In July 2001, a handful of Hudson County Freeholders finished their board meeting and rushed to Jersey City to personally check out the reported pitiful conditions in one of two local geriatric hospitals run by Progressive Rehab.The same week, "Dear Prospector," a chestnut mare bred by Amjad Chowdhry and Surbhi Tarkas – the owners of Progressive Rehab – was racing first to the finish line at Monmonth Race Track, scoring a $25,000 purse.
"That’s really sweet," said Freeholder Bill O’Dea when the Hudson Reporter told him of this coincidence during a telephone interview two weeks ago. "As residents of Pollak Hospital were running out of water to drink and bathe, the owners were winning horse races."
Chowdhry and Tarkas have been the target of numerous lawsuits from vendors and government agencies Hudson County and Jersey City seeking to get retribution for millions of dollars owed. But two weeks ago, the Hudson Reporter learned that the two elusive owners have been raising and racing thoroughbred horses throughout the state, including races at the Meadowlands, even as local and state officials seek answers to the mismanagement of Pollak Hospital in Jersey City and Meadowview Hospital in Secaucus.
Earlier this year, under the direction of County Executive Tom DeGise, Hudson County won an $11 million settlement against Chowdhry for money owed the county during the period from 1995 to 2001 when Progressive operated the facilities.
Two weeks ago, Tarkas was charged by a state Grand Jury for allegedly misappropriating more than $100,000 in patients’ funds while operating the facility. Her arraignment is expected Oct. 14.
Investigations by state and county officials in 2001, while the owners were winning horse races around the state, showed that the conditions at the two hospitals had deteriorated to the point of becoming a health risk. As a result of the massive debt the owners owed the county, their contract was voided by the court and management shifted to new operators, a private company called Omni that runs the facilities to this day.
But county officials still have the option of seeking additional funds through civil suits, O’Dea said.
"This is something I intend to pursue at the upcoming freeholder meeting," O’Dea said recently.
In legal action concluded last March, the county won a $11 million judgment against Chowdhry in Hudson County Superior Court, even though Chowdhry had sought to separate his personal assets from the bankrupt business.
Judge Barbara A. Curran ruled that Chowdhry was in fact the alter ego for the bankrupt Progressive and could be held accountable for the company’s debts and failing to make good on a $23 million lease purchase deal with the county.
Progressive had promised to purchase Meadowview and Pollak hospitals as part of a 1995 agreement.
County officials, however, were not certain they could track Chowdhry’s resources through the legal maze Chowdhry had apparently created. O’Dea, learning of the news of Chowdhry’s position as racehorse breeder in the state, said the county may now have a legal avenue to follow.
Other co-owner charged with theft
Two weeks ago, the New Jersey Division of Criminal Justice, part of the Attorney General’s Office, indicted Surbhi Tarkas, the other principal owner, for allegedly misappropriating more than $100,000 of patients’ money.
Tarkas, of East Brunswick, was charged with allegedly stealing cash from patients’ Personal Needs Accounts administered through the state’s Medicaid and Social Security programs. According to Director of the Division of Criminal Justice Vaughn L. McKoy and Insurance Fraud Prosecutor Greta Gooden, Tarkas allegedly failed to make required disposition of property received. If convicted, Tarkas faces up to 10 years in state prison and a fine of up to $150,000.
The Division of Criminal Justice – Office of Insurance Fraud prosecutor’s investigation determined that Tarkas was the director and part-owner of Progressive Health Care of Hudson County, Inc. which owned Meadowview Nursing Center located at 595 County Ave. in Secaucus. The indictment charged that between June, 2000 and January, 2001, Tarkas diverted over $100,000 from various nursing home residents trust accounts and used the money to pay corporate expenses.
When contacted, defense attorney Robert G. Stevens of Princeton said he had not yet officially been retained to represent Tarkas, but expected to develop a defense strategy if he is. He said he could not comment on the case until then.
Meadowview Nursing Center, a provider of long-term care services to Medicaid recipients, received payments from the Medicaid Program and Social Security on behalf of the nursing home residents. The nursing home, in turn, was required by law to place $35 to $40 of these payments into a Personal Needs Account (PNA) each month for each resident’s personal use.
"The allegations contained in this indictment charge the defendant with stealing money from elderly patients who required long-term care," Prosecutor Gooden Brown said. "This type of fraud and criminal activity is abhorrent. The Office of Insurance Fraud will investigate and prosecute these types of crimes."
Details of the deal
The Hudson County Improvement Authority purchased the two hospitals from Hudson County in 1995 for $20 million in an attempt to help the county balance its budget. Then the HCIA then entered into an agreement with Progressive for Progressive to manage and eventually purchase the two hospitals. Progressive, which was supposed to make a $4.9 million payment in 1999 and an additional $10 million in 2003, restructured its debt in 2000, promising to make a payment of $13 million.
Bankruptcy court documents showed significant problems with operations at the hospitals, including lack of liability insurance, as well as indebtedness not just to the county, but to vendors for millions of dollars as well. Progressive was also found to owe in excess of $1 million in unpaid utility bills.
After missing scheduled payments to the Hudson County Improvement Authority, prompting a lawsuit, Progressive declared Chapter 11 bankruptcy – leading several prominent state and county officials to call for an investigation into the care of patients.
The county freeholders visited Pollak Hospital one day, where they were threatened with arrest by Progressive’s management. Eventually, the freeholders managed to take a tour of the building. They said they found deplorable conditions.
An investigation by Assemblywoman Joan Quigley began to uncover other problems. Quigley discovered that Progressive did not carry liability insurance, owed vendors several millions of dollars, owed the City of Jersey over a million dollars in water and sewerage bills, and owed Hudson County millions in overdue lease payments.
Quigley also noted that Progressive had also failed to make payroll payments for the Workmen’s Unemployment Compensation Fund.
New charges may spark new investigation
O’Dea was startled to find out about the latest charges and said the county still could sue the owners of Progressive for costs incurred in seeking a new operator and for other issues.
"I think we can follow up with these charges as well," O’Dea said during a telephone interview. "I think the best person to [comment] would be the county administrator, since such a suit would likely come out of his office. But I am certainly going to bring this up at the next freeholder meeting."
County Administrator Abe Antun had no comment on the charges and directed all questions to the county executive’s press office.
Jim Kennelly, director of communications for the County Executive, said the criminal case was not likely to impact the county’s efforts to pursue funding from Chowdhry.
"Tom DeGise has asked the attorneys at the HCIA to pursue Chowdhry’s financing, and we are aggressively seeking to do so," Kennelly said. "But after consulting with our legal staff, we do not see how the criminal charges against Tarkas have any bearing of what we have to do."
The charges generated from the state raise other questions about operations at the facility, since they pertain to activity during a period when then-County Executive Robert Janiszewski was a cooperating witness in a federal corruption probe about his political dealings.
"One has to wonder if the federal government was asleep at the wheel," said one vendor who claimed Progressive owed him at least $150,000. The vendor wondered why some of this activity would have been allowed to go on while the FBI was watching.
The abuses outlined against Tarkas allegedly occurred between June 2000 and January 2001. Janiszewski was arrested in November 2000, at which time he became a federal informant while also continuing his duties as county executive.
Justice isn’t swift
For Harry Stewart, a one time county worker who was employed at Meadowview Hospital, justice has not been swift. But the series of scandals rocking Hudson County political circles has brought some satisfaction to him.
In 1995, Stewart, along with hundreds of other county employees, was dumped from the payroll of Meadowview in a massive downsizing orchestrated by Janiszewski.
"We warned the county not to go with Progressive Rehab," Stewart said during a telephone interview. "We filed suit to stop the county from privatizing. But no one listened."
Eight years later, Stewart and the other employees watched courts dismantle the health care provider and also saw Janiszewski await sentencing on extortion and other charges.
In 2001, Progressive was stripped of the contract for the two county geriatric centers after they had failed to keep up with payments to the county.
"We told them from beginning not to go with Progressive," Stewart said.
Janiszewski’s curse
Meadowview Hospital became a nagging problem for the Janiszewski Administration from about 1992, when state Department of Health officials determined that the hospital did not meet contemporary guidelines for mental health treatment.
The building, constructed in 1926, reflected the primative standards of the time. It harbored communal living arrangements that housed 100 people per room in bunk-like beds, and forced residents to shower in open locker-room like showers. An investigation at the time showed that the place also lacked recreational facilities for the residents, had too little supervisory staff, did not have adequate clothing for its residents and used a malfunctioning fire suppression system.
Janiszewski, sources said, had big plans to renovate Meadowview Hospital, and actually moved most of the patients to Pollak Hospital in Jersey City. But lack of money for the massive repair caused a change of plans, and eventually, some of the work was accomplished by use of prison labor and union workers – incorporating some, but not all, of the required changes to the facility.
In 1993, the hospital was divided into various wings that would provide a psychiatric facility, juvenile detention, and offices for the Hudson County schools superintendent and other county officials, and the Office of Emergency Management.
Residents returned to Meadowview Hospital in March 1993, so the county operated two hospitals: Pollak and Meadowview. But the county faced additional serious problems. The cost of running these facilities could not be made up for with state and federal Medicaid reimbursements.
Abe Antun, who took over as county administrator in 1995, said he had encouraged Janiszewski to "get out of the nursing home business" because the county could not rely on the level of reimbursements to balance its budget.
"Within a week of my coming to this county [in 1990], the first thing I said to the administrator [Geoff Perselay] and to the county executive is, we had to get out of the nursing home business," Antun told the freeholders in late 2002. "After five years, they finally asked me to consider that again and I did. We got out of it."
The county was also under the pressure of new federal regulations that would have required even more stringent upgrades to the two facilities, such as the hiring of certain professionals and the installation of computer programs for monitoring billing and other services. The county was not in a position to pay for the additional upgrades.
But there was a political motive as well. Janiszewski, facing a tough re-election, decided to downsize county government.
Although he boasted during an interview with the Hudson Reporter at the time, "The people without a job will be those making the huge salaries," hundreds of low-paid or longtime workers for the county were laid off.
Janiszewski bragged of cutting the workforce from 4,500 to 3,400 within that time period. Many of the cuts came as the direct result of the Progressive deal.
Despite last-minute negotiations with employees seeking to save their jobs, Progressive began layoffs in June 1995.
"Some of those people moved on to other jobs eventually," Stewart said. "But many of them had worked at those facilities for most of their lives, some for 20 or 30 years. I lost track with many of them."
Janiszewski was hardly sympathetic with the plight of the county workers. In series of memos exchanged between department heads, Haydee Miranda, then director of the County Department of Environmental Health and Human Services, pleaded with Janiszewski to provide counseling for those being laid off. In her memo, she cited threats to various mid-level county administrators. In a return memo, Janiszewski told her and others to stop complaining.
Deaths investigated by state
A few months after the Progressive takeover, the state Health Department investigated several deaths at the facility. Stewart remembered one patient in particular, a woman named Mary who had a tendency to eat tea bags, died as a result of accidentally inhaling one. A nurse died of a heart attack.
"I’ll always think of Mary when I think of Progressive," Stewart said, "and how she never needed to die."
Deal backfires
Janiszewski, in testimony at the trial of Freeholder Nidia Davila-Colon in June 2003, said his personal friend, Paul Byrne, had brokered the deal for Progressive.
Although a lawsuit filed by the displaced county workers and other bidders on the contract claimed the county had violated bidding rules to get Progressive the contract, Byrne said the process followed state guidelines.
"I remember when one of the owners of Progressive came to look over our facility," Stewart said. "He pulled up in a stretch limo with two armed guards. Security had to tell them to remove their weapons because they were entering an area that had a psychiatric hospital and a juvenile detention facility."
Several state investigations after the changeover suggested that operations had problems even then, although county officials did not realize the extent of the problems at the two facilities until Progressive fell behind on payments.
Janiszewski eventually had his father housed in the facility in mid-2000. Frank Janiszewski died in the facility a few months before Janiszewski was confronted by the FBI in Atlantic City in November 2000 and began cooperating with the FBI.