A MedRite operated an urgent care on Flatbush Avenue in Downtown Brooklyn. Sept. 12, 2023. Alex Krales/THE CITY
By Greg B. Smith and Gwynne Hogan | September 15, 2023
Medrite and Aron Security got $450 million to staff more than a dozen shelters under a shroud of secrecy. Even the city comptroller and Council are struggling to find out more as workers and residents clash.
Even as Mayor Eric Adams is forcing city budget cuts he says are necessitated by the cost of aiding migrants, his administration is spending billions of dollars off its books — much of it on companies with extensive histories of complaints over their practices.
Adams handed much of his migrant aid program to the city Health & Hospitals Corporation (HHC), a quasi-government agency that is not subject to the oversight of the city’s fiscal watchdog.
Comptroller Brad Lander recently made headlines when he refused to sign off on a $432 million city contract with DocGo, which provides shelter and services for migrants, citing irregularities and omissions in its paper trail. The contract was made through the city’s Department of Housing Preservation and Development, which falls under the comptroller’s oversight authority.
Lander also flagged the company’s lack of experience in housing and social services as well as its business practices, writing: “Every vendor awarded a City contract must be found to have the requisite business integrity to justify the award of public dollars.”
But meanwhile, the comptroller has tried unsuccessfully to obtain documents or details on what are now at least 38 Health & Hospitals migrant-related contracts, costing taxpayers more than $2.1 billion. Adams has said that the cost to the city of aiding migrants could amount to $4 billion per year.
At more than a dozen shelters, guards work for one contractor, Aron Security, under a $140 million HHC contract, while Medrite LLC, an urgent healthcare company with no prior experience staffing or running shelters, provides operations personnel at more than 20 sites as part of its $304 million arrangement with HHC.
Aron is currently being sued by the city Department of Homeless Services and a major shelter provider, Samaritan Daytop Village, over multiple assaults at city-run shelters where Aron was handling security.
Aron and Medrite staff many of the of the roughly two dozen shelters, some run by Health & Hospitals and called Humanitarian Resource and Relief Centers, as well as others dubbed “respite sites” run by the city’s Office of Emergency management. Around 20,000 of the 59,000 migrants in city care are in these types of shelters, according to data from July. Conditions vary greatly across them, with some intended for longer stays, while others provide the barest of accommodations, originally intended for extremely short stays, though many migrants have ended up staying months in them.
Outside a migrant shelter in an old judo gym in Astoria, Queens, staffed by Medrite and Aron, several men described frustration over long waits for the few bathrooms, but mostly amicable relations with staffers there.
“We don’t have problems with them, we live here in tranquility,” said Mamadou Gueye, a 25-year-old migrant from Senegal who spoke in French. “My only problem is I don’t have a job.”
Medrite and Aron staff the massive shelter on Hall Street in Clinton Hill, Brooklyn, housing hundreds of men, where a former cop working for a third contractor recently pulled a gun on residents, sparking a chaotic scene.
And residents of a Bushwick shelter staffed by Medrite and Aron, who asked that their names be withheld fearing retribution, described an actively hostile relationship with staff. One volunteer witnessed a worker calling the men “animals,” and others said they were regularly yelled at and called names. A migrant from Haiti said a guard had physically shoved him.
The biggest fear that loomed over many of the men who spoke with THE CITY was that they’d be randomly kicked out. It had happened to many others suddenly, without warning, sometimes in the middle of the night.
“Even if someone insults you, you can’t say anything,” said a 49-year-old asylum-seeker from Senegal, in French. “If you don’t shut up, they’ll kick you out.”
Kayla Mamelak, a spokesperson for Adams, disputed that migrants could be kicked out at random.
“The only time we have asked people to leave our sites is if they violate our code of conduct and are creating an unsafe living condition for other asylum seekers,” Mamelak said. “All have had the opportunity to return to our arrival center at the Roosevelt Hotel to ask for new placement.”
Business Battles
Medrite was tapped in March by Health & Hospitals to provide “wrap around services” at migrant facilities. It took over for another provider due to the company’s “superior performance and lower cost,” according to a letter from CEO Mitchell Katz to the hospitals’ board.
The company had previously provided COVID-19 vaccination and testing under Health & Hospitals contracts. Then Medrite signed with the city Department of Health and Mental Hygiene to set up a patient registration system for the m-pox vaccine, a portal that crashed and had to be abandoned.
The company told the state Department of Labor in early March it would have to lay off nearly 300 employees as COVID-19 contracts expired — and just weeks later got the $304 million shelter contract via the city hospital system.
In 2016, the company settled a suit with the state attorney general after it was caught paying for fake Yelp reviews, but that didn’t stop the company from getting bigger and bigger business with the city. Nor did a string of lawsuits in which partners alleged the company and its founder, Samuel Fisch, mismanaged the business.
One 2020 lawsuit by an investor alleged Fisch dipped into partners’ funds to pay himself more than $2 million a year, raided an account meant for taxes, and siphoned investors money into another adjacent business that only he controlled. (State tax records show Fisch owes the state more than $300,000 in unpaid personal income tax and for withholding taxes for Medrite.)
A second lawsuit filed by a business partner claimed Fisch physically assaulted an investor who had questions about the company’s finances. A third, filed in March of 2023, days after Medrite secured it’s latest Health and Hospitals contract, alleged Fisch dipped into investor funds using them as a “personal piggybank.”
All three lawsuits have concluded, and the terms of any settlement are not public. Attorneys for the three plaintiffs declined to comment on the lawsuits.
Bill Miller, head of real estate for Medrite, denied Fisch had assaulted his business partner and other allegations detailed in the three lawsuits.
“That was a question about ownership of the original company and it all got settled,” Miller said.
Asked about the lawsuits, and how Medrite was selected, a spokesperson for Health and Hospitals deferred to Mayor Eric Adams’ office. Mamelak, a spokesperson for Adams, said she wouldn’t comment on litigation between external parties. She added that while Medrite has no track record running shelters, it’s providing much-needed medical care for migrants, and that Health & Hospitals is ultimately in charge of the locations.
“Meeting these needs requires a scalable network of health care professionals through the support of reliable subcontractors,” she said. “We are proud of our staff whose compassionate and dignified care has paved the way for a healthier and more promising future for thousands of asylum seekers and their children.”
A copy of Medrite’s $304 million contract obtained by THE CITY said the company is tasked with providing, “shelter, food, medical care, case work services, and a range of settlement options.”
But multiple residents said their main interaction with Medrite was when employees, who wear t-shirts emblazoned with the company’s logo, counted them each evening.
“Those people, they make their money comfortably,” said Jose David in Spanish, a 21-year-old Venezuelan migrant, staying in a Queens shelter. “They don’t do anything.”
Joshua Goldfein, an attorney for Legal Aid Society who advocates on behalf of homeless New Yorkers, who’s conducted site visits at migrant shelters across the city said he’s heard similar complaints about Medrite, as he has about DocGo, another COVID-era for profit contractor with no prior experience running shelters.
“They turn the lights on and set up the beds,” Goldfein said. “It’s like literally keeping the lights on.”
Tony Sclafani, a Medrite spokesperson, lauded the company’s work with the city in recent years.
“During the COVID-19 pandemic, more than 1 million patients were treated and vaccinated, and in these challenging times, we are proud to continue our work with New York City to provide critical administrative and medical services to asylum seekers,” he said.
‘Negligent, Careless, Reckless’
Another vendor, Aron Security, got a $140 million contract to handle security at sites where the migrants are placed, despite multiple lawsuits against the company in the last two years.
At the time HHC’s board awarded the Aron contract March 30, the Long Island based firm had been sued six times in the prior two years by residents of homeless shelters for failing in its assignment to keep shelters safe.
In one lawsuit, an employee of a men’s shelter run by Samaritan on East 53rd Street in Manhattan sued both Aron and the city after he alleges he was attacked in January 2022 by a shelter resident and that Aron failed to provide a safe environment.
Residents of three other shelters run by Samaritan have sued, including a client of a men’s shelter at a hotel in Long Island City, Queens, where the resident claimed he was attacked by another resident with a weapon despite the presence of a metal detector at the entrance manned by Aron staff.
In one particularly harrowing incident at a family shelter on Myrtle Avenue in Bushwick, Brooklyn, where Aron was handling security, a resident states he was assaulted in August 2022 by an intruder who bit off part of his nose.
On Thursday Samaritan did not respond to THE CITY’s questions about its allegations of negligence pending against Aron.
In three lawsuits, one of the city’s biggest shelter providers, Samaritan Daytop Village, had turned around and sued Aron.
This spring, the city Department of Homeless Services also filed suit, alleging that Aron had “failed to manage, maintain, control, inspect” an East New York men’s homeless shelter, was “negligent, careless, reckless,” and “failed to perform their security related duties and failed to keep the premises in a safe manner.”
DHS spokesperson Neha Sharma declined to discuss either the agency’s lawsuit or Samaritan’s cases pending against Aron. She also wouldn’t say whether the agency would continue to approve the security firm’s work as a subcontractor going forward.
In an emailed response to THE CITY’s questions, Sharma said with security subcontracts in general, DHS officials review an “organization’s overall experience, integrity, and delivery of services…and reviews of the financial integrity of the organization and integrity of the principals.”
She added: “DSS-DHS does not tolerate any cases of violence/misconduct at our sites, including amongst clients, and our contracted security staff are trained to deploy de-escalation tactics as they work to ensure the safety of both clients and staff.”
When it won the HHC job, Aron had no prior contracts with the city hospital system and only one with the City of New York — a $12 million contract awarded in June 2020 by the Department of Buildings to handle security at COVID test sites.
In all of the shelter lawsuits, Aron’s lawyers have filed responses denying wrongdoing and contesting the allegations. On Thursday THE CITY sent questions to Aron’s CEO Alexander Caro about the DHS and Samaritan lawsuits. Caro did not respond.
A Black Box
Because Medrite and Aron were hired by HHC, the city comptroller and the public know nothing about how they were hired and what effort was made to check out their job histories.
A spokesperson for Lander, Chloe Chik, said this week that the comptroller continues to press for more information from City Hall and HHC, which operates under the name NYC Health + Hospitals. “Given the magnitude of the spending that H+H is doing to provide shelter and services to new arrivals, it is in the interest of transparency and a full government response to share H+H contracts,” Chik said.
She added: “As H+H and the city continue to use emergency procurement, it raises the need for greater scrutiny in selecting vendors.”
The City Council will be holding a hearing Sept. 21 on the city’s dealings with private shelter providers. Councilmember Gale Brewer (D-Manhattan), who chairs the Council’s oversight and investigations committee, said her office has struggled to gain access to essential city contract information ahead of the hearing.
“The emergency process needs to be looked at,” Brewer said.
To date Lander has been able to obtain only bare bones information about HHC’s migrant-related spending through the end of July: just contract amounts and start and end dates.
Everything else about these contracts, including how and why they were selected, is hidden from public view — even though such information is routinely made available for standard city contracts. The procurement method and the number of shelter units these contractors are responsible for are listed as “not available.”
Also unknown to Lander or the public: how much of Medrite’s $304 million contract and Aron’s $140 million contract have been paid out so far. Such information is usually routinely shared on the comptroller’s Checkbook NYC website.
There’s no sign that’s about to change. On Friday Alex Hunter, a spokesperson for HHC, said that they turn all their asylum-seeker contracts over to City Hall and City Hall gives the comptroller only what it is required to turn over.
On Monday, mayoral spokesperson Mamelak declined to answer THE CITY’s questions about why the mayor’s office wasn’t releasing all the HHC contracts to the comptroller, stating, “HHC submits contract information to the city and the city provides everything it is legally required to provide to the comptroller’s office.”
This story was published by THE CITY on September 15, 2023.
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