Feds sue Hochul officials, claim massive fraud scheme in revamp of NY’s $11B Medicaid homecare program
The US Department of Justice sued Gov. Kathy Hochul’s administration Tuesday, alleging it rigged bidding for an $11 billion Medicaid home care program and allowed a favored company, Public Partnerships LLC (PPL), to siphon millions in taxpayer funds.
State Health Commissioner James McDonald and Medicaid Director Amir Bassiri are named in the 55-page lawsuit, which claims the state consolidated payroll services for nearly 250,000 home care recipients under PPL and pushed ahead with the transition despite warnings it would cause major problems.
Assistant Attorney General Brett A. Shumate said that New York failed to police a favored vendor that unlawfully diverted millions in Medicaid funding, and that the DOJ is acting to enforce federal laws and prevent further harm.
Hochul is not accused of wrongdoing, but emails cited in the complaint show her office was involved in both the bidding process and transition. The lawsuit says that in September 2024, Amir Bassiri participated in discussions in which Health Department officials, under pressure from the Governor’s Office, sought to determine whether competing bidders were qualified.
After winning the contract, PPL proposed extending the transition timeline from three months to nine months while it hired staff. According to internal emails, Hochul’s office rejected any extension and insisted on meeting the April 1 deadline.
The lawsuit alleges Hochul’s administration downplayed mounting problems as thousands of disabled New Yorkers struggled with customer service issues and caregiver payments.
On Jan. 13, 2025, a week after the transition window opened, only 43 of the 214,000 people in PPL’s system had completed, per PPL records unveiled in the lawsuits.
Three days later, McDonald said the process was proceeding efficiently and effectively.
Assistant Attorney General Colin McDonald said New York’s “backroom deal” with PPL cost taxpayers millions and harmed Medicaid patients, adding that the DOJ is using every available tool to combat fraud and corruption in taxpayer-funded programs.
