ALBANY, NY — A pediatric nursing facility will pay $1.3 million to Medicaid and submit to five years of federal oversight following a state investigation that found the center neglected chronically ill and disabled children for years, according to an announcement from New York Attorney General Letitia James on February 12, 2026.
The Center for Disability Services Holding Corporation, operating as St. Margaret's Center, admitted wrongdoing as part of a settlement with the New York Attorney General's Office and the United States Attorney's Office for the Northern District of New York. The investigation revealed the Albany facility fraudulently certified compliance with federal and state nursing home standards while failing to provide adequate care to young residents between January 2018 and December 2023, according to the settlement announcement.
The probe uncovered consistent understaffing at St. Margaret's that jeopardized the health and safety of its vulnerable pediatric population. State health inspectors documented instances where the facility failed to supervise three children, creating immediate dangers to their wellbeing, according to findings from the New York Department of Health. Additional lapses included inadequate respiratory care for residents and multiple medication errors, including two instances where staff failed to administer anti-seizure medication to a resident, as reported by state regulators.
"New York nursing home residents, especially children and their families, always deserve high-quality care and attention," Attorney General James stated in the announcement. "For years, St. Margaret's failed to follow the law and endangered vulnerable children with poor staffing and care."
The facility's compliance failures were so severe that the Centers for Medicare and Medicaid Services temporarily designated St. Margaret's as a Special Focus Facility, a designation reserved for the nation's poorest performing nursing homes, according to federal records. Investigators also determined the facility lacked an effective compliance program to ensure it met legal obligations for providing quality care, yet continued submitting claims to Medicaid while certifying compliance with standards it was not meeting, according to the settlement agreement.
CMS Inspection History
Federal oversight records show St. Margaret's Center maintains a three-star overall rating from CMS, though its health inspection rating stands at just two stars out of five. The 92-bed nonprofit facility has accumulated 59 total deficiencies across 15 inspections on record with CMS.
The facility's most recent federal inspection on February 18, 2025 — occurring after the investigation period but before the settlement — identified four significant deficiencies. Inspectors cited the center for failing to protect residents from abuse, neglect, and physical punishment. The same inspection found the facility failed to develop and implement complete care plans with measurable actions and timetables for residents.
Medication safety issues persisted into 2025, with inspectors documenting failures to properly label and store drugs and biologicals according to professional standards. The inspection also identified deficiencies in the facility's infection prevention and control program, which received an "E" severity rating.
Federal records show the facility was previously cited in October 2023 for failing to timely report suspected abuse, neglect, or theft to proper authorities and to report investigation results as required.
Despite these health inspection concerns, St. Margaret's Center received higher marks in other CMS categories, earning four stars for staffing and the maximum five stars for quality measures.
Ownership & Operations
St. Margaret's Center operates as a nonprofit corporation providing skilled nursing and rehabilitation services to chronically ill and disabled children and other residents primarily insured through Medicaid. New York law imposes a "special obligation" on nursing home owners to ensure the highest possible quality of life for residents and maintain adequate staffing levels to meet care needs. Federal regulations require Medicaid providers to maintain effective compliance programs ensuring adherence to care standards.
Settlement Terms and Oversight
Under the settlement terms, St. Margaret's will pay $707,200 to New York State and $592,800 to the federal government. The U.S. Department of Health and Human Services Office of Inspector General will monitor the facility's operations, care quality, and facility conditions for five years.
The investigation began after whistleblowers filed a complaint under the qui tam provisions of both the New York False Claims Act and federal False Claims Act in U.S. District Court for the Northern District of New York. These laws allow private citizens to file actions on behalf of the government and receive a portion of any recovery.
This marks the fifth nursing home Attorney General James has held accountable for resident mistreatment and neglect as part of ongoing investigations into patient care concerns throughout New York facilities.
Resources for Families
Families with concerns about care at New York nursing homes can contact the New York Long-Term Care Ombudsman at 1-855-582-6769. The national ombudsman hotline is available at 1-800-677-1116, and additional resources can be found at ltcombudsman.org. Residents and families can also report concerns directly to the New York Department of Health.
UPDATE — March 15, 2026
According to WAMC Northeast Public Radio, a father has publicly detailed the neglect his daughter experienced at St. Margaret's Center during her three-year stay from 2019 to 2022. Phillip Studtmann reported that his daughter Emma, who has hydrocephalus and was admitted at age seven, suffered a broken femur and frequently had breathing alarms ignored by staff who remained at their stations on their phones while she choked on secretions. Studtmann stated his daughter's health deteriorated rapidly during her time at the facility, requiring oxygen at least 50% of the time and frequent emergency admissions to Albany Medical Center for airway maintenance. As part of the settlement agreement, the U.S. Department of Health and Human Services and Office of the Inspector General will oversee the facility's care and conditions for five years.
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