Feds sue Hochul officials, claim massive fraud scheme in revamp of NY’s $11B Medicaid program

Key Points:

• The US Department of Justice filed a lawsuit against New York Gov. Kathy Hochul’s administration, alleging it rigged bids on an $11 billion Medicaid homecare program to favor Public Partnerships LLC (PPL), allowing the company to siphon millions in taxpayer money.
• State Health Commissioner James McDonald and Medicaid Director Amir Bassiri are named in the lawsuit, which accuses the administration of pushing a problematic payroll services transition despite warnings of chaos and refusing to extend the transition timeline despite PPL’s request.
• Although Hochul is not directly accused, emails reveal her office’s active involvement in the bid awarding and transition process, including exerting pressure to exclude other qualified bidders and downplaying the transition’s severe issues.
• The transition led to significant customer service failures affecting thousands of disabled New Yorkers, with only 43 of 214,000 recipients fully transitioned weeks after the process began, despite official statements claiming efficiency.
• Justice Department officials condemned the deal as a betrayal of public trust and emphasized their commitment to combating fraud and corruption in taxpayer-funded programs.