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Separating a nursing home operation and its building into two corporations is a common practice around the country. In New York, for-profit nursing homes with related-party realty companies spent 19% more of their operating revenue toward rent in 2020 than did for-profits that leased from unaffiliated firms, KHN found.
Fulton Commons Care Center, a nursing home on Long Island, spent nearly a third of its 2020 revenue on rent, a higher portion than all but three other facilities in New York, financial records show. In a lawsuit filed in December, the attorney general charged that the rent paid to Fulton Commons Realty, the company that owned its East Meadow, New York, building, was grossly inflated. Both the home and real estate company were owned by Moshe Kalter and his extended family, according to documents filed with the lawsuit.
In 2020, the nursing home paid nearly $10 million in rent to Fulton Realty, but an auditor for the attorney general calculated the property expenses that year were less than $6 million. The owners of Fulton and their families gave themselves nearly $16 million over four years from inflated rent, substantial management fees, and “no-show” jobs for Kalter’s eight children, the attorney general alleged.
“Rather than honor their legal duty to ensure the highest possible quality of life for the residents in their care, the Fulton Commons owners allegedly maintained insufficient staffing so they could take more money for their own personal gain,” James said in a statement.
Raul Tabora Jr. and David Yaffe, lawyers for Kalter, called the lawsuit’s charges “one-sided” in a written statement to KHN. They said that the payments to the children were not for jobs but because they were shareholders, and that Fulton kept an average balance of $3 million on hand to cover any pressing needs. “The evidence will demonstrate that any time resources are needed, they are provided by Mr. Kalter,” the lawyers wrote.
Residents’ families told investigators that staff shortages existed well before the pandemic. In an affidavit filed with the lawsuit, Frank Hoerauf Jr. said workers left his father sitting in adult diapers without pants and let his hair grow so long it covered his eyes. Another time, they left him screaming in pain from a urinary tract infection, he said.
“Fulton Commons seems like it was operated to be a cash machine for the owners where the care and the quality of life for residents there was very poor,” Hoerauf said.
Another resident, Elena Milack, who had lost one foot to diabetes, complained about poor care for years, including having to ring the call bell for an hour to get help to get to the bathroom, according to an affidavit filed by her daughter-in-law and health proxy. “GET ME OUT OF HERE OR TELL ME WHAT I CAN TAKE TO KILL MYSELF,” she texted her son in summer 2019. In 2020, she contracted an infection that turned her remaining foot black.
“Toes are all infected now,” Milack, a retired law school secretary, texted. “[M]y upper foot is dying and will soon fall off. I am hoping the good Lord will take me before that happens.” She died in November 2020.
Kalter said in a deposition he had never stepped inside his nursing home and did not supervise the quality of the care. He testified he granted full authority over the facility to its administrator and relied on his nephew, who was the controller of the home, to interact with the home’s leadership, according to court records.
In his deposition, Kalter said: “I have no personal knowledge of anything that’s going on in the nursing home.”
According to an affidavit from an auditor for the attorney general’s office, over the course of four years, Kalter deposited nearly $12 million from Fulton into his joint bank account with his wife, Frady.
KHN data editor Holly K. Hacker contributed to this report.
Kaiser Health News is a national health policy news service. It is an editorially independent program of the Henry J. Kaiser Family Foundation which is not affiliated with Kaiser Permanente.
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