The U.S. Department of Justice sued two top New York health officials on Tuesday, alleging they rigged the bidding for an $11 billion Medicaid home care contract and then allowed a favored company to improperly collect millions of taxpayer dollars from the program.
The civil complaint, filed by the Justice Department’s Civil Division, names New York State Health Commissioner James McDonald and State Medicaid Director Amir Bassiri as defendants. Assistant Attorney General Brett A. Shumate said the lawsuit seeks to enforce federal laws requiring integrity in government health care programs and to protect taxpayers from fraud and abuse.
At the center of the case is New York’s Consumer Directed Personal Assistance Program (CDPAP), which allows approximately 250,000 elderly and disabled residents to hire their own caregivers, including family members, rather than relying on traditional home care agencies. The state consolidated payroll and administrative functions under a single contractor in 2024, arguing the move would reduce costs and improve oversight.
That contractor was Public Partnerships LLC (PPL), a Georgia-based company. According to the federal complaint, the bidding process was not a fair competition. The lawsuit cites internal communications suggesting state officials faced pressure from the Governor’s Office while evaluating competing bids.
Federal prosecutors also allege that PPL intentionally submitted what it internally described as a “recklessly low bid” to secure the contract. According to the complaint, the company expected to recover losses later through higher reimbursement rates approved by the state.
The Justice Department further alleges that once awarded the contract, PPL inflated costs billed to Medicaid and improperly increased administrative charges in violation of contractual obligations and federal law.
The transition to the new system quickly encountered major problems. According to the complaint, PPL requested a longer transition period but was denied. Court records cited by federal attorneys indicate that one week into the January 2025 rollout, only 43 of approximately 214,000 participants had successfully transitioned to the new system. Caregivers across the state reported delayed paychecks, service disruptions, and overwhelmed customer service operations.
Gov. Kathy Hochul is not named as a defendant and is not accused of wrongdoing. However, the complaint references actions by her office during both the bidding process and the implementation of the contract. Hochul has defended the overhaul as necessary to combat waste and fraud, noting that CDPAP spending grew from $1.9 billion in 2015 to approximately $11 billion by 2025.
The lawsuit follows months of scrutiny surrounding the contract award. PPL has faced allegations of operational and financial issues in multiple other states. In New York, lawmakers from both parties have been examining the procurement process, and some have called for additional investigations into the contract award and rollout.
For the hundreds of thousands of New Yorkers who rely on CDPAP services, the federal lawsuit transforms a troubled program transition into a high-profile legal battle over the management of billions of taxpayer dollars. The defendants have not yet filed formal responses, and the allegations remain unproven.
JBizNews Desk
Albany, New York
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