ALBANY UNDER FIRE: DOJ Alleges Hochul Administration Rigged $11 Billion Medicaid Contract in Favor of Preferred Vendor
The Trump administration has filed a sweeping lawsuit against New York state officials, accusing them of steering an $11 billion Medicaid home care contract to a favored company and enabling it to improperly collect millions of taxpayer dollars.
The lawsuit, brought Tuesday by the Department of Justice, alleges that senior state health officials manipulated the bidding process for a major overhaul of New York’s Consumer Directed Personal Assistance Program (CDPAP), which serves nearly 250,000 home care recipients.
At the center of the case is Public Partnerships LLC (PPL), the company selected to become the program’s sole payroll administrator. State officials had argued that consolidating the system under a single contractor would reduce costs and improve efficiency, but the transition instead became mired in widespread problems and confusion.
“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,” Brett A. Shumate, assistant attorney general for the Department of Justice’s Civil Division, said in a statement.
“The Justice Department is acting to ensure that federal laws regarding truthful statements and fair dealing in federal health care programs are upheld and to prevent additional harm from being exacted against the public by PPL and New York,” Shumate added.
According to federal prosecutors, state leaders brushed aside repeated indications that the transition would be deeply problematic as PPL assumed control of CDPAP, a program that allows relatives and friends to provide care for disabled or chronically ill individuals instead of traditional home health aides.
The complaint names state Health Commissioner James McDonald and Medicaid Director Amir Bassiri as defendants. While Gov. Kathy Hochul is not personally accused of wrongdoing, the 60-page filing includes communications suggesting her office played a significant role in both the contract award process and the rollout of the program.
Federal attorneys point to internal correspondence showing state officials telling counterparts in other states that they faced “pressure from the Governor’s Office” while evaluating competing bidders.
After ultimately winning the contract, PPL sought additional time to transition patients and caregivers into the new system. The company requested that the enrollment period be expanded from three months to nine months as it worked to build staffing capacity.
According to the lawsuit, Hochul’s office rejected those requests.
One email from a senior Health Department official cited in the complaint stated: “I wanted to give you a heads up that Chamber is coming in hard on the [Statewide Fiscal Intermediary] launch, they really aren’t entertaining options to move off of a path that gets this done by 4/1. We will not be advancing statutory or regulatory changes [to extend the CDPAP transition timeframe] at this time.”
Federal investigators also contend that the governor’s office later worked to minimize concerns about the troubled rollout, even as thousands of disabled New Yorkers struggled with long wait times, administrative problems, and disruptions in caregiver payments.
Internal PPL records cited in the lawsuit show that by Jan. 13, 2025 — one week after the transition process officially began — only 43 of the 214,000 individuals in the company’s system had completed enrollment.
Nevertheless, three days later, McDonald publicly maintained that “the facts and data show that the transition is proceeding efficiently and effectively.”
The complaint further alleges that PPL violated federal healthcare fraud laws by overstating costs billed to Medicaid and improperly inflating the administrative payments it received from New York, actions prosecutors say breached the terms of its contract.
Federal officials claim PPL knowingly submitted what it internally described as a “recklessly low bid,” calculating that a below-market proposal would secure the contract even if it was initially unprofitable.
The company allegedly expected the Hochul administration to help it obtain higher reimbursement levels from health plans by classifying certain expenses under enhanced “direct care” rates rather than limiting those payments to caregiver wages and benefits.
The state’s request for proposals specifically warned bidders that this type of reimbursement “spread” would not be permitted.
When PPL later moved forward with increased direct-care rates, health insurers objected sharply.
“If PPL insists on its one-size-fits-all, non-negotiable rate, it will put at risk services to members and will undoubtedly undermine the very financial savings that the State projected,” the New York Health Plan Association wrote in a letter obtained by The Post.
Justice Department officials said the case demonstrates the federal government’s determination to combat fraud involving taxpayer-funded healthcare programs.
“New York’s backroom deal with PPL has cost taxpayers millions of dollars and cast countless Medicaid patients to the curb,” Colin McDonald, assistant attorney general for the Justice Department’s National Fraud Enforcement Division, said in the complaint.
Hochul’s office forcefully rejected the allegations, characterizing the lawsuit as politically motivated.
“This is just another sad attempt by the Trump administration to weaponize the justice system to attack political opponents in an election year,” Hochul spokesperson Kara Cumoletti said.
“As many courts have already held, the transition to a single fiscal intermediary was lawful and appropriate. We are confident the facts are on our side,” she continued.
Hochul is currently seeking a second full term as governor and is expected to face Republican challenger and Trump ally Bruce Blakeman in November.
The state Department of Health also condemned the lawsuit, calling it a politically driven attack and defending the CDPAP restructuring effort.
“We look forward to the day where these disingenuous attacks can stop and our partners in Washington can look to New York as a model for how to improve to control costs and root out abuses while preserving and improving quality of care,” a department spokesperson said.
{Matzav.com}
