The U.S. Justice Department has filed a lawsuit against New York state officials, alleging they failed to prevent a fraud scheme that generated millions of dollars in unauthorized profits funded by federal taxpayers through the takeover of New York’s $10 billion CDPAP program.
Assistant Attorney General Colin M. McDonald of the Justice Department’s National Fraud Enforcement Division stated: “New York’s backroom deal with Public Partnerships, LLC has cost taxpayers millions of dollars and cast countless Medicaid patients to the curb.” Assistant Attorney General Brett A. Shumate of the Civil Division added that New York’s failure to police a favored vendor unlawfully siphoning millions of dollars from Medicaid funding is “egregious and betrays the public trust.”
The complaint names state Health Commissioner James McDonald and Medicaid Director Amir Bassiri but does not directly accuse Governor Hochul. Internal emails included in the 60-page federal lawsuit reveal the governor’s office actively influenced New York health officials during the program transition, with staff writing that they were “under pressure from the Governor’s Office” when vetting potential bidders.
The suit alleges New York pre-selected Public Partnerships, LLC for a billion-dollar Medicaid contract through a sham bidding process after initially claiming to conduct a fair competition. PPL later requested extending the CDPAP transition timeline from three months to nine months but was refused by Hochul’s office, per emails from a state health department “principal.” Internal communications show the governor’s team downplayed the severity of the transition crisis as thousands of disabled New Yorkers faced severe customer service disruptions and caregiver payment issues.
The Justice Department claims PPL and New York repeatedly made false representations about the transition completion date while intentionally concealing that the program would not be finalized by April 1, 2025—the contractual deadline—resulting in significant harm to patients. The lawsuit further alleges both entities disregarded revenue limits set in the contract, allowing PPL to bill at hourly rates exceeding projections and depleting intended cost savings for taxpayers.
