Two NJ Nursing Homes Diverted $92 Million From Resident Care
Summary
A New Jersey Comptroller investigation found the owners of two nursing homes, Hammonton and Deptford, moved $92 million -- more than two-thirds of the $134.8 million in Medicaid funding the homes received over five and a half years -- through a network of companies they controlled, disclosing less than 1% of it as legally required. Both facilities missed the state's minimum staffing requirements on nearly every day investigators sampled, and state surveys tied the resulting understaffing to a resident's death and the sexual assault of two others. New Jersey is now trying to recover about $124 million.
Two-thirds of the money, moved through companies they owned
State and federal law require nursing homes to disclose exactly what they pay related companies, because the risk of self-dealing is so high when an owner is effectively paying himself. Hagler and Rozenberg were required to report those payments⧉ -- and reported just $882,666 of the $92 million, under 1%. Hagler personally signed the cost reports that hid the rest. OSC calls this "not a simple error." The companies receiving the money included a Bronx-based management firm the two men owned together, two property companies that owned the nursing homes' real estate, a business-consulting firm owned by both men and several of their relatives, a staffing company, an IT firm, and clinical laboratories -- a structure OSC says let Hagler and Rozenberg move nursing-home revenue into their own pockets while the underlying cost reports made it look like ordinary vendor spending.
View data as table
| Staffing violations | $87.2M | overpayment + RN penalties |
|---|---|---|
| Mortgage & rent scams | $35.5M | |
| Undisclosed payments | $2.1M |
How the rent became the crime
The largest single mechanism was the rent. In 2014, Hagler and Rozenberg bought Hammonton, Deptford, and a third nursing home for $68.8 million combined, putting down just 1.5% of the price⧉ and financing the rest through a $58.2 million mortgage that bundled the value of the nursing-home businesses together with the value of the real estate underneath them. That let their property companies charge the nursing homes 'rent' that was really repayment on the cost of buying the business itself -- $7.8 million of it, OSC found, misreported on cost reports as ordinary property expense rather than disclosed as related-party debt. On top of that, over the 5.5-year review period, the property companies collected another $27.8 million in "additional rent" the lease said was for taxes, insurance, and maintenance costs -- expenses that were already covered by the base rent. OSC is now seeking $35.5 million tied to these mortgage and rent arrangements.
Half the required staff, almost every day
Where the money didn't go was the floor. New Jersey law sets minimum direct-care staffing ratios by shift, and OSC sampled 82 days at Hammonton and 64 at Deptford⧉ between February 2021 and May 2024. Hammonton, with an average of 178 residents requiring 53 staff a day by law, missed the minimum on all 82 sampled days -- a 52% average shortfall, nearly 28 staff short daily -- and had no Registered Nurse on duty, despite a legal requirement to at facilities its size, on 46 of those days. Deptford, with 199 residents requiring 59 staff, missed the minimum on 62 of 64 days -- a 54% shortfall, roughly 32 staff short -- and went without a required RN on 52 of 64 days, 81% of the time.
Both facilities also routinely staffed Licensed Practical Nurses in roles legally reserved for RNs -- 66 of 82 days at Hammonton, 60 of 64 at Deptford. OSC calculated, using statistical extrapolation from the sample, that the two facilities were overpaid $86.3 million combined for care they billed Medicaid for but didn't adequately staff -- plus $980,000 in civil penalties for the missing-RN violations alone.
View data as table
| Hammonton required | 53/day | |
|---|---|---|
| Hammonton actual | 25/day | 52% short |
| Deptford required | 59/day | |
| Deptford actual | 27/day | 54% short |
What understaffing did to the people who lived there
The consequences show up in every metric OSC checked. From January 2019 to June 2024, Deptford averaged a 1.5-star CMS quality rating and Hammonton 1.8⧉, against a 3.4-star New Jersey state average -- one star is 's bottom rating, meaning "quality much below average." Police logs recorded more than 2,400 calls to Deptford and roughly 1,000 to Hammonton over the review period, most describing residents left without care: unanswered call bells, missed medications, hours spent without help.
State Department of Health surveys tie specific harm to the understaffing. A June 2021 survey found Hammonton failed to prevent the sexual assault of two residents by another resident, despite prior reports the same resident had done this before. A November 2022 survey at Deptford documented a resident's death 13 days after the fact -- a resident restricted to a pureed diet was given a sandwich and cookie, apparently asphyxiated, and the death went unnoticed by staff for hours; a CNA present during the resuscitation attempt told investigators the facility's Director of Nursing said, "what happens in this room stays in this room."
New Jersey already knew, and did little
This isn't OSC's first warning about this ownership pattern. In December 2024, OSC issued a separate report⧉ on South Jersey Extended Care, a third Hagler/Rozenberg-linked facility, finding similar fraud and fund-siphoning and making three recommendations for legislative and regulatory reform. A year later, OSC writes, there had been "no meaningful progress" implementing any of them. This report repeats those recommendations and adds three more: pass Senate Bill 1948, requiring nursing homes to submit audited financial statements for related entities; bar owners implicated in rent, mortgage, or related-party scams from operating additional New Jersey nursing homes; and pass legislation specifically regulating how nursing homes structure rent and mortgage arrangements with their own owners.
- Hammonton and Deptford's owners moved $92 million -- more than two-thirds of the $134.8 million in Medicaid funding the homes received -- through companies they owned, disclosing less than 1% of it as legally required.
- Both facilities missed New Jersey's minimum staffing requirements on nearly every day OSC sampled -- 82 of 82 at Hammonton, 62 of 64 at Deptford -- and went without a legally required RN on duty roughly half to over 80% of the time. New Jersey is seeking $87.2 million just for the staffing violations.
- State surveys tie the understaffing directly to resident harm, including a death from apparent asphyxiation that went unnoticed for hours and the sexual assault of two residents -- and OSC says its prior warning about the same ownership pattern, issued a year earlier about a related facility, produced "no meaningful progress" before this happened again.
All figures in this piece come from the New Jersey Office of the State Comptroller's Medicaid Fraud Division report, An Investigation of Fraud, Waste, and Abuse in Two New Jersey Nursing Homes, issued December 10, 2025, read in full via direct PDF fetch from nj.gov. Archive.org's availability API returned repeated rate-limit errors during this iteration, so no Wayback capture could be obtained; the inline citations and Sources link point directly at the Comptroller's own stable PDF. The report notes it did not independently verify the specific allegations described in individual 911 calls and volunteer reports, and that the facilities' owners dispute both OSC's extrapolation methodology and its presentation of state survey findings -- OSC addresses and rejects both objections on the record in the report itself. Several figures here -- the arithmetic recombining the report's own component dollar amounts, and the RN-absence rates expressed as percentages -- are this outlet's own arithmetic on the report's own numbers; see analysis.json's computed[] for each. A blind adversarial verifier, working from the primary document alone with no access to this draft, independently checked every itemized fact; see verification.json.
Sources(1) ▾
- New Jersey Office of the State Comptroller (OSC), Medicaid Fraud Division -- Kevin D. Walsh, Acting State Comptroller, An Investigation of Fraud, Waste, and Abuse in Two New Jersey Nursing Homes (Medicaid Fraud Division Report) (2025-12-10) — The primary document. An investigative report by New Jersey's independent Office of the State Comptroller, Medicaid Fraud Division, following a subpoena-enforced review of five and a half years of records (Jan. 1, 2019-June 16, 2024) at two nursing homes owned by the same two men. Source for every figure in this piece: the scale of Medicaid funding and related-party fund diversion; the cost-report falsification; the mortgage-bundling and 'additional rent' schemes; both facilities' direct-care staffing shortfalls and the extrapolated-overpayment calculations; the star ratings, 911-call counts, and specific survey findings documenting resident harm (including a resident death and a sexual assault); the total recovery OSC is seeking; and OSC's recommendations, including the finding that its prior (December 2024) recommendations on a related facility went unimplemented. nj.gov · original document
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New Jersey's Office of the State Comptroller (OSC) spent nearly a year subpoenaing records at two nursing homes it says were run as a money machine for their owners rather than a home for the people who lived there. The resulting report⧉, released in December 2025, covers Hammonton Center for Rehabilitation and Healthcare and Deptford Center for Rehabilitation and Healthcare -- 240 beds each -- owned by Daryl Hagler and Kenneth Rozenberg, who together own 46 nursing homes across four states. Over the five and a half years OSC reviewed, the two facilities took in $134.8 million in New Jersey Medicaid funding. OSC found $92 million of it -- more than two-thirds -- moved through a web of companies Hagler and Rozenberg owned themselves.