Daniel E. Straus is the New Jersey healthcare executive who founded the CareOne nursing home chain, and the CareOne lawsuits tied to his name include a 2025 federal racketeering and human trafficking complaint, a $6 million jury verdict for racial discrimination, a Medicare Advantage whistleblower suit against a separate company he chaired, and Delaware Chancery litigation over a public-company merger. CareOne also drew heavy scrutiny during the COVID-19 pandemic, when ProPublica reported death rates at the chain’s New Jersey homes ran more than 60% above the state average.
Who Daniel E. Straus Is
Straus entered the nursing home business after his father’s death in 1978, building Multicare Companies with his brother Moshael into a publicly traded elder-care chain that Genesis Health Ventures acquired in June 1997 for $1.06 billion.1The New York Times. Deal to Create a Big Chain in Elder Care Two years later he founded CareOne, which grew into a network of 21 nursing homes, rehabilitation centers, and assisted living facilities headquartered in Fort Lee, New Jersey.2Jewish Standard – Times of Israel. The Spirit of Innovation His daughter Elizabeth Straus rose to Executive Vice President of the company. Straus’s investments extend beyond CareOne to Medicare Advantage plans, hospice, pharmacy, and population health, and those affiliations form the backdrop for most of the legal disputes below.
The 2025 Federal Racketeering and Human Trafficking Lawsuit
On April 10, 2025, three former employees filed a federal complaint in the District of New Jersey against Straus, CareOne Vice President of Special Operations Emily Vazquez, and a group of Straus-affiliated entities including CareOne, LLC, Care One Management, Ascend Hospice, Partners Pharmacy, and Straus Group.3PACER Monitor. Straus et al. v. Straus et al., Case No. 25-02606 The plaintiffs are Meagan Ladue, Elizabeth Straus, and Brandon Howard. Elizabeth Straus shares a surname with Daniel Straus, but the available filings do not specify the relationship.
The New Jersey Law Journal reported that the complaint alleges the defendants operated a “racketeering enterprise” to conceal $500 million in Medicare fraud, along with sexual exploitation, sexual abuse, and human trafficking. The suit also alleges the defendants orchestrated a scheme to silence whistleblowers reporting systemic fraud and abuse. The human trafficking count rests on claims that the defendants understood and exploited the personal vulnerabilities of the three plaintiffs.4New Jersey Law Journal. Ex-Big Law Attorney Faces Human Trafficking, Whistleblower Claims The case was filed with a jury demand and remains in early stages. The allegations have not been adjudicated.
The $6 Million Racial Discrimination Verdict
Rebecca McCarthy, a former CareOne vice president who managed a rehabilitation center in Somerset County, sued the company in December 2016. McCarthy, who is Black, alleged she was fired and replaced by a white woman with one month of experience after a supervisor objected to a Black executive running the facility.5NorthJersey.com. CareOne to Pay Nursing Home Manager $6M in Racial Discrimination Case
In 2019, a jury found for McCarthy and awarded roughly $6 million: $1,872,630 in compensatory damages and $4,127,370 in punitive damages against CareOne and supervisor Alison Fitzpatrick-Durski. A trial judge denied CareOne’s motion to dismiss the verdict.6NJ.com. Former Nursing Home Exec Wins $6M Verdict From Company That Fired Her Because of Race On appeal, the New Jersey Superior Court’s Appellate Division in July 2021 affirmed the compensatory damages but vacated the punitive damages and counsel fees, remanding for a new trial on punitives and reconsideration of the fee award.7New Jersey Courts. McCarthy v. CareOne, Docket No. A-2542-19
CareOne’s COVID-19 Death Toll and Litigation
On March 30, 2020, CareOne signed a license agreement with New Jersey to supply 707 “COVID-capable” beds across five facilities for patients being discharged from hospitals. Governor Phil Murphy publicly praised the arrangement and singled out Elizabeth Straus by name.8ProPublica. CareOne Nursing Homes Said They Could Safely Take More COVID-19 Patients, but Death Rates Soared
ProPublica later reported that at least 518 residents of CareOne’s New Jersey homes died from COVID-19, and the chain’s death rate exceeded the statewide nursing home average by more than 60%. CareOne at Morristown lost 45 residents, roughly one death per four beds. CareOne at Parsippany lost 36, close to one per three beds, and had been cited by the Centers for Medicare and Medicaid Services for infection-control issues before the pandemic peak. At CareOne at Madison Avenue in Morristown, local health officials tried to suspend admissions during the surge but were rebuffed by facility administrators, who argued nursing homes were not subject to local health department regulation; state inspectors later found the facility in compliance.8ProPublica. CareOne Nursing Homes Said They Could Safely Take More COVID-19 Patients, but Death Rates Soared
CareOne filed a trademark application on April 1, 2020, to register “COVID-Capable” as a service mark and used the term in marketing. In ongoing litigation over standards of care, courts have rejected the company’s argument that its short-term rehabilitation residents should not trigger traditional nursing home standards.
Aveta and the Medicare Fraud Whistleblower Suit
Straus was a founding principal investor and Chairman of Aveta Inc., a New Jersey holding company whose Puerto Rico subsidiaries MMM Healthcare and PMC Medicare Choice ran Medicare Advantage plans.9Center for Public Integrity. Whistleblower Suit Says Health Plan Cheated Government Out of More Than $1 Billion
In April 2011, a whistleblower named Josh Valdez filed a federal lawsuit in Santa Ana, California, alleging that Aveta’s subsidiaries defrauded the U.S. government of between $300 million and $350 million annually from 2007 through 2010 by manipulating patient “risk scores” to inflate Medicare payments. The complaint was unsealed in February 2014. Reporting by the Center for Public Integrity said the complaint alleged that, despite internal concerns about federal audit exposure, Aveta officials borrowed $100 million to pay a dividend to investors, “the largest of whom was founder and Chairman Daniel E. Straus.”9Center for Public Integrity. Whistleblower Suit Says Health Plan Cheated Government Out of More Than $1 Billion As of 2014 the U.S. Attorney’s Office for the Central District of California had opened an investigation but had not completed it. The public record does not reflect a final resolution.
P3 Health Partners Litigation in Delaware Chancery
Straus invested in P3 Health Group Holdings through his affiliate Hudson Vegas Investment SPV, LLC. In December 2021, P3 merged with the SPAC Foresight Acquisition Corp. and began trading on Nasdaq as P3 Health Partners Inc. Straus was identified in SEC filings as a beneficial owner of more than 10% of P3’s common stock.10P3 Health Partners. P3 Health Partners Annual Report (Amendment No. 1)
As the second-largest unitholder, Hudson Vegas sued P3, controlling investor Chicago Pacific Founders Fund, and Foresight in Delaware’s Court of Chancery, alleging multiple breaches of P3’s LLC Agreement. In rulings issued in late October and early November 2022, Vice Chancellor J. Travis Laster allowed most of Hudson’s claims to proceed.11Delaware Court of Chancery. In re P3 Health Group Holdings, LLC, Consol. C.A. No. 2021-0518-JTL
Surviving claims included allegations that the merger closed without Hudson’s required consent, that P3 breached a provision entitling Hudson to a $50 million first-priority cash distribution before other members received merger consideration, and that Hudson was denied a contractual preemptive right to buy additional units in a capital raise. Hudson also alleged it was fraudulently induced to make its original $50 million investment, citing company projections of “north of $12.7 million” in 2020 EBITDA against actual results of negative $40 million. The Laster rulings expanded “acting manager” liability under Delaware LLC law, holding that individuals without formal titles can be liable if they materially participate in merger-related management decisions.
Where CareOne Stands Now
CareOne’s consolidated financial statements for the year ended December 31, 2024, report roughly $406 million in long-term debt and a working capital deficit of $138 million, with interest expense of about $30.5 million for the year. Management attributed the negative working capital to capital investment in facilities and said it expected to refinance maturing debt.12CareOne. Consolidated Financial Statements, Year Ended December 31, 2024
Individual facilities continue to draw regulatory attention. CareOne at Wall was assessed a federal fine of $68,819 in October 2023 and carries a “below average” health inspection rating on Medicare’s Care Compare.13Medicare.gov. CareOne at Wall – Care Compare ProPublica also reported that in 2016 CareOne paid $200,000 to Michael Cohen, then a lawyer for Donald Trump, for online-reputation consulting.8ProPublica. CareOne Nursing Homes Said They Could Safely Take More COVID-19 Patients, but Death Rates Soared The 2025 federal case is the most significant unresolved litigation Straus faces at the time of the file, and its outcome will turn on discovery and adjudication still to come.