Home Alone—With Medicaid Fraudsters


New Yorkers have always excelled at finding new ways to make a buck—honestly and otherwise—and the profitable schemes that Attorney General Andrew Cuomo is rooting out in the home health-care business are part of that ambitious tradition.

Cuomo has dubbed his investigation “Operation Home Alone,” and if his story line lacks an impish Macaulay Culkin character, it is chockablock full of rascally home invaders. So far, Cuomo has charged 95 such schemers, who posed as caregivers while actually fleecing patients and the state of millions in Medicaid dollars.

The scam works this way: Home-care attendants are required to have 75 hours of training, including supervision by a registered nurse who teaches basic medical applications like treating wounds, inserting catheters, and the like, along with bathing, dressing, and feeding techniques. Graduates of the two-week course receive a certificate and the right to work as a home health aide through licensed agencies.

A few years ago, some enterprising person got the bright idea to skip the training altogether and go straight to the certificate, which could be bought and sold on the city’s ever-adaptable black market.

The problem of how to find health aides willing to take part in this scheme was solved by having “marketers” scout out those in need of employment. This down-and-dirty approach allegedly worked very well in Brooklyn’s Russian community, where there was a shortage of Russian-speaking home health aides.

One reason the lack of training didn’t matter, authorities allege, is that, for many of the home-care visits billed to the state, no services were ever provided. In some instances, the Medicaid payments were split down the middle with the would-be patients. This is known as a “50/50” in the Medicaid-fraud world.

On paper, at least, the aides were the hardest of workers: At one home health agency whose managers pled guilty last year to defrauding Medicaid of $12 million, time sheets showed that many aides had worked 24 hours a day every day of the week. One aide claimed to have worked 36 hours each day—for 14 days straight.

This kind of fraudulent outrage is par for the course in Medicaid, which has long been plagued by con artists of one stripe or another. The schemers that Cuomo is chasing are just following the money, as the home health-care industry consumes an ever-growing share of health budgets.

What’s more interesting are some of the characters alleged to be at the top of the food chain in the home-care fraud schemes. This month, Cuomo brought his biggest case yet, charging a Brooklyn firm called B&H Healthcare Services, doing business as Nursing Personnel Home Care, with having bilked the state out of at least $30 million in bogus Medicaid billings.

Cuomo filed a criminal indictment—alleging grand larceny and fraud—against the company and its president, a man named Walter Greenfeld. He simultaneously filed a civil suit in State Supreme Court asking for treble damages against the company (that would be $90 million), and named the firm’s officers and shareholders as defendants.

Here’s one of the interesting aspects of the civil suit: Several of the shareholders identified in the lawsuit have the same last names—Schreiber and Goldstein—as the two principal officers of B&H Photo, the giant camera retailer on Ninth Avenue. Moreover, according to Cuomo’s complaint, B&H Home Health Care/Nursing Personnel for some reason paid more than $2 million to B&H Photo.

The complaint goes out of its way to state that B&H Photo is not a shareholder in the home health-care company, and a lawyer representing the defendant said the similar names were just a coincidence. B&H—the photo company—didn’t return calls.

Then there’s the fact that the biggest owner in B&H/Nursing Personnel, according to the complaint, is a major political contributor named Isaac “Yitzchok” Schwartz, who lives on Rodney Street in Williamsburg, Brooklyn, and holds 40 percent of the company.

Schwartz is well known in political circles as a generous donor to campaigns. He has mostly kept a low profile, but his picture got snapped in 1996 when he showed up at LaGuardia Airport with leaders of Williamsburg’s Hasidic community to welcome then–Republican presidential candidate Bob Dole and escort him to a Brooklyn fundraiser.

This fall, Schwartz and his family donated $4,600—the maximum allowed—to Rudy Giuliani’s ill-fated presidential campaign. Overall, records show that he and his loved ones have pumped $97,000 into federal races since 1995. His recipients range from George W. Bush and former senator Alfonse D’Amato to Brooklyn Democratic congressman Anthony Weiner and Alabama Republican senator Richard Shelby. Schwartz is also partial to Rhode Island representative Patrick Kennedy, son of Massachussetts senator Ted Kennedy, who has received $14,000 from the businessman and his family since 2001.

He’s also been active in state races, plowing $30,000 into campaigns since 2001. He gave $3,500 to Eliot Spitzer’s 2006 gubernatorial campaign, as well as $1,000 to the very man who’s currently suing him—Attorney General Cuomo. But most of his state donations went to former governor George Pataki and other Republican candidates.

He had good reason to like Pataki. In the late ’90s, Schwartz joined a team that included a bevy of major Republican campaign contributors and businessmen to form a new company called CarePlus, which won approvals to participate in the new and lucrative field of Medicaid managed care. In a 2002 Voice article, Wayne Barrett described how Pataki aides at the state health department shoehorned the company into the bidding process after it flunked initial agency evaluations.

Schwartz did not respond to requests for comment. As a corporate entity, B&H/Nursing Personnel is represented by attorney Randy Mastro, a former Giuliani deputy. Mastro declined to discuss the case. The firm has pled not guilty, and Mastro said when the charges were filed that the $30 million figure cited in the complaint is “vastly inflated.”

Mastro was also the attorney for an earlier major target of state authorities, an adult day-care operator named Lawrence Friedman, who pled guilty in 2001 to Medicaid fraud and agreed to repay $48 million. One of the things that made Friedman’s case notorious was that his entree to Pataki officials was brokered by a pair of Williamsburg businessmen named Joseph Goldberger and Joseph Menczer, who helped raise an astonishing $500,000 for the former governor.

Known as the “Two Josephs,” the men are key power brokers for the Williamsburg Orthodox community, and, according to several neighborhood sources, are close allies of Schwartz and B&H/Nursing Personnel. They are also apparently irrepressible. Although it was Spitzer, as attorney general, who brought charges against Friedman and helped spotlight the role the men played with the Pataki administration, both Menczer and Goldberger were prominent guests at Spitzer’s election-eve victory celebration and at his inauguration. In a photo that ran in the Daily News, the Two Josephs are seen beaming at Spitzer, his wife, and daughters as they descended the capital steps after his inaugural address.