The former owner of a Totowa nursing home pleaded guilty Monday to Medicaid fraud after a state investigation revealed that he billed the Medicaid program for $302,877 in improper and unsubstantiated costs, including more than $100,000 in personal expenses.

Victor Napenas, 63, of Piscataway, pleaded guilty to third-degree Medicaid fraud before state Superior Court Judge Irvin J. Snyder in Camden, according to state Acting Insurance Fraud Prosecutor Riza Dagli. Napenas owned the Valley Rest Nursing Home on Bogart Street in Totowa, which closed in 2007.

In pleading guilty, Napenas admitted that he fraudulently obtained payment from Medicaid for personal expenses unrelated to patient care.

The state will recommend that Napenas be sentenced to 90 days in a county jail as a condition of three years of probation. He must pay $302,877 in restitution to the Medicaid program, $45,263 in penalties, and $31,859 in provider taxes owed to the state. He will be prohibited from acting as a Medicaid provider for eight years. Snyder scheduled sentencing for Oct. 8.

The investigation began when state Department of Health and Senior Services (DHSS) surveyors noted severe deficiencies in the care delivered to residents at Valley Rest, which resulted in the owners voluntarily closing the facility. In the process, DHSS ordered a financial audit, which showed many irregularities on the facility's 2005 cost report submitted to Medicaid.

The investigation revealed that the cost report included $302,877 in improper charges, including personal expenses and other amounts Napenas could not document or prove were spent.

Napenas issued business credit cards to himself and his wife through the nursing home, which they used for personal purchases, including trips to the Philippines, dance lessons and large family dinners. Napenas had those credit card charges and other personal expenses totaling more than $100,000 inserted into the cost report, resulting in reimbursement from Medicaid.

"This nursing home owner treated the facility's Medicaid cost report like his own blank check, fraudulently obtaining reimbursement for over $100,000 in personal expenses in a single year," Dagli said. "Fortunately, the Department of Health and Senior Services audited the facility and detected irregularities in the cost report. Our Medicaid Fraud Control Unit will continue to work with the Department of Health and Senior Services to uncover and prosecute fraud and abuse involving Medicaid providers."

Deputy Attorneys General Linda A. Rinaldi and Erik Daab are prosecuting the case. Sgt. Frederick Weidman, Auditor Kim Geis and Rinaldi conducted the investigation.

— TOM HESTER SR., NEWJERSEYNEWSROOM.COM