People v Abraham Operations Assoc. LLC

2024 NY Slip Op 32976(U)

August 23, 2024

Supreme Court, New York County

Docket Number: Index No. 451549/2023

Judge: Melissa A. Crane

Cases posted with a "30000" identifier, i.e., 2013 NY Slip

Op 30001(U), are republished from various New York

State and local government sources, including the New

York State Unified Court System's eCourts Service.

This opinion is uncorrected and not selected for official

publication.
NYSCEF DOC. NO. 886 

INDEX NO. 451549/2023 

RECEIVED NYSCEF: 08/23/2024 

PRESENT: 

SUPREME COURT OF THE STATE OF NEW YORK 

NEW YORK COUNTY 

HON. MELISSA A. CRANE PART 

Justice 

60M 

---------------------------------------------------------------------------------X INDEX NO. 451549/2023 

PEOPLE OF THE STATE OF NEW YORK, BY LETITIA 

JAMES, ATTORNEY GENERAL OF THE ST ATE OF NEW 

YORK, 

Plaintiff, 

- V -

ABRAHAM OPERATIONS ASSOCIATES LLC OBA BETH 

ABRAHAM CENTER FOR REHABILITATION AND 

NURSING, DELAWARE OPERATIONS ASSOCIATES LLC 

OBA BUFFALO CENTER FOR REHABILITATION AND 

NURSING, HOLLIS OPERATING CO LLC OBA 

HOLLISWOOD CENTER FOR REHABILITATION AND 

HEALTHCARE, SCHNUR OPERATIONS ASSOCIATES 

LLC OBA MARTINE CENTER FOR REHABILITATION AND 

NURSING, LIGHT PROPERTY HOLDINGS ASSOCIATES 

LLC,DELAWARE REAL PROPERTY ASSOCIATES 

LLC,HOLLIS REAL ESTATE CO LLC,LIGHT 

OPERATIONAL HOLDINGS ASSOCIATES LLC,LIGHT 

PROPERTY HOLDINGS II ASSOCIATES LLC,CENTERS 

FOR CARE LLC OBA CENTERS HEAL TH CARE, CFSC 

DOWNSTATE LLC,BIS FUNDING CAPITAL LLC,SKILLED 

STAFFING LLC,KENNETH ROZENBERG, DARYL 

HAGLER, BETH ROZENBERG, JEFFREY SICKLICK, LEO 

LERNER, REUVEN KAUFMAN, AMIR ABRAMCHIK, DAVID 

GREENBERG, ELLIOT KAHAN, SOL BLUMENFELD, 

ARON GITTLESON, AHARON LANTZITSKY, JONATHAN 

HAGLER, MORDECHAI MOTi HELLMAN, 

Defendant. 

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02/13/2024, 

MOTION DATE 02/13/2024 

MOTION SEQ. NO. 002 003 

DECISION + ORDER ON 

MOTION 

The following e-filed documents, listed by NYSCEF document number (Motion 002) 779, 780, 781, 782, 

783,810,860 

were read on this motion to/for DISMISS 

The following e-filed documents, listed by NYSCEF document number (Motion 003) 784, 785, 805, 806, 

807,808,809,811,812,813 

were read on this motion to/for DISMISS 

The Attorney General of the State of New York commenced this special proceeding, 

pursuant to NY Executive Law § 63 (12), by filing its verified petition on June 28, 2023 

451549/2023 PEOPLE OF THE ST ATE OF NEW YORK, BY LETITIA JAMES, A HORNEY 

GENERAL OF THE STATE OF NEW YORK vs. ABRAHAM OPERATIONS ASSOCIATES LLC DBA 

BETH ABRAHAM CENTER FOR REHABILITATION AND NURSING ET AL 

Motion No. 002 003 

1 of 21 

Page 1 of 21 

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NYSCEF DOC. NO. 886 

INDEX NO. 451549/2023 

RECEIVED NYSCEF: 08/23/2024 

(NYSCEF Document Number [Doc] 1 [verified petition]). In Motions 2 and 3, respondents 

move to dismiss the petition pursuant to CPLR 3211 (a) (1), (a) (7), and (a) (8). 

Background 

The facts are from the petition unless noted otherwise. 

Petitioner asserts that the respondents engaged in persistent fraud and illegality in their 

operation, ownership, and control of four nursing homes: Beth Abraham Center for 

Rehabilitation and Nursing in the Bronx ("Beth Abraham Center"); Buffalo Center for 

Rehabilitation and Nursing in Buffalo ("Buffalo Center"); Holliswood Center for Rehabilitation 

and Healthcare in Queens ("Holliswood Center"); and Martine Center for Rehabilitation and 

Nursing in White Plains ( "Martine Center") (collectively, the "Nursing Homes"). 

According to the petition, all of the Nursing Homes are operated by Centers for Care 

LLC ("Centers"). "Centers controls and manages the Nursing Homes under the guise of 

providing management consulting services" (Doc 1, ,i 54). Petitioner asserts that respondents 

Kenneth Rozenberg ("Rozenberg") and Darryl Hagler ("Hagler") each hold a 50% ownership 

interest in Centers (id.). The individual respondents, including Rozenberg and Hagler, are coowners of the Nursing Homes, the LLCs that own the properties where the nursing homes are 

located, as well as the companies that operate, manage, or otherwise provide services to the 

nursing homes. 

The Other Corporate Respondents 

Abraham Operations Associates LLC ("Abraham Operations"), d/b/a Beth Abraham 

Center for Rehabilitation and Nursing, is a for-profit 448-bed nursing home. Light Operational 

Holdings Assocs. LLC ("Light Operational") is the 98% owner of Beth Abraham Center, and 

Rozenberg owns 95% of Light Operational. Rozenberg' s daughter, Rivka Rozenberg, holds the 

451549/2023 PEOPLE OF THE ST ATE OF NEW YORK, BY LETITIA JAMES, A HORNEY 

GENERAL OF THE STATE OF NEW YORK vs. ABRAHAM OPERATIONS ASSOCIATES LLC DBA 

BETH ABRAHAM CENTER FOR REHABILITATION AND NURSING ET AL 

Motion No. 002 003 

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Page 2 of 21 

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NYSCEF DOC. NO. 886 

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remaining 5%. Light Property Holdings Associates LLC ("Light Property") owns the real 

property where Beth Abraham Center is located and is Beth Abraham's landlord. Hagler owns 

99% of Light Property. His son, Jonathan Hagler, owns the other 1 %. 

Delaware Operations Associates LLC ("Delaware Operations"), d/b/a Buffalo Center for 

Rehabilitation and Nursing, is a 200-bed for-profit nursing home located in Buffalo. Rozenberg 

is Buffalo Center's 90% owner and Jeffrey Sicklick is its 10% owner. Delaware Real Property 

Associates LLC ("Del. Real Property") owns the real property where Buffalo Center is located. 

Hagler owns 99% of Del Real Property and his son owns the other 1 %. 

Hollis Operating Co., LLC ("Hollis Operating Co.") d/b/a Holliswood Center for 

Rehabilitation and Healthcare is a 314-bed for-profit nursing home located at Hollis. It is owned 

by Rozenberg (95.5%), Sicklick (2.5%), and Leo Lerner (2%). Hollis Real Estate Co., LLC 

("Hollis Real Estate") owns the real property where Hollis Center is located. Hagler owns 90% 

of Hollis Real Estate and Mordechai "Moti" Hellman owns the remaining 10%. 

Schnur Operations Associates LLC ("Schnur Associates"), d/b/a Martine Center for 

Rehabilitation and Nursing, is a 200-bed for-profit nursing home in White Plains. Light 

Operational owns 65% of Martine Center and the remaining interest is held by Amir Abramchik 

(10%), David Greenberg (10%), Elliot Kahan (10%), Rozenberg (4%), and Sol Blumenfeld 

(1 %). As noted above, Rozenberg is the 95% owner of Light Operational. Light Property 

Holdings II Associates LLC ("Light Property II") owns the White Plains real estate where 

Martine Center is located. Hagler owns 99% of Light Property II and his son Jonathan owns the 

remaining 1 %. 

The Nursing Homes paid funds to BIS Funding Capital LLC ("BIS"), owned by Hagler 

(99%) and his son Jonathan (1 %), "purportedly in exchange for software and major movable 

451549/2023 PEOPLE OF THE ST ATE OF NEW YORK, BY LETITIA JAMES, A HORNEY 

GENERAL OF THE STATE OF NEW YORK vs. ABRAHAM OPERATIONS ASSOCIATES LLC DBA 

BETH ABRAHAM CENTER FOR REHABILITATION AND NURSING ET AL 

Motion No. 002 003 

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equipment and other goods and services" (id. para 51). CFSC Downstate, LLC ("CFSC 

Downstate") is a New York limited liability company. Skilled Staffing, LLC ("Skilled 

Staffing") is a staffing agency owned by Shoshana Areman (majority) and Elisabeth Farkas 

(minority). Farkas is Rozenberg's daughter-in-law. Skilled Staffing received funds from the 

Nursing Homes for purported management and consulting services. 

Respondents' Alleged Violations and Repeated and Persistent Fraud and Illegality 

As petitioner notes, New York law imposes a "special obligation" on nursing home 

operators to provide nursing home residents with "necessary care and services," in accordance 

with each resident's care plan. New York and Federal law require adequate staffing "to attain or 

maintain the highest practicable physical, mental, and psychosocial well-being of each resident" 

(see IO NYCRR §§ 415.1 (a); 415.3 (f); 415.12; 415.13; 42 CFR § 483.25; see also 42 § CFR 

483 .35; 483 .10 ( d) (2) ). Petitioner asserts that respondents violated Public Health Law ("PHL") 

§ 2803-d (7) by "repeatedly and persistently commit[ing] and tolerat[ing] numerous acts of 

neglect against residents of the Nursing Homes" (Doc 1 [Petition], ,i 3). The State asserts that 

respondents "fail[ed] to provide 'timely, consistent, safe, adequate and appropriate services, 

treatment and or care ... including but not limited to: nutrition, medication, therapies, sanitary 

clothing and surroundings, and activities of daily living,' as defined by 10 NYCRR § 81.1 ( c )" 

(id.). 

Petitioner asserts that the respondents' engaged in "repeated and persistent fraud and 

illegality" from 2013 through the filing of the petition (id., ,i 4). The purported misconduct 

includes respondents': 

"(l) repeated and persistent neglect and inhumane treatment ofresidents who 

suffered and died under their care, due to Respondents' repeated disregard for, 

and violation of applicable laws, including those obligating Respondents to 

provide required resident care and sufficient staffing to deliver it, and to limit 

451549/2023 PEOPLE OF THE ST ATE OF NEW YORK, BY LETITIA JAMES, A HORNEY 

GENERAL OF THE STATE OF NEW YORK vs. ABRAHAM OPERATIONS ASSOCIATES LLC DBA 

BETH ABRAHAM CENTER FOR REHABILITATION AND NURSING ET AL 

Motion No. 002 003 

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admissions to residents for whom the Nursing Homes were able to provide 

required care; and (2) a long history of insufficient staffing and resulting poor 

quality of care that began well before the COVID-19 pandemic, in violation of 

numerous New York State and federal statutes and regulations, so that the 

Respondents, including the Nursing Homes' Owners, could covertly transfer 

millions of dollars in "up-front profit" to themselves from the Nursing Homes. 

The preventable harm and humiliation suffered by the Nursing Homes' residents 

resulted from a complex web of corporate entities and fraudulent transactions 

implemented by Respondents Rozenberg, Hagler, and Centers. This web 

intentionally turned the Nursing Homes into money-making machines for those 

who controlled them. Indeed, ... Respondents covertly extracted exorbitant 

amounts of money from the Nursing Homes through their collusive relationship, 

in which Rozenberg is the majority owner of the Nursing Homes, Hagler is the 

majority owner of the real estate upon which the Nursing Homes sit, and both 

individuals own Centers, which they used to exercise control" 

(id.; see also id. at nl [" 'Up-front profit taking' refers to Respondents' practice of making selfnegotiated and/or collusive payments from the Nursing Homes to themselves, companies they 

control, or their Favored Persons disguised as legitimate "expenses" and other transfers of funds, 

as a priority over, and without regard to, ensuring that the Nursing Homes have used the public 

funds they received to meet their duty to provide required care, with sufficient staffing to render 

such care to its residents."]). 

Supported by sworn statements of residents, their family members, and Nursing Home 

staff, as well as analysis of residents' medical records and other evidence, petitioner asserts that 

respondents repeatedly and persistently neglected their residents and 

"illegally disregarded and violated state and federal laws so that they could hide 

from regulators and the public how many millions of dollars they were extracting 

from the Nursing Homes, while ignoring and violating the legal duties of the 

Nursing Homes and their owners to provide required resident care and sufficient 

staffing to deliver that care, and to limit admissions to residents to whom the 

Nursing Homes could provide required care" 

(id. ,i 5). 

451549/2023 PEOPLE OF THE ST ATE OF NEW YORK, BY LETITIA JAMES, A HORNEY 

GENERAL OF THE STATE OF NEW YORK vs. ABRAHAM OPERATIONS ASSOCIATES LLC DBA 

BETH ABRAHAM CENTER FOR REHABILITATION AND NURSING ET AL 

Motion No. 002 003 

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The State seeks declaratory relief, permanent injunctions, restitution, 

reimbursement of expenses, and statutory costs in connection with the following eleven 

causes of action: 

(1) under§ 63 (12), against all respondents, for "Converting $83,810,544 in 

Government Healthcare reimbursement funds through deception, 

misrepresentation, and concealment"; 

(2) under§ 63 (12), against Rozenberg, Centers, the Nursing Homes' Operators, 

and the Nursing Homes' Owners, for falsely certifying compliance with Medicaid 

rules and regulations; 

(3) under§ 63 (12), against Rozenberg, Centers, the Nursing Homes' Operators, 

the Nursing Homes' Owners, the Landlords, Hagler, Jonathan Hagler, and 

Mordechai "Moti" Hellman, for collusive and/or self-dealing real estate 

transactions, leases, and loans; 

(4) under§ 63 (12), against Rozenberg, Centers, Nursing Home Operators, 

Nursing Home Owners, and Hagler, for failing to obtain DOH approval for 

withdrawals/transfers, and filing false cost reports with DOH to conceal related 

party transactions; 

(5) under§ 63 (12), against Rozenberg, Centers, Nursing Home Operators, and 

Nursing Home Owners, for insufficient staffing, inadequate resident care, and 

other violations of the Public Health Law and other NY and federal laws; 

(6) under§ 63 (12), against Rozenberg, Centers, Nursing Home Operators, 

Nursing Home Owners, and Hagler, for violating withdrawal and transfer 

disclosure requirements under Public Health Law§ 2808 (5) (c) and 10 NYCRR § 

400.19; 

(7) under§ 63 (12), against Rozenberg, Centers, Nursing Home Operators, 

Nursing Home Owners, and Hagler, for filing false or misleading cost reports 

regarding related party transactions in violation of 10 NYCRR part 86-2; 

(8) under§ 63 (12), against all respondents, for filing false Medicaid claims in 

violation of 18 NYCRR § 515.2; 

(9) under§§ 63 (12) and 63-c, against all respondents, for overpayment of public 

[Medicaid] funds; 

(10) under§§ 63 (12) and 63-c, against all respondents, for illegally obtaining and 

disposing of Medicaid funds; 

451549/2023 PEOPLE OF THE ST ATE OF NEW YORK, BY LETITIA JAMES, A HORNEY 

GENERAL OF THE STATE OF NEW YORK vs. ABRAHAM OPERATIONS ASSOCIATES LLC DBA 

BETH ABRAHAM CENTER FOR REHABILITATION AND NURSING ET AL 

Motion No. 002 003 

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(11) against all respondents, for unjust enrichment that resulted from diverted 

Medicaid funds. 

Respondents' Motions to Dismiss 

In Motion 3, Respondents Beth Abraham, Buffalo Center, Holliswood Center, Martine 

Center, Centers Health, Light Operational, Skilled Staffing, Kenneth Rozenberg; Beth 

Rozenberg; Jeffrey Sicklick; Leo Lerner; Reuven Kaufman; Amir Abramchik; David Greenberg; 

Elliot Kahan; Sol Blumenfeld; Aron Gittleson; Aharon Lantzitsky; and Mordechai "Moti" 

Hellman (collectively, the "Centers Respondents") move for partial dismissal pursuant to CPLR 

3211 (a) (1), (a) (7) & (a) (8). 

The Centers Respondents argue that the petition should be dismissed as against certain 

individual respondents because the allegations are insufficient. They also assert that the court 

lacks personal jurisdiction over certain respondents, and the applicable statute of limitations bars 

some of the claims. In addition, the Centers Respondents argue that the Medicaid and Medicare 

conversion claims [Counts I, VIII, IX, and X] must be dismissed because the government did not 

retain an interest in those funds once the funds covered services already performed. They argue 

that these conversion claims should also be dismissed because "the petition fails to trace the 

funds that were supposedly converted" (Doc 785 [reply mem, MS 03]). The Centers 

Respondents further urge the court to dismiss the State's claims involving false Medicaid 

certifications and inflated rents for failure to state a cause of action. The Centers Respondents 

also assert that: Counts V and VIII must be dismissed because the AG did not account for the 

COVID crisis; the Tweed Law claims (Counts IX-X) must be dismissed because the Tweed Law 

does not create a new cause of action; and the unjust enrichment claim (Count XI) should be 

dismissed because it is duplicative. 

451549/2023 PEOPLE OF THE ST ATE OF NEW YORK, BY LETITIA JAMES, A HORNEY 

GENERAL OF THE STATE OF NEW YORK vs. ABRAHAM OPERATIONS ASSOCIATES LLC DBA 

BETH ABRAHAM CENTER FOR REHABILITATION AND NURSING ET AL 

Motion No. 002 003 

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In Motion 2, Respondents Light Property, Del. Real Property, Hollis Real Estate, Light 

Property II, CFSC Downstate, BIS Funding, Hagler, and Jonathan Hagler (collectively, the "Real 

Estate Respondents" or "RE Respondents") move to dismiss the petition in its entirety. The Real 

Estate Respondents urge the court to dismiss the petition against Jonathan Hagler. They also 

argue that the petition must be dismissed because it lacks specific allegations against each 

respondent. Further, the RE Respondents contend that the Medicaid fraud control unit 

("MFCU") lacks authority to commence this special proceeding under Section 63 (12). 

Similarly, they argue that federal law preempts § 63 (12) because Medicaid fraud requires 

scienter under federal law. In addition, the RE Respondents assert that the summary nature of§ 

63 (12) deprives them of their state and federal due process rights. 

The Centers Respondents and RE Respondents also adopt each other's arguments. The 

State opposes the motions to dismiss. 

Discussion 

In a special proceeding, a respondent "may raise an objection in point of law by setting it 

forth in [the] answer or by a motion to dismiss the petition, made upon notice within the time 

allowed for answer" (CPLR 404 [a]; Cardinale v New York City Dept. of Educ., 204 AD3d 994, 

997 [2d Dept 2022], appeal dismissed, 39 NY3d 966 [2022]). "If the motion is denied, the court 

may permit the respondent to answer, upon such terms as may be just" (CPLR 404 [a]). 

"On a motion to dismiss pursuant to CPLR 404 (a) and 3211 (a) (7), only the petition is 

considered, all of its allegations are deemed true, and the petitioner is accorded the benefit of 

every possible favorable inference" (Cardinale, 204 AD3d at 997-998, citing Connaughton v 

Chipotle Mexican Grill, Inc., 29 NY3d 137, 142 [2017]). However, bare legal conclusions are 

not entitled to such deference. 

451549/2023 PEOPLE OF THE ST ATE OF NEW YORK, BY LETITIA JAMES, A HORNEY 

GENERAL OF THE STATE OF NEW YORK vs. ABRAHAM OPERATIONS ASSOCIATES LLC DBA 

BETH ABRAHAM CENTER FOR REHABILITATION AND NURSING ET AL 

Motion No. 002 003 

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1. Preliminary Matters 

a. Standing 

The court rejects respondents' argument that petitioner lacks standing to maintain this 

special proceeding under§ 63 (12). Contrary to respondents' contention, the Attorney General is 

the petitioner, not the Medicaid Fraud Control Unit (MFCU). MFCU is a part of the Attorney 

General's Office (e.g. Moe v Kuriansky, 120 AD2d 594, 595 [2d Dept 1986 [the AG "ultimately 

control(s) (MFCU's) work"]). In any event, MFCU is authorized under state law (Exec. Order 4) 

and federal law ( 42 CPR § 1007 .1 et seq.) to investigate and prosecute, or refer for prosecution, 

"violations of all applicable State laws, including criminal statues, as well as civil false claims 

statutes or other civil authorities, pertaining to ... Fraud in the ... provision of medical 

assistance, or the activities of providers" ( 42 CPR § 1007 .11 [a]). 

b. Personal Jurisdiction 

The court has jurisdiction over the respondents. Contrary to respondents' contentions, 

jurisdiction over Hellman, Kaufman, Greenberg, Blumenfeld, and Jonathan Hagler is appropriate 

under CPLR 302 (a) (1). The petition adequately establishes that these respondents transact 

business in New York. Long-arm jurisdiction may be asserted over these respondents by virtue 

of their membership interests in certain respondent entities. In addition, the court has jurisdiction 

over Hellman and Jonathan Hagler because they are members ofLLCs that own New York 

properties (CPLR 302 [a] [4]). 

Briefly, Hellman has transacted business in the state. He is a member of Hollis Real 

Estate, that owns the Holliswood property, and received equity distributions from Holliswood's 

rents. Kaufman, Greenberg, and Blumenfeld own or owned parts of the operating respondents 

Holliswood Center and Martine Center, both located in New York, and they filed certifications 

451549/2023 PEOPLE OF THE ST ATE OF NEW YORK, BY LETITIA JAMES, A HORNEY 

GENERAL OF THE STATE OF NEW YORK vs. ABRAHAM OPERATIONS ASSOCIATES LLC DBA 

BETH ABRAHAM CENTER FOR REHABILITATION AND NURSING ET AL 

Motion No. 002 003 

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and other documentation to the New York State Public Health and Health Planning Council 

(PHHPC) when these operator entities acquired their nursing homes. Jonathan Hagler is a 1 % 

owner of Light Property, Light Property II, Del. Real Property, and BIS Funding. He is also a 

10% owner of CFSC Downstate. Jonathan Hagler transacted business, either directly or through 

an agent, by virtue of his membership interests in these New York businesses. The claims 

against these respondents directly arise from their contacts with the state and the court's exercise 

of jurisdiction over the out-of-state respondents comports with due process. 

c. Statute of Limitations 

The statute of limitations for petitioner's claims is 6 years (see CPLR 213 [9] [§ 63 (12) 

claims], CPLR 213 [5] [§ 63-c claims], CPLR 213 [1] [unjust enrichment claims]). The parties 

agree that the limitations period was tolled for 228 days during the pandemic (see Doc 811 [resp 

reply mem] at 25). The petitioner argues that the "continuing wrong" doctrine extends the 

limitations period. Respondents argue that the petition does not allege continuing wrongs and 

that wrongful conduct that occurred before November 12, 2016 is time-barred. November 12, 

2016 is 6 years and 228 days prior to the date that the AG filed the petition on June 28, 2023. 

The "continuing wrong" doctrine "is usually employed where there is a series of 

continuing wrongs and serves to toll the running of a period of limitations to the date of the 

commission of the last wrongful act" (Selkirk v State of New York, 249 AD2d 818, 819 [3d Dept 

1998]). This doctrine "may only be predicated on continuing unlawful acts and not on the 

continuing effects of earlier unlawful conduct" (id.). 

Respondents fail to establish that the continuing wrong doctrine is inapplicable. The 

petition asserts that respondents engaged in repeated and persistent schemes involving fraud and 

illegality. For example, Rozenberg and Hagler allegedly colluded to force Holliswood to pay 

451549/2023 PEOPLE OF THE ST ATE OF NEW YORK, BY LETITIA JAMES, A HORNEY 

GENERAL OF THE STATE OF NEW YORK vs. ABRAHAM OPERATIONS ASSOCIATES LLC DBA 

BETH ABRAHAM CENTER FOR REHABILITATION AND NURSING ET AL 

Motion No. 002 003 

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inflated rental payments pursuant to an exorbitant lease. The lease was executed in 2013 but rent 

payments began in 2014 and continued until 2020. Contrary to respondents' contention, the 

harm did not occur in 2013 when the lease was entered, it began at the earliest in 2014 when 

Holliswood's minimum rent increased by 93% over the rent rate that respondents submitted to 

DOH, and the harm continued throughout the lease term. The petitioner's claims are not breach 

of contract claims where, for instance, the claim would accrue on the date of the breach, even if 

the harm results later (see e.g. Clark v Metropolitan Transp. Auth., 46 Misc 3d 344, 350 [Sup Ct, 

NY County 2013]). Here, instead, the AG alleges that the respondents orchestrated multiple 

ongoing illegal schemes to divert nursing home assets to themselves. As set forth in the petition 

(see e.g. Doc 1, ,i 15), these alleged schemes include: 

• Causing the Nursing Homes to enter into collusive real estate arrangements 

that saddled the homes with excessive debts and forced them to pay falsely 

inflated rents to real estate companies owned by Hagler; 

• Extracting millions of dollars from the Nursing Homes through collusive 

related party transactions, including the payment of "fees" to sham vendors 

owned in whole or part by Rozenberg, Hagler, and/or their family members; 

• Causing the Nursing Homes to make interest-free loans to other nursing 

homes owned and operated by Rozenberg for no discemable business 

purpose, which deprived the Nursing Homes of funds to spend on staffing; 

these loans were rarely repaid in full, if at all; and 

• Causing the Nursing Homes to pay purported "salaries" to their owners -

salaries that were frequently unreported, inflated, and in some instances, 

indicative of no show jobs, in that the purported "salaries" bore no 

relationship to any work supposedly performed. 

Thus, petitioner's allegations assert a repeated and persistent scheme to funnel up-front 

profits away from the nursing homes to the respondents in violation of applicable regulations (cf 

e.g. Selkirk v State, 249 AD2d 818, 819 [3d Dept 1998] [ continuing wrong doctrine may apply 

where the harms constitute "continuing unlawful acts," as opposed to "continuing effects of 

earlier unlawful conduct"]; People v Trump, 62 Misc 3d 500, 508 [Sup Ct 2018] [applying the 

451549/2023 PEOPLE OF THE ST ATE OF NEW YORK, BY LETITIA JAMES, A HORNEY 

GENERAL OF THE STATE OF NEW YORK vs. ABRAHAM OPERATIONS ASSOCIATES LLC DBA 

BETH ABRAHAM CENTER FOR REHABILITATION AND NURSING ET AL 

Motion No. 002 003 

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continuing wrong doctrine where "respondents' alleged continuous and pervasive failure to 

operate and manage the" business "in accordance with ... statutory rules and fiduciary 

obligations" resulted "in the misuse of [business] assets and self-dealing"]). Accordingly, at this 

pre-answer stage, and under the circumstances presented in the petition, respondents have not 

sufficiently demonstrated, as a matter oflaw, that they are entitled to dismissal because the 

claims are time-barred. 

Even if the continuing wrong doctrine does not apply, the fraudulent concealment 

doctrine may toll the period. Executive Law§ 63 (12) "claims may be tolled under the 

fraudulent concealment doctrine" (New Yorkv Feldman, 2003-2 Trade Cases P 74102 [SDNY 

July 10, 2003]). The State alleges in the petition that Rozenberg and Hagler "caused the Nursing 

Homes to take ( or be obligated to fund) Related-Party loans with exorbitant interest rates to 

finance their purchases of certain Nursing Homes," and "caused the realty companies to take 

commercial loans with principal amounts that were higher than necessary to acquire the Nursing 

Homes, leaving the Nursing Homes to repay that debt while" respondents collected up-front 

profits (Doc 1, ,i 413). 

The State asserts that respondents deceived DOH and concealed their misconduct by 

"(i) taking out a series of inflated mortgages and saddling the Nursing Homes 

with the responsibility to pay the debt, while pocketing excess proceeds; (ii) 

misleading DOH about the lease agreements and pocketing millions of dollars in 

purported rent; (iii) submitting false and misleading annual Cost Reports; and (iv) 

withdrawing equity far in excess of 3% without obtaining prior permission from 

DOH through collusive transactions" 

(Doc 805 [petitioner's mem opp] at 47, citing petition [Doc l], §§ VIII [A] [mortgages and 

leases], VIII [D] [3] [Cost Reports], VIII [E] [equity withdrawals]). 

Petitioner asserts that the Nursing Home Operators and Nursing Home Owners concealed 

this persistent fraud and illegality by "flout[ing] DOH rules, ... failing to disclose related party 

451549/2023 PEOPLE OF THE ST ATE OF NEW YORK, BY LETITIA JAMES, A HORNEY 

GENERAL OF THE STATE OF NEW YORK vs. ABRAHAM OPERATIONS ASSOCIATES LLC DBA 

BETH ABRAHAM CENTER FOR REHABILITATION AND NURSING ET AL 

Motion No. 002 003 

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transactions on the Nursing Homes' cost reports[,] ... [and] ignoring[ing] ... the rules and 

regulations that prohibit transfers of funds from nursing homes without DOH approval" (e.g. 

Petition, ,i 16). Thus, treating the allegations in the petition as true at this pre-answer stage, 

respondents do not establish as a matter of law that the fraudulent concealment doctrine fails to 

toll the limitations period. 

d. Respondents' due process rights, generally 

The RE Respondents assert that the summary nature of an Executive Law§ 63 (12) 

special proceeding will deprive them of their due process rights. They argue that the court 

should convert this special proceeding to a plenary action. 

"The Supreme Court has stated that due process requires an opportunity to be heard 'at a 

meaningful time and in a meaningful manner'" (People v Apple Health and Sports Clubs, Ltd., 

Inc., 80 NY2d 803, 806 [1992] [citations omitted]). "The opportunity must be appropriate to the 

nature of the case" (id., citing Mullane v Central Hanover Trust Co., 339 US 306, 313 [1950]). 

Respondents contend that the "sprawling Petition is the result of a 3-year investigation, 

but the Real Estate Respondents have not been provided any meaningful opportunity to respond" 

(Doc 780 [RE Respondents' mem] at 20-21 ). They are incorrect. Here, as in Apple Health I, the 

Executive Law § 63 (12) procedures are constitutionally sufficient. Respondents were involved 

in the pre-litigation investigation and had opportunities to be heard before the state filed the 

petition (see People v Apple Health and Sports Clubs, Ltd., Inc., 80 NY2d 803, 807 [1992] 

["Thus, the litigation, once instituted, came as no surprise to the respondents. The prior 

negotiations with the Attorney-General and the petition clearly apprised respondents of the 

underlying facts alleged by the Attorney-General and afforded them ample opportunity to raise 

their opposing contentions on the merits of the petition."]). Since the AG filed the petition, 

451549/2023 PEOPLE OF THE ST ATE OF NEW YORK, BY LETITIA JAMES, A HORNEY 

GENERAL OF THE STATE OF NEW YORK vs. ABRAHAM OPERATIONS ASSOCIATES LLC DBA 

BETH ABRAHAM CENTER FOR REHABILITATION AND NURSING ET AL 

Motion No. 002 003 

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respondents have been heard at oral argument on their motions for discovery and these motions 

to dismiss. They will also have the opportunity to be heard later in this case when they submit 

their answers, affidavits, and other evidence. They will also have the opportunity to appear for 

future oral arguments, hearings, and trials, as may be necessary. Under the circumstances, this 

summary proceeding does not deprive the respondents of their procedural due process rights. 

2. Petitioner States Viable Executive Law § 63 (12) Claims 

a. Petitioner's§ 63 (12) claims, generally 

Executive Law§ 63 (12) "defines the fraudulent conduct that it prohibits, authorizes the 

Attorney General to commence an action or proceeding to foreclose that conduct, and specifies 

the relief, including equitable relief, that the Attorney General may seek" (People v Trump 

Entrepreneur Initiative LLC, 137 AD3d 409,417 [1st Dept 2016]). 

Executive Law § 62 (12) states: 

"Whenever any person shall engage in repeated fraudulent or illegal acts or 

otherwise demonstrate persistent fraud or illegality in the carrying on, conducting 

or transaction of business, the attorney general may apply, in the name of the 

people of the state of New York, to the supreme court of the state of New York, 

on notice of five days, for an order enjoining the continuance of such business 

activity or of any fraudulent or illegal acts, directing restitution and damages and, 

in an appropriate case, cancelling any certificate filed under and by virtue of the 

provisions of section four hundred forty of the former penal law or section one 

hundred thirty of the general business law, and the court may award the relief 

applied for or so much thereof as it may deem proper." 

"A special proceeding, as authorized by Executive Law § 63 (12), is intended as an 

expeditious means for the Attorney-General to prevent further injury and seek relief for the 

victims of business fraud" (People v Apple Health and Sports Clubs, Ltd., Inc., 206 AD2d 266, 

268 [1st Dept 1994]). In the context of a§ 63 (12) proceeding, 

"[t]he word 'fraud' or 'fraudulent' ... shall include any device, scheme or artifice 

to defraud and any deception, misrepresentation, concealment, suppression, false 

pretense, false promise or unconscionable contractual provisions. The term 

451549/2023 PEOPLE OF THE ST ATE OF NEW YORK, BY LETITIA JAMES, A HORNEY 

GENERAL OF THE STATE OF NEW YORK vs. ABRAHAM OPERATIONS ASSOCIATES LLC DBA 

BETH ABRAHAM CENTER FOR REHABILITATION AND NURSING ET AL 

Motion No. 002 003 

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'persistent fraud' or 'illegality' ... shall include continuance or carrying on of 

any fraudulent or illegal act or conduct. The term 'repeated' as used herein shall 

include repetition of any separate and distinct fraudulent or illegal act, or conduct 

which affects more than one person" 

(Exec. Law § 63 [12]). 

Thus, fraud claims under§ 63 (12) are broader than common law fraud and can be 

established without proof of scienter or reliance (see People v Trump Entrepreneur Initiative 

LLC, 137 AD3d 409,417 [1st Dept 2016]; People v Coventry First LLC, 52 AD3d 345, 346 [1 st 

Dept 2008]). "The test for fraud under Executive Law§ 63 (12) is whether the targeted act has 

the capacity or tendency to deceive or creates an atmosphere conducive to fraud" (People v 

Northern Leasing Sys., Inc., 193 AD3d 67, 68 [1st Dept 2021]). 

Executive Law§ 63 (12) claims have been applied to a wide array ofrespondents, 

including persons with knowledge of fraudulent schemes, individuals who perpetrated those 

schemes, and pass-through entities and knowing recipients of fraudulently obtained proceeds 

(see People v Leasing Expenses Co. LLC, 199 AD3d 521, 523 [1st Dept 2021]; see also e.g. 

People v Northern Leasing Sys., Inc., 169 AD3d 527, 528 [1st Dept 2019]; People v One Source 

Networking, Inc., 125 AD3d 1354, 1357 [4th Dept 2015] ["Because Executive Law§ 63 (12) 

allows the Attorney General to seek relief against 'any person,' there is no impediment to 

imposing personal liability against a corporate officer if it is established that he [ or she] 

personally participated in or had actual knowledge of the fraud or illegality."] [quotations 

omitted]; People v Apple Health and Sports Clubs, Ltd., Inc., 80 NY2d 803, 808 [1992] [finding 

that "interlocking corporations" that "acted in concert" can be liable for fraudulent and illegal 

activities]; People v Cold Spring Acquisition, LLC D/B/A Cold Spring Hills Center for Nursing 

& Rehabilitation, Index No. 617709/2022 [Sup Ct, Nassau County 2022] [involving nursing 

homes, their operators, and owners, and related real estate entities]; People v Fulton Commons 

451549/2023 PEOPLE OF THE ST ATE OF NEW YORK, BY LETITIA JAMES, A HORNEY 

GENERAL OF THE STATE OF NEW YORK vs. ABRAHAM OPERATIONS ASSOCIATES LLC DBA 

BETH ABRAHAM CENTER FOR REHABILITATION AND NURSING ET AL 

Motion No. 002 003 

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Care Center, Inc., Index No. 617687 /2022 [same]). That is, parties outside of an organization 

who have knowledge of the organization's unlawful acts and have received the benefits of those 

unlawful acts can be held liable under§ 63 (12). 

Executive Law§ 63 (12) was "meant to protect not only the average consumer, but also 

the ignorant, the unthinking and the credulous" (State v Northern Leasing Sys. Inc., 193 AD3d at 

75). Section 63 (12) actions have also been maintained on behalf of the people of New York 

(e.g. People v Sprint Nextel Corp., 26 NY3d 98, 109 [2015]), and "to recover overpayments of 

reimbursements" paid by New York's Medicaid program (e.g. People v Pharmacia Corp., 39 

AD3d 1117, 1118 [3d Dept 2007]). 

The petition sufficiently alleges that respondents repeatedly engaged in fraud and illegal 

behavior by filing false and misleading Medicaid certifications, violating other Medicaid 

program regulations, paying fraudulent and collusive fees to related party service providers, and 

orchestrating fraudulent real estate schemes based on fraudulent loans. The petition also alleges 

that respondents used these fraudulent and illegal activities to extract millions of dollars from the 

nursing homes that were then diverted to respondents in violation of Medicaid, PHL, and DOH 

rules and regulations, including the Nursing Home's obligations to provide required care, 

maintain adequate staffing, and to limit admissions. In addition, petitioner sufficiently alleges a 

basis for the requested relief, including disgorgement and restitution of improperly diverted 

Nursing Home assets, sham rent payments that violated the 3% rule, and misappropriated 

Medicaid and other government funds. 

b. Preemption 

Next, the court rejects respondents' contention that federal law preempts Executive Law 

§ 63 (12). Section 63 (12) is not in conflict with 42 CPR§ 1007.1. 42 CPR§ 1007.1 defines 

451549/2023 PEOPLE OF THE ST ATE OF NEW YORK, BY LETITIA JAMES, A HORNEY 

GENERAL OF THE STATE OF NEW YORK vs. ABRAHAM OPERATIONS ASSOCIATES LLC DBA 

BETH ABRAHAM CENTER FOR REHABILITATION AND NURSING ET AL 

Motion No. 002 003 

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fraud as "any act that constitutes criminal or civil fraud under applicable State law. Such 

conduct may include deception, concealment of material fact, or misrepresentation made 

intentionally, in deliberate ignorance of ... or in reckless disregard of the truth." This definition 

of fraud in the CPR permits but does not require a minimum mens rea element. 

c. Executive Law claims against certain individual respondents 

The court also denies the motion to dismiss certain respondents from this special 

proceeding. Individual respondents Kenneth Rozenberg, Beth Rozenberg, Jeffrey Sicklick, Amir 

Abramchik, Elliot Kahan, David Greenberg, Sol Blumenfeld, Aron Gittleson, Aharon Lantzitsky, 

Reuven Kaufman and Leo Lerner (collectively, the "Nursing Home Owners") may be held liable 

under the Public Health Law ("PHL"). PHL § 2808-a (2) defines "controlling person" as any 

person who "by reason of a direct or indirect ownership interest ( whether of record or beneficial) 

has the ability, acting either alone or in concert with others with ownership interests, to direct or 

cause the directions of the management or policies of said facility." Any "controlling person" 

that is liable under the PHL "shall also be liable, jointly and severally, with and to the same 

extent as" the associated nursing home (PHL § 2808-1 [l]). As petitioner notes, "liability and 

responsibility follow the capability to make a profit" (Doc 805 [Petitioner's mem opp] at 17, 

quoting Ocean Side Inst. Indus. v United Presby. Residence, 254 AD2d 337, 338 [2d Dept 1998] 

[discussing legislative history]). The court denies the motion to dismiss petitioner's sixth cause 

of action, under § 63 (12), for the Nursing Home Owners' alleged PHL violations. 

Further, although some of the respondents may not have had any responsibility to provide 

care to nursing home residents, or may not have directly engaged in the alleged fraudulent 

activities, the petition states a§ 63 (12) claim against all respondents. Individuals may be liable 

under§ 63 (12) if they participated in the fraudulent conduct or if they had actual knowledge of 

451549/2023 PEOPLE OF THE ST ATE OF NEW YORK, BY LETITIA JAMES, A HORNEY 

GENERAL OF THE STATE OF NEW YORK vs. ABRAHAM OPERATIONS ASSOCIATES LLC DBA 

BETH ABRAHAM CENTER FOR REHABILITATION AND NURSING ET AL 

Motion No. 002 003 

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the conduct (People v Apple Health & Sports Clubs, Ltd., 80 NY2d 803, 807 [1992]), and parties 

who "turned a blind eye to evidence" of fraudulent activities can also be held liable (People v 

College Network, Inc., 53 Misc 3d 1210(A) [Sup Ct, Albany County 2016]). 

Likewise, the court denies the motion to dismiss the claims against Hagler, individually. 

The petition is plainly sufficient as to Hagler because he is a 50% owner of Centers, is Centers' 

CFO, and is the majority owner of the Landlord entities. In addition, the petition states claims 

against the minority owners of the Nursing Home Operators and the Landlords (the "Minority 

Owners"). Viewing the petition in the light most favorable to the State, the Minority Owners 

knew, or should have known, about the fraudulent or illegal conduct and failed to prevent that 

conduct. The Minority Owners all benefited from the alleged fraudulent conduct and some 

purportedly participated in the conduct signing Certificate of Need applications, holding 

positions at the nursing homes, or serving as consultants, and by accepting sham salaries (see e.g. 

Petition, ,i,i 56-65, 235-236, 239, 249-269, 309, 605-609, 617-620, 628, 643-666; see also 

Petitioner's mem opp at 22-28). 

Finally, for the purposes of this pleading, the individual respondents may be liable for the 

fraudulent or illegal acts that other respondents allegedly committed ( e.g. People v General Elec. 

Co., 302 AD2d 314, 317 [1st Dept 2003] [finding third-party liability under§ 63 [12] using 

agency theory]). In People v Northern Leasing Sys., Inc. (193 AD3d 67 [1st Dept 2021]), the 

First Department held that a respondent's failure to supervise adequately "created an enterprise 

conducive to fraud" that violated § 63 (12) (id. at 75). The respondents may also be liable under 

an aiding and abetting theory (see People v College Network, Inc., 53 Misc 3d 1210(A) [Sup Ct, 

Albany County 2016]). 

d. Other contentions 

451549/2023 PEOPLE OF THE ST ATE OF NEW YORK, BY LETITIA JAMES, A HORNEY 

GENERAL OF THE STATE OF NEW YORK vs. ABRAHAM OPERATIONS ASSOCIATES LLC DBA 

BETH ABRAHAM CENTER FOR REHABILITATION AND NURSING ET AL 

Motion No. 002 003 

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Respondents have not established that dismissal of resident care claims is warranted. 

They argue that the COVID pandemic excuses their failures to provide adequate care to the 

Nursing Home's residents. At most, these matters raise issues of fact that cannot be resolved on 

these motions. Similarly, the court rejects respondents' contention that they are entitled to 

immunity under the now-repealed Emergency Disaster Treatment Protection Act ("EDTP A"). 

Respondents have not met their burden of establishing that the claims in the petition fall within 

the scope of the EDTP A. The alleged violations began before the pandemic and continued until 

the filing of the petition. Moreover, EDTP A immunity does not extend to gross negligence, 

reckless conduct, or intentional misconduct (see PHL § 3082 [2]). 

Respondents have also failed to establish that DOH waived the Nursing Homes' 

obligations to maintain adequate staffing levels at the facilities. 

3. Petitioner's Executive Law§ 63-c claims 

Executive Law § 63-c (the "Tweed Law") provides: 

"Where any money, funds, credits, or other property, held or owned by the state, 

or held or owned officially or otherwise for or in behalf of a governmental or 

other public interest, by a domestic, municipal, or other public corporation, or by 

a board, officer, custodian, agency, or agent of the state, or of a city, county, 

town, village or other division, subdivision, department, or portion of the state, 

has heretofore been, or is hereafter, without right obtained, received, converted, or 

disposed of, an action to recover the same, or to recover damages or other 

compensation for so obtaining, receiving, paying, converting, or disposing of the 

same, or both, may be maintained by the state in any court of the state, ... 

although a right of action for the same cause exists by law in some other public 

authority, and whether an action therefor in favor of the latter is or is not pending 

when the action in favor of the state is commenced. The attorney-general shall 

commence an action, suit or other judicial proceeding, as prescribed in this 

section, whenever he deems it for the interests of the state so to do; or whenever 

he is so directed, in writing, by the governor." 

Executive Law§ 63-c proceedings can be used to recover misappropriated Medicaid 

funds (e.g. Cuomo v Ferran, 77 AD3d 698, 701 [2d Dept 2010] ["The Tweed Law vests the 

451549/2023 PEOPLE OF THE ST ATE OF NEW YORK, BY LETITIA JAMES, A HORNEY 

GENERAL OF THE STATE OF NEW YORK vs. ABRAHAM OPERATIONS ASSOCIATES LLC DBA 

BETH ABRAHAM CENTER FOR REHABILITATION AND NURSING ET AL 

Motion No. 002 003 

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Attorney General with the discretionary authority to seek the recovery of money or property 

( other than real property) belonging to the State, or to recover damages or other compensation, or 

both, pursuant to any viable action or proceeding at law or in equity available to the State."]). 

Contrary to respondents' contentions, liability under§ 63-c does not require satisfying the 

elements of common law conversion. Indeed, § 63-c "e "vests the Attorney General with the 

discretionary authority to seek the recovery of money or property ... belonging to the State ... , 

or to recover damages or other compensation for the same, or both, pursuant to any viable action 

or proceeding at law or in equity available to the State" (State v Grecco, 21 AD3d 4 70, 4 77 [2d 

Dept 2005]). The petitioner need not prove that the respondents knew that the Medicaid funds 

were obtained "without right" (Executive Law§ 63-c [1]). 

Here, the petition alleges that the respondents committed, or were complicit in, the 

collection of Medicaid funds "without right," for example, by filing false or misleading Medicaid 

certifications, otherwise violated Medicaid program regulations, and paying fraudulent and 

collusive fees to related party service providers. These allegations are sufficient to survive this 

motion to dismiss the Tweed Law claims. 

4. Petitioner's unjust enrichment claim 

Unjust enrichment is an equitable quasi-contract claim that "depends upon broad 

considerations of equity and justice" ( Columbia Mem. Hosp. v Hinds, 38 NY3d 253, 275 

[2022]). 

"The essential inquiry in any action for unjust enrichment ... is whether it is 

against equity and good conscience to permit the defendant to retain what is 

sought to be recovered. A plaintiff must show that (1) the other party was 

enriched, (2) at that party's expense, and (3) that it is against equity and good 

conscience to permit [the other party] to retain what is sought to be recovered" 

451549/2023 PEOPLE OF THE ST ATE OF NEW YORK, BY LETITIA JAMES, A HORNEY 

GENERAL OF THE STATE OF NEW YORK vs. ABRAHAM OPERATIONS ASSOCIATES LLC DBA 

BETH ABRAHAM CENTER FOR REHABILITATION AND NURSING ET AL 

Motion No. 002 003 

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(Mandarin Trading Ltd. v Wildenstein, 16 NY3d 173, 182 [2011] [internal citations and 

quotation marks omitted]). 

"Although privity is not required for an unjust enrichment claim, a claim will not be 

supported if the connection between the parties is too attenuated" (id. at 182). The claimant must 

allege "a relationship between the parties, or at least an awareness" of the other party (id.). 

Respondents argue that this claim should be dismissed because it is duplicative. First, the 

court finds that the unjust enrichment claim is pleaded sufficiently. Next, the court declines to 

dismiss this claim as duplicative at this pre-response stage because Petitioner may assert it as an 

alternative basis for relief. 

5. Conclusion 

The court has considered the respondents' remaining contentions and finds them 

unavailing. 

Accordingly, it is 

ORDERED that respondents' motions to dismiss, MS 02 and 03, are denied; and it is 

further 

ORDERED that the respondents shall respond to the petition within 20 days from theefiled date of this decision and order. 

8/23/2024 

DATE MELISSA A. CRANE, J.S.C. 

CHECK ONE: 

APPLICATION: 

CHECK IF APPROPRIATE: 

~ CASE DISPOSED 

GRANTED 0 DENIED 

SETTLE ORDER 

INCLUDES TRANSFER/REASSIGN 

NON-FINAL DISPOSITION 

GRANTED IN PART 

SUBMIT ORDER 

FIDUCIARY APPOINTMENT 

451549/2023 PEOPLE OF THE STATE OF NEW YORK, BY LETITIA JAMES, ATTORNEY 

GENERAL OF THE STATE OF NEW YORK vs. ABRAHAM OPERATIONS ASSOCIATES LLC DBA 

BETH ABRAHAM CENTER FOR REHABILITATION AND NURSING ET AL 

Motion No. 002 003 

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□ OTHER 

□ REFERENCE 

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