Profits up, care down.
How New York nursing home owners move public money out of their facilities, why the Attorney General and the Department of Health have not stopped them, and the three laws that would.
In May 2020, an 80-year-old woman recovering from a stroke and COVID pneumonia was admitted to a 510-bed nursing home in Borough Park, Brooklyn. According to her son, two nurses covered her entire floor. Two weeks after she arrived, she fell twice in 24 hours and broke her hip. He says she fell because no one came to help her to the bathroom. Her family now cares for her at home in shifts. Her lawsuit is pending, and the facility denies the allegations.Crain’s
In March 2026, the owners sold that building for about $161.5 million. They had bought it in 2011 for $19 million. In between, it secured more than $180 million in loans. It was one of ten New York City nursing homes the same owners sold that month, for a combined $557 million.Crain’s
Those two facts are connected. They describe how a large part of New York’s nursing home industry works.
Medicaid pays for roughly three out of four New York nursing home residents, so taxpayers fund most of the care. In theory, that money pays for nurses, aides, wound-care supplies, food and therapy. In practice, sophisticated owners have built structures that move it out of the facility and into companies they or their families own. The residents left behind develop pressure wounds, fall without help, go without food and water, and sit for hours in soiled bedding.
The Attorney General and the Department of Health know this, and both have tried to stop it. This report explains how the schemes work, why enforcement has not stopped them, and three changes to New York law that would make owners answer for the harm their business models cause.
Lawsuits and regulatory reports contain allegations. Unless we say a court has ruled, the claims below have not been proven, and several matters ended in settlements without any admission of wrongdoing.
Ten nursing homes, bought for $99.8 million, sold for $557 million
Purchase and March 2026 sale prices for the ten New York City properties sold by Centers Health Care’s owners, in millions of dollars.
Source: Crain’s New York Business, Oct. 14, 2026, analysis of NYC Department of Finance register data. Figures as reported.
The playbook
The details differ, but the same seven techniques appear again and again in Attorney General complaints, comptroller reports and academic research. They tend to run in this order: take control of the money, move it out, and leave nothing behind to collect.
Technique 1Split the building from the business, then raise the rent
A nursing home has two parts: the real estate and the operation that delivers care. Many owners put each in a separate company. When the same people control both, the rent is not set by a market. The owners set it, and Medicaid largely pays it.
The Attorney General’s 2023 complaint against the owners of four Centers Health Care facilities alleged that after the owners acquired Holliswood Center in Queens, its annual rent rose from about $2.5 million to about $4.9 million, far beyond what the mortgage required.AG complaint
Technique 2Borrow against the building and let residents’ care fund the debt
Once a related company owns the property, it can borrow heavily against it. The rent paid by the nursing home, mostly Medicaid and Medicare money, services the debt. The owners can take the loan proceeds out. If the home later fails, the debt stays with the building and the cash is gone. The Borough Park building secured more than $180 million in loans after a $19 million purchase.Crain’s
Technique 3Hire yourself
Nursing homes buy staffing, therapy, pharmacy, supplies, laundry, food, consulting and management. When the vendor belongs to the owner’s family, the price is whatever the owners want it to be.
- The Attorney General alleged that a staffing agency headed on paper by a Centers owner’s daughter took in $38.5 million from 2017 to 2021, more than 90% of it from Centers facilities.
- New Jersey’s State Comptroller found that of $134.8 million in Medicaid paid to two homes from 2019 to mid-2024, about $92 million went to businesses related to the owners.
- At Cold Spring Hills in Woodbury, the Attorney General alleged more than $42 million moved to owners and related companies (see the case file below).
Technique 4Cut the people who provide care
Every dollar moved out of the facility is a dollar that does not pay an aide, a nurse or a wound-care supply. New York has required at least 3.5 hours of direct care per resident per day since 2022. In August 2026, roughly 267 of the state’s 597 nursing homes fell short.Crain’s
When there are not enough people on the floor, residents are not turned and pressure wounds develop; they try to reach the bathroom alone and fall; meals go uneaten and water undelivered; infections go unnoticed until they become sepsis. These are the injuries we see in our cases.
Technique 5Hide the profit
Because so much money leaves through rent, interest and vendor fees, a nursing home can report thin margins while its owners do very well. Economists studying Illinois, one of the few states with long-term related-party data, estimated that roughly two-thirds of nursing home profit in 2019 was hidden in inflated payments to related companies.NBER WP 32258 Their study is a working paper based on Illinois data.
Technique 6Leave nothing to collect
The operating company, the entity that holds the license and gets sued, is kept thin. The valuable assets sit in other companies and trusts. When a resident wins a judgment, the operator may have nothing. It files for bankruptcy, or the facility is sold and its old liabilities stay behind with an empty shell.
Technique 7Insure yourself, then stop paying
Some owners buy liability insurance from an insurer controlled by their own family, often formed outside New York. Others carry a policy with a self-insured retention so large that the facility must pay the first several hundred thousand dollars of every claim, including its own defense, before the insurer owes anything. Many such policies make the insurer’s obligations conditional on the facility paying first. When the operating company stops paying, the insurer can deny coverage, and the injured resident collects from neither. The Cold Spring Hills record shows how that happens.
Cold Spring Hills
A 588-bed nursing home in Woodbury, Long Island. The Attorney General’s case against its owners puts nearly every technique in the playbook on the public record.
In December 2022, Attorney General Letitia James sued Cold Spring Hills Center for Nursing and Rehabilitation, its owners and 13 related companies. The petition alleged that Bent Philipson was the facility’s principal owner and concealed his role, that Benjamin Landa also concealed his ownership, and that their adult children were installed as “straw owners.”AG, Dec. 2022
The facility received more than $157 million in Medicaid and $88 million in Medicare from 2017 through 2021. The AG alleged that more than $42.4 million went to owners and related parties from 2016 to 2021, that staffing was cut before the pandemic, and that the facility failed to report 51 of 98 COVID deaths to the state in the spring of 2020.
Where the Attorney General says the money went
Payments from Cold Spring Hills to related parties by channel, 2016–2021, as alleged in the Attorney General’s petition. Millions of dollars.
Sources: AG press release, Dec. 16, 2022; Aff. of Senior Auditor-Investigator Patrick Beltrani ¶¶ 61, 66, 118, People v. Cold Spring Acquisition, LLC, Index No. 617709/2022 (Sup. Ct. Nassau County). The Graph figure combines $7.16M paid directly and $3.52M paid through a premium finance company. Allegations; the court rejected most financial-fraud claims and the AG has appealed.
The insurer the family owned
Among the related companies were three with “Graph” in the name: a brokerage, a management company and Graph Insurance Company, a risk retention group, a kind of insurer owned by the businesses it covers.
Avi Philipson listed as 24% owner and managing member. The AG alleges Bent Philipson was the concealed principal owner.
99% owned by Avi Philipson, according to Graph’s own sworn affidavit.
Bank records list Bent Philipson as managing member; a 2022 DFS report lists him as president. Placed in Vermont rehabilitation, March 2025.
75% owned through Philipson Family LLC; Bent Philipson, president.
Sources: Beltrani Aff. ¶¶ 62–65, 117–119 (NYSCEF Doc. No. 865); Aff. of Mary Vazquez ¶¶ 7–8 (NYSCEF Doc. No. 578); NYS DFS Report on Examination of Standard & Preferred Insurance Co. (May 26, 2022); Vermont Department of Financial Regulation.
According to a sworn affidavit by the Medicaid Fraud Control Unit’s auditor-investigator, Cold Spring Hills paid the Graph companies more than $7.1 million from 2017 through 2021, including for general and personal liability insurance, and another $3.5 million through a premium finance company for a policy that, in the investigator’s words, Bent and Avi Philipson “negotiated with themselves.” The facility did not list the Graph companies as related parties on its required Medicaid cost reports.NYSCEF 865 ¶¶ 118, 128
Graph tells a different story. In its own sworn affidavit, its corporate secretary said the facility paid about $4.74 million in liability premiums for 2019 through 2022 and that losses on those policies were at least $5.79 million, so the coverage lost money for Graph. She said Graph had issued 625 liability policies to 225 health care facilities since 2018.NYSCEF 578 ¶¶ 1, 12–13
Graph’s own numbers make the larger point. By its account, it was paying out more than it collected on a facility its owners’ family controlled, its losses were still growing, and it insured hundreds of other facilities. Eighteen months later, Vermont’s insurance regulator placed it in rehabilitation.
The same family controlled the facility that stopped paying and the insurer that then refused to pay anything.
The disclaimer
In September 2024, Graph denied coverage on a wrongful death claim brought by the estate of a Cold Spring Hills resident. Graph’s letter gave these reasons:
- the facility had repeatedly failed to pay defense costs and damages falling within the policy’s self-insured retention;
- its defense lawyers had withdrawn, or were preparing to withdraw, for nonpayment;
- the facility had not responded to a written warning in August 2024.
Graph declared itself prejudiced and disclaimed. The letter was addressed to the facility’s management, including Avi Philipson, who by Graph’s own sworn account owns 99% of Graph’s management and brokerage companies. The denial came six months after the court’s ruling and three and a half months before the operating company filed for bankruptcy. Six months after the denial, the insurer itself was in rehabilitation. Graph’s position is that the facility breached its policy obligations.
Why the insurer’s form matters
A risk retention group is regulated mainly by the state where it was formed, not by New York, and federal law requires its policies to warn that state guaranty funds will not pay if it fails. When an owner-affiliated group fails, a resident injured in that owner’s facility does not get New York’s safety net. The resident gets a place in line in a Vermont proceeding. The rehabilitation order bars suits against Graph anywhere but the Vermont court.
While the case was pending
The owners did not answer the Attorney General’s petition until September 2023, nine months after it was filed, following a motion to dismiss and repeated requests for more time. That month the AG went back to court for emergency relief and described what had happened in the meantime.
- A resident’s son swore that on July 30, 2023, his mother’s unit had two aides and one nurse for 43 residents, and one aide and one nurse the next day. His mother, who has multiple sclerosis, was left in bed an entire weekend, waited on a toilet for an hour and twenty minutes, and got her evening medication five hours late.
- An MFCU detective recounted families’ reports of a rehabilitation patient who got 10 minutes of physical therapy instead of 45, could not open her meals, lost weight and had one shower in two months, and of a resident who needed four infected teeth pulled after staff stopped brushing them.
- The facility stopped funding its union workers’ health benefits while related-party payments continued, and the Department of Health moved to revoke its operating certificate.
These are the Attorney General’s and its witnesses’ sworn statements. The owners disputed the AG’s case, and their counsel has said the court found no fraud.
How a facility empties out
The Cold Spring Hills record, from the Attorney General’s petition to the insurer’s rehabilitation.
- AG suesPetition alleges $42.4M to owners and related parties, concealed ownership, understaffing and unreported COVID deaths.
- Owners answer; AG seeks emergency reliefNine months after filing. Workers’ benefits unpaid; DOH moves to revoke the operating certificate.
- Court rulesLiability for care-related illegality; monitor appointed. Most financial-fraud claims rejected; about $2M restitution. AG appeals.
- ContemptFacility held in civil contempt for failing to pay $2.65M into the union benefit fund.
- $21M in confessed judgmentsSigned by the listed owner in favor of the owner-affiliated landlord, according to the AG.
- Insurer disclaimsGraph denies coverage on a resident’s wrongful death claim for unpaid retention and defense costs.
- Chapter 11Operating company files for bankruptcy. AG reports $4.8M more to related parties after its case began.
- Insurer in rehabilitationVermont court places Graph Insurance Group under a state rehabilitator; suits outside Vermont enjoined.
Sources: AG filings, Index No. 617709/2022 (Sup. Ct. Nassau County); McKnight’s Long-Term Care News (2024); In re Cold Spring Acquisition, LLC, No. 25-22002 (Bankr. S.D.N.Y.); Vt. Super. Ct. No. 24-CV-03563.
Centers Health Care
In June 2023, the Attorney General sued the owners, operators and landlords of four Centers Health Care homes: Beth Abraham in the Bronx, Holliswood in Queens, Martine in White Plains and Buffalo Center. The 316-page complaint alleged they misused more than $83 million in Medicare and Medicaid funds through related-party leases, loans, fees and salaries while residents suffered neglect, weight loss, pressure wounds and, in some cases, death. The court refused to dismiss the case against any defendant.
In November 2024 the owners settled for $45 million without admitting wrongdoing: $8.75 million in restitution, $35 million for resident care, independent monitors, and a bar on selling or closing the four homes. The owners have said the settlement dismissed the allegations against them.
New York Focus later found Buffalo Center below the settlement’s staffing floor 82 times between November 2024 and December 2025, with no penalty. In December 2025, New Jersey’s Comptroller reported that the same owners’ two New Jersey homes had moved about $92 million in Medicaid funds to related businesses, and sued in January 2026 to recover about $124 million. That case is pending. About two months later, the owners sold ten New York City homes, not including the settlement facilities, for $557 million.
SentosaCare
New York requires the Department of Health to review the “character and competence” of anyone seeking to own or operate a nursing home. In 2015, ProPublica found that in 15 applications by owners affiliated with the SentosaCare group, the department’s reviews omitted at least 20 federal fines and reported no repeat violations where they existed. The process meant to keep bad operators out has, at times, waved them through.
Why New York hasn’t stopped it
New York does not lack laws. In 2021 and 2022 it passed some of the strongest nursing home statutes in the country: a minimum staffing law, a rule that 70% of revenue go to direct care, and a 5% cap on profit. They have been enforced slowly, partially or not at all.
General cap on a state civil penalty per violation. Long Island homes paid roughly $108,000–$148,000 a year in state fines combined in 2022–2024.
Share of inspectors’ citations the Department of Health actually fined, often years later, in the State Comptroller’s 2016 audit.
Gap between the staffing law taking effect in 2022 and the first penalties under it in February 2026, covering 2022–2023.
New York nursing homes below the 3.5-hour staffing standard in August 2026.
Publicly reported recapture under the 5% profit cap. The industry itself put 2019 excess revenue near $510 million.
Federal minimum staffing standards in force. The 2024 rule was struck down, barred by Congress and repealed effective February 2026.
Attorney General cases take years. When they settle, owners admit nothing, and as the Centers record shows, settlement terms can be missed without consequence. Facilities with troubled records are sold, refinanced and transferred with state approval, and the liabilities stay behind with operating companies that have nothing left to pay.
None of this means regulators do not care. Agencies with limited staff are policing a well-financed industry with every incentive to delay. Any reform that depends on agency enforcement alone will produce the same result. The reforms that work put enforcement power in the hands of the people who were harmed, and put the owners’ own assets at risk.
What the industry says
The industry argues the real problem is money. LeadingAge New York testified in 2026 that Medicaid rates still rest on 2007 costs and fall short by about $90 per resident per day. Workforce shortages are real, especially upstate.
Underfunding is real. Nonprofit homes, which generally do not use related-party structures, report the deepest losses. But underfunding does not explain the record above. A facility that reports a loss while paying above-market rent to its owner’s real estate company is not losing money in the usual sense, and an owner who sells ten homes for $457 million more than he paid was not starved of resources. Underfunding is a reason to raise rates. It is not a reason to let owners take public money out the back door.
Three laws that would change the incentives
Make owners answer for the harm
Public Health Law § 2808-a already makes a nursing home’s “controlling persons” jointly liable with the facility in cases under the residents’ rights law, PHL § 2801-d. But negligence and wrongful death claims still reach owners mainly by piercing the corporate veil, and the landlords, lenders and family members who receive the money may fall outside the law. The Legislature should amend § 2808-a to:
- apply owner liability to every claim arising from a resident’s care, including negligence, wrongful death and survival claims;
- reach related companies and family members that received facility funds above fair market value, up to the excess received;
- presume that above-market related-party payments made while a facility was below the staffing minimum can be unwound to pay residents’ claims;
- require any buyer to assume pending injury claims or fund an escrow to pay them;
- make the related-party disclosures homes already file with the state public.
Stop Medicaid from recovering out of a neglected resident’s estate
Under PHL § 2801-d(6), damages a resident recovers under the residents’ rights law do not count against Medicaid eligibility and need not repay the cost of care. But that protection ends at death, when pain-and-suffering damages pass to the estate and estate-recovery rules let Medicaid recover years of payments. It also does not cover negligence claims brought alongside. Medicaid paid the facility, the facility neglected the resident, and Medicaid then recovers out of the award for that neglect.
The Legislature should amend § 2801-d(6) and Social Services Law § 369 so the protection covers all damages recovered against a nursing home, its owners or related companies, and continues after death. Because federal law requires estate recovery, New York should also seek federal approval of a hardship standard and press Congress to amend 42 U.S.C. § 1396p. Medicare’s recovery rights are federal and unaffected.
Require real insurance, and a bond behind it
We are aware of no New York requirement that nursing homes carry liability insurance at all. New York already requires self-insured employers to post a bond for workers’ compensation claims, and bars auto policies from lapsing until the insurer notifies the DMV. Nursing homes should meet at least that standard. A new law should require:
- coverage from an insurer licensed in New York and financially rated, at limits scaled to beds, with defense costs outside the limits;
- no coverage written, fronted or substantially reinsured by a company the owners or their families own or manage;
- no denial of coverage to residents because a facility failed to pay its retention; the insurer pays and recovers from the facility and its owners;
- a bond behind every retention, posted with the state and payable to residents when a judgment goes unpaid;
- no lapse for nonpayment, as to residents, until 30 days after notice to the Department of Health;
- personal liability for owners who evade these requirements.
Federal law limits how New York may regulate risk retention groups formed in other states, but preserves a state’s power to define acceptable proof of financial responsibility as a condition of a license. The law should be written as a licensing condition. Sureties generally require owners to guarantee a bond personally, which puts their own assets behind their facilities.
What you can do now
- Request the complete medical record in writing, including nursing notes, medication records, care plans and incident reports.
- Photograph injuries such as pressure wounds, bruises and fractures, and note the dates.
- Look up the facility in the Department of Health’s nursing home profiles and enforcement database, and on Medicare’s Care Compare.
- Report concerns to the Department of Health and the Long-Term Care Ombudsman Program.
- Mind the deadlines. Injury and wrongful death claims have strict time limits under New York law.
Nursing home abuse and neglect practice
- Amanda D’Ambrosio & C.J. Hughes, “How to make a fortune in nursing homes,” Crain’s New York Business (Oct. 14, 2026).
- N.Y. Attorney General, press releases on the Centers Health Care suit (June 2023) and $45 million settlement (Nov. 14, 2024), ag.ny.gov.
- N.J. Office of the State Comptroller, investigation report (Dec. 10, 2025) and lawsuit announcement (Jan. 19, 2026), nj.gov.
- New York Focus, reporting on Centers settlement compliance and Medicaid exclusions (July 29, 2026), nysfocus.com.
- N.Y. Attorney General, “Attorney General James Sues Long Island Nursing Home for Years of Fraud and Resident Neglect” (Dec. 16, 2022), ag.ny.gov.
- People v. Cold Spring Acquisition, LLC, Index No. 617709/2022 (Sup. Ct. Nassau County): Aff. of Patrick Beltrani (NYSCEF Doc. No. 865); Aff. of Mary Vazquez (Doc. No. 578); Aff. of Ryan Ricker (Doc. No. 665); Aff. of resident’s son (Doc. No. 667); Affirmation of Brian K. Steinwascher (Doc. No. 670).
- In re Cold Spring Acquisition, LLC, No. 25-22002 (Bankr. S.D.N.Y.), Docs. 9-1 and 640; McKnight’s Long-Term Care News (2024).
- Vermont Department of Financial Regulation, Graph Insurance Group, A Risk Retention Group, LLC, Order of Rehabilitation (Mar. 18, 2025), dfr.vermont.gov.
- NYS Department of Financial Services, Report on Examination of Standard & Preferred Insurance Co. (May 26, 2022), dfs.ny.gov.
- ProPublica, “New York For-Profit Nursing Home Group Flourishes Despite Patient Harm” (2015), propublica.org.
- Ashvin Gandhi & Andrew Olenski, “Tunneling and Hidden Profits in Health Care,” NBER Working Paper No. 32258.
- Office of the NYS Comptroller, Audit Report 2015-S-26 (2016); Crain’s New York Business, statewide staffing analysis (Oct. 12, 2026); 90 Fed. Reg. 55687 (Dec. 3, 2025); LeadingAge New York, testimony (2026).
- N.Y. Pub. Health Law §§ 12, 2801-a, 2801-d, 2803-x, 2808-a, 2828, 2895-b; N.Y. Soc. Serv. Law § 369; N.Y. Workers’ Comp. Law § 50; N.Y. Veh. & Traf. Law § 313; 42 U.S.C. § 1396p; 15 U.S.C. §§ 3902, 3905.
Attorney Advertising. This report is for general informational purposes and is not legal advice. Prior results do not guarantee a similar outcome. Descriptions of lawsuits, regulatory findings and investigations reflect allegations and public records as of the date of publication. Unless otherwise stated, the matters described have not resulted in findings of liability, and settlements referenced were entered without admission of wrongdoing.