The U.S. Justice Department has filed a civil lawsuit against New York state officials and a Georgia-based contractor, accusing them of orchestrating a fraud scheme that has cost taxpayers millions of dollars in the state's $10 billion Medicaid home-care program. The lawsuit, filed in the U.S. District Court for the Eastern District of New York, names the New York State Department of Health, Medicaid Director Amir Bassiri, and Public Partnerships LLC (PPL) as defendants. It alleges that New York conducted a 'sham bid process' to award PPL a lucrative contract to manage the Consumer Directed Personal Assistance Program (CDPAP), a Medicaid initiative that allows people with disabilities to hire and direct their own caregivers.
The lawsuit claims that PPL, an Alpharetta-based company that took over the program in 2025, has generated millions of dollars in unauthorized profits by ignoring contract limits on revenues and billing managed care organizations at inflated hourly rates. 'New York's backroom deal with PPL has cost taxpayers millions of dollars and cast countless Medicaid patients to the curb,' said Assistant Attorney General Colin M. McDonald of the Justice Department's National Fraud Enforcement Division. Assistant Attorney General Brett A. Shumate added: '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.'
Sham Bidding Process and Contract Misrepresentations
According to the complaint, the New York Legislature passed a statute in spring 2024 consolidating the management of CDPAP from hundreds of existing 'fiscal intermediaries' to a single contractor — setting up one of the most lucrative Medicaid contracts in the nation. The DOJ alleges that despite purporting to conduct a fair bidding process, New York pre-selected PPL and conducted a sham process that resulted in the company being awarded the contract in late 2024.
The lawsuit further alleges that PPL and New York officials repeatedly made knowing misrepresentations about when the transition could be completed, concealing that both parties were aware the transition would likely miss its April 1, 2025 deadline and cause severe disruptions to patient care. Prosecutors also claim that PPL and state officials disregarded key contract limits on the revenues and profits PPL was entitled to receive — limits that were central to the goal of saving hundreds of millions of dollars through the CDPAP transition.
'I think this hourly rate game is going to become our hobby,' a PPL leader wrote in a 2024 email regarding the CDPAP strategy, according to the lawsuit. Managed care organizations reportedly informed the New York Department of Health that PPL sought billions in excess of what they thought was warranted, but the department did not act.
Patient and Caregiver Impact
CDPAP is one of New York's largest health benefit programs, serving more than 250,000 disabled patients and employing over 300,000 caregivers as of fall 2024. The lawsuit alleges that the scheme has caused 'substantial harm to many thousands of vulnerable home-care Medicaid patients and caregivers, to small- and medium-sized New York businesses who were put out of business, and to the American taxpayer who ultimately is footing the bill.'
According to the complaint, caregivers went underpaid and patients had to seek care outside of their homes as a result of the transition. The DOJ is seeking a court order freezing PPL's revenue under the CDPAP contract and appointing a temporary receiver to oversee the program.
State and Company Responses
The New York Department of Health strongly rejected the allegations, calling the lawsuit 'baseless ... inexcusable and completely lacking in merit.' 'This baseless complaint is the latest attempt by Washington Republicans to score political points at the expense of vulnerable New Yorkers,' spokesperson Cadence Acquaviva said in a statement. The department maintained that the hiring of PPL 'was accomplished through a fair and legally sound competitive bidding process' and that the transition saved $1.2 billion in state Medicaid costs and $1 billion in federal matching payments.
PPL also disputed the DOJ's claims, stating: 'We strongly disagree with the characterizations in the complaint and will respond fully through the appropriate legal process.' The company said it was selected 'through a transparent, competitive process to strengthen and modernize New York's CDPAP program' and expressed pride in its work serving hundreds of thousands of New Yorkers.
Broader Federal Crackdown on Medicaid Fraud
The lawsuit is part of a broader Trump administration push to crack down on fraud, waste and abuse in federal health care programs. The case follows a huge Medicaid fraud scandal in Minnesota in 2025 and comes two months after the administration acknowledged it made a significant error in facts used to justify its fraud probe into New York's Medicaid program.
Earlier this year, Centers for Medicare & Medicaid Services Administrator Mehmet Oz sent a scathing letter to New York accusing the state of allowing fraud, waste and abuse. The DOJ's civil lawsuit represents the most significant legal action yet in the federal government's efforts to hold states and contractors accountable for Medicaid mismanagement.
