Exposing Financial Fraud in South Jersey Nursing Home

At KBD Attorneys, we are committed to holding negligent and fraudulent long-term care facilities accountable—because the lives of our most vulnerable citizens depend on it. A recent investigation in New Jersey has revealed what can only be described as a staggering betrayal of trust and public funds. South Jersey Extended Care, once dubbed one of the worst nursing homes in the state, is now the subject of a sweeping Medicaid fraud crackdown by the New Jersey Office of the State Comptroller.

A Web of Greed at the Expense of Residents

According to State Comptroller Kevin Walsh, the operators of South Jersey Extended Care siphoned millions of dollars in Medicaid funds through a complex web of side businesses. These funds—intended for hiring staff, upgrading facilities, and ensuring quality care—were instead funneled into owner distributions, inflated consulting fees, and even charitable donations to organizations they controlled.

“This was a massive scam,” said Walsh. “These individuals were able to amass a fortune by pretending to be independent parties. In reality, they operated as one unit, providing terrible care to the sick, the elderly, and the poor, so they could make big profits.”

In one glaring example, a Konig-owned company charged the nursing home nearly $14 million for food services over five years—despite internal records showing that the costs were significantly inflated. While the owners reaped the profits, residents lived in understaffed and under-resourced conditions.

The Bigger Picture: A Systemic Industry Problem

Unfortunately, the South Jersey Extended Care case is not an isolated incident. Across the country, nursing home operators have adopted legal but ethically questionable business structures that allow them to drain resources away from resident care.

An estimated 78% of nursing homes operate with related-party businesses—side companies they own that receive payment for services like real estate, management, and medical supplies. A 2023 paper from the National Bureau of Economic Research found that as much as 63% of nursing home profits are hidden through these inflated transactions.

These arrangements make it extremely difficult to track how public funds are actually spent. Regulators struggle to parse through complex cost reports, while residents and families are left in the dark about who really controls the care being provided.

When Profits Trump Patient Care

The consequences of these business practices are devastating. Facilities that route funds to related companies often:

• Have lower staffing levels

• Receive more complaints

• Report more patient injuries

• Operate under financial distress

One tragic case cited in Ohio involved an 81-year-old man who choked to death after being left unattended by staff. His family has alleged that the parent company, which collected hefty management fees through a related entity, neglected to invest in adequate care or working medical equipment.

Legal and Regulatory Action

In response to the South Jersey Extended Care scandal, New Jersey officials have taken unprecedented steps. The state has moved to bar the facility’s owners and associates from the Medicaid program, and a court has appointed a receiver to take over the facility’s operations.

Yet, state-level action isn’t enough. Experts say the federal government must set clearer standards for how nursing homes spend taxpayer money, including caps on rent, management fees, and profits.

Until then, it’s up to attorneys, watchdogs, and families to demand accountability.

How KBD Attorneys Can Help

At KBD Attorneys, we represent families harmed by nursing home neglect, abuse, and financial exploitation. Our legal team is well-versed in uncovering complex ownership structures and fighting for justice on behalf of elderly residents who have suffered because of corporate greed.

If your loved one has been mistreated in a nursing home—or if you suspect fraud or financial mismanagement—contact us today. We will investigate the facility, pursue damages, and help you hold those responsible accountable.

KBD Attorneys: Protecting the Vulnerable. Exposing the Truth. Demanding Justice