New Jersey health system owners allegedly embezzled millions as hospitals' debt swelled

The owner of Alaris Health is accusing the owners of Jersey City, N.J.-based CarePoint Health of embezzling millions from its money-losing hospitals, according to the Hudson County View.

CarePoint Health's ownership group filed a lawsuit against Jersey City-based Alaris in December, alleging the company is interfering with CarePoint's efforts to sell Bayonne (N.J.) Medical Center and holding up the sale of Christ Hospital in Jersey City and Hoboken (N.J.) University Medical, according to Bloomberg Law. Avery Eisenreich, the owner of Alaris, has a 25 percent ownership stake in Christ Hospital.

In a counterclaim filed with the Delaware Chancery Court Jan. 15, Mr. Eisenreich accuses CarePoint's owners of embezzling from the hospitals as the hospitals accumulated more debt. His counterclaim comes after the New Jersey Commission of Investigation released a report finding CarePoint's owners received more than $150 million in management fees from hospitals through a group of limited liability companies they own.

"Christ Hospital presently shows outstanding debts and liabilities on its balance sheet of approximately $30 million — the same amount of money withdrawn by the [owners] for fictitious management fees to Sequoia Healthcare between 2013 and 2016," Mr. Eisenreich said in the counterclaim.

Regarding Mr. Eisenreich's allegations, a CarePoint spokesperson released the following statement to the Hudson County View:

"CarePoint's goal is to ensure that the hospitals remain open and it has been working tirelessly to further the sale process notwithstanding the conduct of Mr. Eisenreich. While we cannot comment on an ongoing legal matter, the claims filed by Mr. Eisenreich in response to the claims against him are frivolous and a desperate attempt to distract from his wrongful conduct."

The spokesperson also noted that the New Jersey Commission of Investigation said last year that CarePoint's hospitals may have closed without the investments and other actions taken by CarePoint's owners.

The state's investigation into CarePoint's finances and use of management companies to extract profits from its hospital prompted three new laws in New Jersey that give state agencies and elected officials more financial and operational insight into for-profit hospitals.

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