Nearly two years after a pack of Hudson County Freeholders stormed Pollak Hospital in Jersey City to protest conditions at the nursing home there, a Superior Court ruling has awarded the county $11.3 million, claiming Progressive Health Care Systems’ owner can be held responsible for the now-bankrupt company’s debts.
Progressive had inked a deal to manage the formerly county-run hospital in 1995.
Superior Court Judge Barbara A. Curran ruled on March 12 that Progressive’s owner, Amjad F. Chowdhry, could be considered synonymous with the company, leaving his personal assets open for the county to tap.
In 1995, under then-County Executive Robert Janiszewski, the county shifted operations of the Pollak and Meadowview hospitals – over the sharp protest from county employee labor unions – to Progressive, a private nursing home facility operator. In 1999, Progressive began to fall behind on its payments to the county, and when pressed for payment, the company declared bankruptcy.
Court documents showed problems with operations there, including a lack of liability insurance and indebtedness not just to the county, but to other vendors as well. Progressive was also found to owe in excess of $1 million in unpaid utility bills. The firm also failed to make payroll tax payments as well as payments to Workman’s Compensation, according to the bankruptcy court documents.
The court eventually assigned a trustee to the hospitals, and the county eventually sold the licenses for both hospitals to another private company – resulting in the closing of Pollak.
For nearly two years, the county’s case against Progressive remained unresolved, until County Executive Tom DeGise and the Hudson County Improvement Authority (which oversaw the sale of the contracts) changed attorneys, and struck a new strategy that would seek to access the wealth of the company’s owner.
“Although I spurred the county to take action two years ago,” said Freeholder Bill O’Dea, whose dramatic march on Pollak hospital in 2001 began the movement to retakeover the hospital, “It was [new County Executive] Tom DeGise that made this happen.”
The court ruling stripped Chowdhry of legal maneuvers that allowed him to shield his personal assets so the county could get some of the $23 million that Progressive had agreed to pay the county to buy the buildings and operations in 1995.
Progressive did not make lease payments from February of 2001 through February 2003 totaling $2,223,134, according to bankruptcy court documents. And it defaulted on a promised $4,999,400 interim purchase price for the facilities, according to bankruptcy court documents.
In early January, DeGise’s designee as counsel for the HCIA, Donato Battista, retained the firm Chasen, Leyner, Bariso & Lamprello to pursue the matter after previous private counsel was deemed to have made little headway in the case.
“This was not something you just lay down on,” explained Battista, who now serves as county counsel. “The county executive and I were determined to fight and win this case for the people of Hudson County, and Cindy Vogel and Ralph Lamprello did an outstanding job over the last three months to make that happen.”
The breakthrough in the case came when Vogel and Lamprello deposed Chowdhry on Jan. 15. Chowdhry refused to answer any substantive questions by invoking his Fifth Amendment right against self-incrimination. When Chowdhry took the Fifth in the deposition, that opened the door for the HCIA’s new counsel to file a motion that voided, or in the legal term, suppressed, Chowdhry’s defense and gave the victory to the county by default.
The attorneys for Hudson County and the HCIA asked for a judgment totaling $11,331,514. After listening to the testimony of Deputy Director of Finance Wade Frazee and a forensic accountant from The Morrison Company, Judge Curran entered a judgment of exactly that amount in favor of the HCIA and the County of Hudson. Chowdhry, according to Cindy Vogelman – the county’s lead attorney in the case – could face additional charges concerning reimbursement of Medicaid funds
“I am proud of the legal work performed by our new team at the HCIA,” said County Executive Tom DeGise. “Every day we untangle another little part of the dealing that betrayed the interests of Hudson County residents under Bob Janiszewski. We are going to aggressively pursue this matter to recover every penny we can from this judgment in the days ahead.”
Chowdhry’s attorney, Robert Stevens, had no comment when reached by telephone. He has 45 days from the March 12 ruling to file a notice of appeal to a higher court. Whether or not Chowdhry has assets to pay the county, or if the county can find them, is another matter.
“We’re looking to execute the judgment,” Vogelman said. “This means we will question him under oath as to bank accounts and other assets.”
Vogelman said it is not certain whether Chowdhry can legally evoke the Fifth Amendment in such a situation. “My understanding is that he cannot,” Vogelman said.