ALBANY — The federal Justice Department has sued top New York health officials under Gov. Kathleen C. Hochul for the way they handled the handover of the state’s Medicaid-sponsored home health care program to a single company last year.
On Tuesday, federal officials filed a civil lawsuit naming state Commissioner of Health Dr. James V. McDonald, state Medicaid Director Amir Bassiri and the company that now manages the program, Public Partnerships LLC, also known as PPL.
In the suit, the federal government alleges that as New York moved to consolidate the management companies for the Consumer Directed Personal Assistant Program last year, state officials colluded with PPL to illegally ensure the company got the contract to run the massive healthcare program that pays family and friends to care for disabled loved ones at their homes. More than 200,000 New Yorkers are clients of the program, with more than 250,000 assistants paid by PPL.
The federal Justice Department accuses PPL of creating an “artificially attractive” bid to run the CDPAP program with misrepresentations within their submission about how much they would charge the state to administer the program and how they would recover that funding.
PPL is the employer for the assistants who give care through the CDPAP program; they track worked hours, pay a flat hourly wage that varies somewhat based on geographical location and provide limited healthcare benefits, while also tracking client information and how much care they’re entitled to receive.
The DOJ is asking the court for an order pausing any more gross revenue from going to PPL under the CDPAP contract, and the appointment of a temporary receiver to manage further non-revenue transactions to keep the program operating in the interim.
The Justice Department specifically alleges that state officials and PPL colluded to steer the contract to run CDPAP to the company as the contours of a change to the program were being discussed in Albany, and then ran a sham of a bidding process that was improperly weighted to benefit PPL’s bid.
They further allege that both PPL and state officials have not been truthful about having a history of specific discussions at senior management levels to hand PPL the CDPAP contract, and claims that state Health Department staff acknowledged that they were under ‘pressure from the Governor’s office,’ as they worked to review the bids to run the program.
The DOJ also alleges that PPL defied the state Department of Health’s requirement that it not dip into a category of funding known as ‘direct care costs’ as revenue for itself. That money is supposed to be going to the caregivers doing the work, and in its proposal to the state PPL agreed that they would hand it over as required. But the DOJ suit says PPL in fact takes a portion of that money using an ‘hourly rate game’ that siphons off a portion back to its own coffers.
The suit also claims that PPL made multiple misrepresentations of their own capacity to carry out the process of taking on the hundreds of thousands of staff and clients who were served by the more than 600 independent companies that administered CDPAP before. The DOJ says that PPL misrepresented their staffing plans, fiscal stability, in-house technical capacity and other key areas of their plan.
In fact, when the transition from the old system to the PPL-run one began in April of 2025, the process was beleaguered with delays and mistakes that forced officials to unilaterally extend the transition window before a state court ruling ordered them to keep the process open for months longer than originally planned. Reports of extreme difficulties with paperwork, the PPL web platform and approvals led to long delays in pay for caregivers and gaps in care for those in need of help. Over a year later, hundreds of thousands fewer caregivers and thousands fewer clients are participating in the program.
“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,” said Brett A. Shumate, assistant attorney general in the Justice Department’s Civil Division. “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 Public Partnerships LLC and New York.”
State officials are rejecting the arguments and said that the suit is another in a line of ‘baseless’ legal attacks from the Republicans who run Washington D.C. right now.
“It is inexcusable and completely lacking in merit,” said Candace Aquaviva, spokesperson for the state Health Department. “The fact of the matter is this administration saved CDPAP from a fiscal crisis by removing hundreds of wasteful administrative middlemen. In the process, we reduced costs for state and federal taxpayers while protecting home care for those who need it. As the courts have confirmed, this was accomplished through a fair and legally sound competitive bidding process. 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.”
The state courts have previously reviewed the contract and bidding process, and in October of last year the Appellate Division of the state Supreme Court affirmed a ruling from the Manhattan Supreme Court that upheld the agreements in place.