Justice Department sues New York officials over Medicaid homecare contract

The U.S. Department of Justice filed a lawsuit Tuesday in U.S. District Court for the Eastern District of New York alleging that state officials rigged the bidding process for an $11 billion Medicaid homecare program. The 55-page complaint claims the contract was awarded to Public Partnerships LLC despite internal warnings about the company's readiness.

State Health Commissioner James McDonald and Medicaid Director Amir Bassiri are named as defendants. The suit alleges officials ignored evidence that other qualified bidders existed and proceeded with the transition even after the selected company requested additional time to prepare.

Transition problems documented Internal emails cited in the complaint show that only 43 of 214,000 recipients had completed enrollment one week after the transition began on January 6, 2025. A state health department statement issued January 13, 2025, described the rollout as proceeding efficiently.

The complaint states that Hochul's office declined to extend the transition period from three months to nine months despite the company's own assessment that more time was needed. Thousands of recipients reportedly encountered customer service issues during the rollout.

Federal response "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, wrote in a statement.

"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, wrote. The lawsuit seeks to enforce federal requirements for truthful statements and fair dealing in health care programs.