The New Jersey Office of the State Comptroller has blocked a group, Bridgeton SNF, from purchasing South Jersey Extended Care and receiving Medicaid funding due to concerns over fraud and abuse. The comptroller cited undisclosed financial ties between the buyer and the current management, as well as a history of poor performance at nursing homes operated by individuals associated with the proposed new ownership.
The investigation revealed complex corporate structures designed to conceal the true ownership and control of the facility. Acting State Comptroller Kevin Walsh described multiple "red flags" and stated that the state has an obligation to prevent sales when buyers attempt to obscure accountability.
South Jersey Extended Care was previously removed from the Medicaid program last year following allegations of siphoning millions in Medicaid funds while providing abysmal care, insufficient staffing, and inadequate resources. The comptroller's previous report detailed how funds intended for resident care were diverted to personal distributions, consulting fees, and charitable donations controlled by the owners.
Further complicating the proposed sale, a former employee involved in the transaction claimed to have limited knowledge of the purchase price and who would ultimately be responsible. The comptroller also questioned a $2 million payment plus interest to a Nebraska nonprofit controlled by a relative of the current owner, which was designated to secure lease rights for the property.
While the buyer's attorney stated this was to relinquish an option held by the nonprofit, the comptroller found the nonprofit's involvement unclear. The state review also indicated that a trust was used to hide the real owners of Bridgeton SNF, who were allegedly involved in a pattern of inflated "rent" payments to related entities after financing nursing home purchases.
Investigations into the prospective owners' ties to facilities in other states revealed most were among the lowest quality in their respective regions. Consequently, Bridgeton SNF's Medicaid application was denied, not only for the lack of transparency and undisclosed financial connections but also for the documented history of poor care, which the comptroller deemed detrimental to the Medicaid program's integrity.
The buyer plans to appeal the decision.
