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An Albany pediatric nursing facility has agreed to pay $1.3 million to settle claims that it endangered chronically ill and disabled children through years of inadequate staffing and care while fraudulently billing Medicaid.
St. Margaret's Center, operated by the Center for Disability Services, admitted to neglecting vulnerable young residents from 2018 through 2023 in a settlement reached with New York Attorney General Letitia James and federal prosecutors.
"For years, St. Margaret's failed to follow the law and endangered vulnerable children with poor staffing and care," Attorney General James said in a statement.
The joint federal and state investigation began after two nurses filed a whistleblower complaint under the False Claims Act. Their complaint alleged the facility systematically inflated staff numbers on reports submitted to state authorities.
In one example from July 2020, St. Margaret's reported 137 workers on duty when internal records showed just 63 employees actually working that day. The facility's own assessment determined it needed at least 58 staffers daily for proper patient care.
The investigation revealed disturbing incidents, including a 3-year-old with severe disabilities who repeatedly fell from her crib due to lack of supervision, and a 5-year-old boy with Down syndrome who had a 150-pound scale fall on his head.
A state Health Department inspection found the facility failed to properly supervise multiple children, immediately jeopardizing their health and safety. Residents also didn't receive proper respiratory care and suffered from medication errors, including two instances where a child's anti-seizure medication wasn't administered.
These serious lapses led the U.S. Centers for Medicare and Medicaid Services to designate St. Margaret's as a "Special Focus Facility" – a classification reserved for the nation's worst-performing nursing homes.
John F. Queenan, an attorney representing St. Margaret's Center, disputed some characterizations of the facility's care, claiming it "consistently met or exceeded federal and state staffing ratios" during the period in question. He called portions of the attorney general's statements "misleading."
Under the settlement terms, $707,200 will go to New York State, while $592,800 will be paid to the federal government. The U.S. Department of Health and Human Services' Office of the Inspector General will monitor St. Margaret's for five years.
This case marks the fifth nursing home enforcement action under Attorney General James, whose office has prioritized addressing poor conditions and fraud in nursing facilities across New York.