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Justice Department Sues New York Over Medicaid Home Care Contract
The Justice Department filed suit Tuesday alleging a Georgia company used a sham bidding process to win a $10 billion New York Medicaid home care program and then improperly took millions in profits. New York officials called the complaint baseless and said the consolidation saved more than $1 billion.
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The Justice Department sued the New York State Department of Health, the state’s Medicaid director and Public Partnerships LLC on Tuesday, alleging the company misrepresented its capabilities to win a contract to run the state’s $10 billion Consumer Directed Personal Assistant Program.
The suit, filed in the Eastern District of New York, claims the company siphoned millions of dollars in unauthorized profits by taking a percentage of each hour of care billed. Prosecutors also allege the state conducted a sham bidding process and failed to hold the company accountable after learning it intended to deviate from its bid.
CDPAP provides home care through lay caregivers, including family members, to more than 250,000 Medicaid patients with disabilities or significant medical needs. The program employed more than 300,000 caregivers as of fall 2024. New York consolidated management of the program into a single firm in 2024 to replace hundreds of separate companies.
State officials have said the change saved taxpayers more than $1 billion in its first year.
The complaint states that Public Partnerships materially misrepresented its staffing plan, financial readiness, software quality and other aspects of its bid. Prosecutors further allege the company improperly inflated hourly billable rates after taking over the program in 2025.
“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 Shumate, assistant attorney general A New York State Department of Health spokesperson rejected the claims, calling the complaint baseless and an attempt to score political points at the expense of vulnerable New Yorkers. The spokesperson said the consolidation removed wasteful administrative middlemen and protected home care while reducing costs. Federal prosecutors are seeking a court order to freeze gross revenue to the company under the contract and to appoint a temporary receiver.”
