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U.S. Freezes Funding for New York Medicaid Fraud Unit Over Low Conviction Numbers
The Trump administration on June 30, 2026, suspended federal funding for New York’s Medicaid Fraud Control Unit through at least September 30. Officials cited insufficient criminal convictions in fraud cases. New York Attorney General Letitia James said her office recovered over $627 million and is considering legal options.
Jul 2, 2:51 PM·1m read3 sources
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The Trump administration announced on June 30, 2026, that it would freeze federal funding for New York’s Medicaid Fraud Control Unit, Fortune reported. U.S. Department of Health and Human Services Inspector General Thomas March Bell sent a letter to state officials stating the suspension would last through at least September 30.
Bell’s letter accused the unit of securing too few criminal indictments and convictions compared with four similarly sized units in other states between 2023 and 2025. The letter noted New York’s choice to prioritize high-impact, complex cases but concluded the results remained insufficient. “Enough is enough,” Bell wrote.
The suspension marks the second such action against a state Medicaid fraud unit in 2026. In early June the administration cut funding for Hawaii’s unit after a three-year period without an indictment or conviction. The Department of Justice had named both the Hawaii and New York units as partners in a national Medicaid fraud takedown announced the week before June 30.
New York Attorney General Letitia James stated her office has recovered more than $627 million for Medicaid during her tenure and was recognized by the Trump administration for leading the nation in anti-fraud efforts. She said the office is considering all legal options to challenge the freeze.
A 2025 report from the HHS Inspector General’s office listed New York among four states that accounted for half of total civil recoveries that year.
Bell wrote that the suspension could be lifted before September 30 if New York demonstrates it has addressed the concerns. The unit is overseen by James and directed by Amy Held.
