Kenny Rozenberg, owner of Israel’s El Al Airlines, and his nursing home companies have reached a $43.75 million settlement with New York’s attorney general in a civil lawsuit filed in June 2023.
Under the settlement terms, Rozenberg’s companies will return $8.75 million to the state and invest an additional $35 million into their facilities. The agreement also requires state-appointed monitors to oversee nursing home operations.
The lawsuit alleged that Centers Health Care, a nursing home management company co-owned by Rozenberg and his business partner and El Al board member Daryl Hagler, misappropriated over $83 million earmarked for resident care during the COVID-19 pandemic. The alleged incidents occurred across four of the 35 nursing homes owned by the company.
According to the suit, the alleged fraud involved government funds totaling $612 million from Medicare and Medicaid. These funds, the lawsuit claimed, were illegally diverted through an intricate network of shell companies and used for inflated real estate transactions, low-interest loans, payments to favored vendors and excessive withdrawals from facility accounts that exceeded the legally permitted 3% limit.
The attorney general’s office further alleged that understaffing and poor care resulting from these financial misappropriations led to severe injuries and even deaths among residents. It was also alleged that Hagler had provided Rozenberg with a $109 million interest-free, condition-free loan to purchase control of El Al in 2020.
Under the settlement reached on Thursday, Rozenberg and Hagler admit no wrongdoing. In addition to the financial settlement, they will invest $35 million into a fund aimed at improving resident care in the four facilities named in the lawsuit. This fund will be allocated toward higher wages, increased staffing, enhanced care standards and strengthened oversight.
As part of the settlement, healthcare and financial monitors will be appointed to ensure compliance with care and financial regulations.
The lawsuit, which is civil rather than criminal, is one of four filed against New York nursing home networks over alleged COVID-19-era violations. Centers Health Care is the largest provider named among them.
Rozenberg’s attorney, Moti Shulman, welcomed the settlement, saying, “We are pleased with this agreement, which rejects all accusations of misconduct by the companies or their managers. For over three decades, these companies have provided quality care for thousands of seniors across more than 35 New York facilities. We are fully committed to implementing the settlement terms, including the $35 million investment to enhance services.”
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