A connected company's license to loot—at the expense of the taxpayers, elderly, and infirm
By Tom Robbins
published: October 13, 2010
So far, the finger-pointing in this season of outrage has focused on crooked politicians and public employees whose pensions we envy. The case of Excellent Home Care falls into a much larger category of abuse: the routine looting of public resources by those who prosper regardless of who's in office.
The story starts in 1994 when a group of wealthy health care moguls put all their chips down on the Republican candidate for governor, George Pataki. Leaders of this push included a nursing home tycoon named Benjamin Landa and a pair of wily operatives out of Williamsburg's Orthodox Jewish community named Joseph Menczer and Joseph Goldberger. They raised some $500,000 for Pataki's campaign, the kind of support that cements deep friendships.
They quickly presented the new governor with a list of favors sought. One had to do with the business of supplying home care attendants for the elderly and infirm.
We pause here for a necessary dose of health care policy. The home care idea is simple: Why pay for a hospital bed when nurses and aides can visit homes, thus reducing the burden on hospitals and clinics?
This notion worked so well that home care costs skyrocketed once unscrupulous for-profit companies recognized their earning opportunities. Patients needing a few hours of care could be served all day long; even better, around-the-clock. Who cared? The government was paying.
In his last year in office in 1994, Mario Cuomo's administration slapped a moratorium on all new home care licenses (in health care babble, they are CHHAs—pronounced "cha's"—for Certified Home Health Agency).
This greatly inconvenienced the health care tycoons. They convinced their new best friend, George Pataki, that the moratorium hurt needy New Yorkers, especially those developmentally disabled or mentally retarded. The administration agreed to authorize a small group of new home care agencies (CHHAs—remember?) to serve these special-needs patients. How could you be against that?
This is how Excellent Home Care came to be, and if its operators told a single word of truth about their actual intentions, it does not appear in any record. From the start, many suspected that the new agencies were just a way to get back to making huge profits off Medicaid and Medicare. This concern was raised at an October 1998 meeting of the state's Public Health Council, a panel of medically savvy citizens whose approval is required for new licenses.
Before Excellent's application was discussed, they had to wait for a new member to step outside. This was Benjamin Landa, an appointee of his friend the governor and the proud co-owner of the company, along with Joseph Goldberger's elderly father-in-law.
Once Landa had excused himself, the chairperson of the council's Establishment Committee, health care attorney Susan Regan, raised concerns. "There is always the danger that the special-needs CHHAs might serve as a way around the moratorium," she said, transcripts show.
Heads nodded around the room. A state health official agreed that "an end-run around the moratorium" was possible. Strict monitoring and annual reviews would close any loopholes, he said. With this assurance, the license was approved.
Excellent didn't get around to opening until 2004. It's unclear why, but it's worth noting that the company's original landlord was a Williamsburg firm also in the business of supplying home nursing aides. A probe by Attorney General Andrew Cuomo—dubbed "Operation Home Alone"—later found that Excellent's landlord, Immediate Home Care, had routinely used untrained aides with bogus state certificates. The owners eventually pled guilty to defrauding Medicaid of $12 million.
Excellent distanced itself by moving a few blocks away. Its first report in 2006 showed 780 patients. Of these, less than 20 percent were disabled. The rest were "general population" patients receiving standard assistance. As far as complying with the rules, this was the company's high-water mark.
Over the next three years, Excellent skipped its reports. The state also never asked, let alone audited its performance. It presumably didn't hurt that Excellent's brain trust—in the best Permanent Government tradition—had now become fervent supporters of Democrat Eliot Spitzer's 2006 bid for governor. Menczer and Goldberger, whose Albany shenanigans earned them the title of "the Two Josephs" during the Pataki years, again raised funds, and rallied the Orthodox community. On election night, they were on the VIP side of the red velvet rope hailing Spitzer's victory. At his inauguration, they stood on the statehouse steps applauding.
Meanwhile, Excellent hit its stride. Its original application had assured the state that it wouldn't be a budget-buster, limiting its work to 2,600 annual visits by skilled nurses, and 30,000 by health care aides. That was just talk. In 2008, records show, Excellent billed the state for more than 10 times that amount: 103,400 skilled nurse visits and 338,000 trips by health care aides.
Its mission to serve only disabled New Yorkers was another laugher. In 2008, this needy group accounted for less than 5 percent of its patients; in 2009, just 3 percent.
But earnings soared. Excellent reported $93.2 million in revenue, most of it via Medicaid, from 2007 to 2008. Gross profits were $23 million, with its two partners taking home $4 million apiece.
As one health care entrepreneur who watched them harvest this outrageous fortune put it, "They hit the lottery."
We'd be unlikely to know about Excellent's adventure if not for the death in 2007 of Joseph Goldberger's father-in-law, a man named Jeno Guttman.
The partners sought to re-divide the pie: Goldberger's wife, and a business associate would get the biggest shares, 30.75 percent each. Landa's new cut was 20 percent, with 13.5 percent for his lawyer, a busy political fundraiser from Long Island named Howard Fensterman. Five percent was to be purchased by another lawyer named Joseph Treff, who had been cited in a major mortgage fraud case.
There were just two problems: One was that the Public Health Council had to approve the new owners. The other was that Excellent had also come under investigation by Cuomo's "Home Alone" probe, the same inquiry that had brought down their former landlord. The application was put on hold until this was resolved.
More problems surfaced when the media got wind that Fensterman, Landa's attorney, was lining up contributions for Cuomo's campaigns. Both the Voice and Newsday reported that Cuomo had received donations from partners in a company under investigation. The campaign quickly returned $6,000 from Landa. Fensterman said his own donations were fine, since he was no longer seeking to become a partner. Actually, he simply had his wife, Lori, replace him as a would-be shareholder.
In December, Excellent settled the "Home Alone" charges, agreeing to a $3.7 million payment. There was no admission of wrongdoing, but prosecutors also did not withdraw their allegation that Excellent had known exactly what it was doing when it employed uncertified health aides.
The important part, however, was that the investigation was behind them, and the partnership agreement was resubmitted to the council. State officials were eager to help. In an executive summary recommending approval of Excellent's application, the "Home Alone" settlement was described as a win for the rogue home care agency: "The investigation concluded that Excellent had unintentionally used uncertified aides," bureaucrats wrote. This fabrication was repeated a few pages later: Excellent had "unknowingly" billed Medicaid for the bogus aides.
Asked last week who concocted this sham story, officials refused to say. "It was a mistake," a health department spokesman insisted. "It's been corrected."
But the company's default was harder to hide. The application came up for approval at the August 31 meeting of the Public Health Council. Again, members had to wait for someone with a vested interest to exit the room. This time, it was Fensterman, who was appointed to the council by Governor Paterson in June 2008.
"This is presented as a change in ownership," began Susan Regan, the attorney who had worried aloud back in 1998 about the company, "but we are seeing a number of very disturbing things."
She cited Excellent's failure to serve the special-needs patients it was licensed to help, plus its many missing reports. She also noted how it had soared past its estimated number of patients. It had even ignored a requirement to handle charity cases.
"Their actual operation is not only nothing like what they projected," said Regan, "but nothing like what they committed to do."
Health department officials responded that Excellent and other special needs agencies had been warned to shape up. A lawyer for the company, Jerome Levy, added that his client was "making a diligent effort to improve."
Regan wasn't satisfied. "It's pretty apparent they were just trying to get a full-service CHHA up and running," she said. "I think that was their intention from the beginning." It wasn't enough to reject the application, she said. "I want to revoke this license."
This brought gasps. This is not how officials usually talk, even private citizens designated to serve on review boards. "I can't think of a more extreme example," persisted Regan. "It was essentially a fraud."
In that case, health department officials said, the matter should probably be kicked down the road for the next governor to handle. "The whole issue of home health care in the state is ripe for reform," said the state's director of long-term care, Mark Kissinger. "We'll see if the next governor wants to take this on."
This month, the odds-on favorite to be the next governor was out in Williamsburg trolling for votes. Andrew Cuomo made several stops in the Orthodox community. At one point, he found himself seated at a long table surrounded by prominent local residents. One of them gestured toward two bearded men sitting next to the Attorney General. "And, of course, you know the two Josephs," he said, as Joseph Goldberger and Joseph Menczer smiled and nodded hopefully in Cuomo's direction.
trobbins@villagevoice.com
