The Justice Department has filed a lawsuit against the New York State Department of Health, its Medicaid director, and a private company operating a $10 billion home health program, alleging a coordinated scheme that siphoned millions in unauthorized profits from federal Medicaid funds.
Filed Tuesday in the Eastern District of New York, the suit targets Public Partnerships LLC (PPL), accusing the firm of making false or misleading statements to secure a contract to manage the state’s Consumer Directed Personal Assistant Program (CDPAP). The program provides home care through lay caregivers, including family members, to more than 250,000 Medicaid patients with disabilities or significant medical needs, supported by over 300,000 caregivers.
Federal prosecutors allege that PPL improperly inflated hourly billable rates after taking over the program in 2025 and pocketed a small percentage of each hour of care as profit—amounting to millions in what the DOJ calls “unauthorized profits.” The lawsuit claims the New York Department of Health awarded the contract through a “sham bid” process and then failed to hold PPL accountable after learning of its intent to deviate from its bid representations.
“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 Shumate, an assistant attorney general, in a statement. “The Justice Department is acting to ensure that federal laws regarding truthful statements and fair dealing in federal health care programs are upheld.”
The DOJ alleges PPL’s bid “materially misrepresented its staffing plan, its financial readiness to perform the contract, the quality of its in-house software, and other key aspects of its plan.” The consolidation of CDPAP management from hundreds of firms to a single vendor was initially intended to save Medicaid $500 billion, but New York officials claim it has saved taxpayers more than $1 billion in the first year.
“To date, New York and PPL repeatedly and willfully have misled the public and the New York Legislature concerning important aspects of the CDPAP transition, including, without limitation, the gross mismanagement of the program by PPL and New York,” the DOJ said.
Federal prosecutors are seeking a court order to freeze any gross revenue flowing to PPL under the CDPAP contract and to appoint a temporary receiver to oversee the program.
New York State Department of Health spokesperson Cadence Acquaviva pushed back, calling the lawsuit “baseless” and “the latest attempt by Washington Republicans to score political points at the expense of vulnerable New Yorkers.” She added, “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.”
The case highlights ongoing tensions between federal oversight and state-run Medicaid programs, particularly as the CMS home care moratorium continues to spark debate over whether data-driven fraud prevention measures are effective or overreaching. The DOJ’s aggressive stance also echoes broader federal efforts to police healthcare fraud, as seen in other recent actions like the FTC and four states suing a trans health group over pediatric care claims.
As the legal fight unfolds, the future of CDPAP—a lifeline for tens of thousands of New Yorkers—remains uncertain, with the DOJ’s request for a receiver threatening to upend the state’s control over the program.
