Doj Accuses New York Of Unlawful Medicaid Home Care ‘scheme’

NEW YORK — The Justice Department sued Gov. Kathy Hochul’s administration Tuesday over its handling of a popular Medicaid home care program that enables over 200,000 New Yorkers to hire their own caregivers, court records show.

The civil lawsuit accuses state Health Commissioner James McDonald and Medicaid Director Amir Bassiri of making false or misleading statements about the consolidation of Medicaid’s consumer-directed personal assistance program, or CDPAP, under financial services company Public Partnerships LLC.

The DOJ’s complaint also accuses PPL of creating an “artificially attractive proposal” to administer the Medicaid program through a “sham bid process,” making false statements about its communications with state officials before winning the CDPAP contract and improperly inflating hourly billable rates upon taking over the program in 2025.

Federal prosecutors are seeking a court order freezing the flow of any gross revenue to PPL under the CDPAP contract and appointing a temporary receiver.

“New York’s failure to police a favored vendor that unlawfully siphoned millions of dollars of Medicaid funding is egregious and betrays the public trust,” Assistant Attorney General Brett A. Shumate said in a statement.

State Department of Health spokesperson Cadence Acquaviva refuted the claims in the lawsuit.

“This baseless complaint is the latest attempt by Washington Republicans to score political points at the expense of vulnerable New Yorkers. It is inexcusable and completely lacking in merit,” Acquaviva said in a statement to POLITICO. "The fact of the matter is this administration saved CDPAP from a fiscal crisis by removing hundreds of wasteful administrative middlemen. In the process, we reduced costs for state and federal taxpayers while protecting home care for those who need it.

PPL also refuted the lawsuit's claims.

"We strongly disagree with the characterizations in the complaint and will respond fully through the appropriate legal process," the company said in a statement. "[PPL] was selected through a transparent, competitive process to strengthen and modernize New York’s CDPAP program, and we are proud of our work to deliver greater accountability, consistency, and support for the hundreds of thousands of New Yorkers who rely on it."

The lawsuit was first reported by the New York Post.

The CDPAP transition dates back to a 2024 budget deal to cut roughly $500 million in annual Medicaid spending by enlisting a single company to take over the program’s administrative operations, which were then handled by hundreds of different companies.

The state launched a request for proposals to administer the program, although lawmakers later discovered draft budget language that would have awarded a no-bid contract to PPL.

PPL, a private equity-backed company that runs self-directed care programs across the U.S., was one of four fiscal intermediaries found to meet the state’s minimum requirements under the request for proposals. The state announced its selection of PPL in September 2024, and the transition kicked off at the start of 2025.

Hochul’s administration recently claimed the transition saved twice as much money as expected, cutting the state’s Medicaid costs by $1.2 billion and saving the federal government another $1 billion in matching payments. State lawmakers have cast doubt on the figures.

State and PPL officials have repeatedly denied any wrongdoing related to the procurement but have acknowledged meeting before the RFP process began. One meeting between health department staff and PPL leadership was confirmed by an email obtained by the Empire Center, a right-leaning policy think tank, but a Hochul spokesperson said it “had nothing to do with the procurement process.”

During an August 2025 state hearing about the transition, McDonald acknowledged early payroll issues and ongoing concerns with CDPAP workers’ shoddy health benefits, but he said PPL was in “full compliance with their contract.”

Hochul’s administration also defended the integrity of the state Medicaid program after a scathing letter from Centers for Medicare & Medicaid Services Administrator Mehmet Oz in March accused New York of allowing fraud, waste and abuse.