Heights maintained an average occupancy rate of 92% in the latest CMS records. So, corporate managers and owners, who control admissions, had a solution to understaffing available and refused to use it.

Patient acuity. Records also show that those facilities increased the patient acuity assessments that are a basis for per diem reimbursements. Case mix index (CMI) represents the average diagnosis-related group (DRG) relative weight for each facility.

Fifty-two of the 56 New Jersey-owned and operated Virginia nursing homes reported Nursing Case-Mix Index higher than the national average of 1.348. Meaning that 93% claimed a patient panel sicker than the average of patients at nearly 15,000 American nursing homes. That translated directly into higher reimbursements.

Bottom line. Questions remain about what federal and state officials will do now about both the Colonial Heights cases and the statewide problem.  

Perhaps someone with authority to shut down Colonial Heights Rehabilitation and Nursing Center will now do so.  I have provided indirect evidence of wrongdoing to the investigators of both crimes and to the Health Commissioner.

Someone needs to put a stop to Virginia’s broader New Jersey problem. It is the bigger issue.  

I have sent additional evidence to the federal task force charged with investigating nursing home fraud. Virginia authorities can have it if they want it.