By Jonathan Stempel
NEW YORK, June 16 (Reuters) – The Trump administration sued top New York health officials on Tuesday over an alleged scheme to rig the bidding process for managing the state’s estimated $10 billion Medicaid homecare program, harming patients and caregivers as well as taxpayers.
The U.S. Department of Justice said the lawsuit aims to stop an alleged fraudulent scheme in which Public Partnerships LLC generated millions of dollars of improper profits after being “pre-selected” to take over New York’s Consumer Directed Personal Assistance Program, or CDPAP.
More than 200,000 patients and more than 260,000 personal assistants participate in the program, state health commissioner James McDonald said in February.
“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, an assistant attorney general in the Justice Department’s civil division, said in a statement.
NEW YORK ALLEGES POLITICAL MOTIVE BY TRUMP ADMINISTRATION
The defendants include PPL, McDonald and state Medicaid Director Amir Bassiri. The lawsuit seeks to stop PPL’s alleged “siphoning of funds from the federal coffers,” appoint a receiver for the company and halt further alleged fraud.
A spokesperson for New York’s Democratic Governor Kathy Hochul said: “This is just another sad attempt by the Trump administration to weaponize the justice system to attack political opponents in an election year. New York’s decision to move to a single fiscal intermediary has already saved taxpayers more than $1 billion while deterring fraud, waste and abuse.”
Hochul is not a defendant and was not accused of wrongdoing. The Health Department also rejected the lawsuit’s accusations and called the bidding process fair and competitive.
PPL has offices in Latham, New York, near the state capital of Albany. “We strongly disagree with the characterizations in the complaint,” a PPL spokesperson said. “PPL was selected through a transparent, competitive process to strengthen and modernize New York’s CDPAP program, and we are proud of our work.”
‘PRESSURE’ FROM GOVERNOR’S OFFICE
New York’s legislature decided in 2024 to move management of CDPAP to a single entity from more than 600 previously.
The Justice Department accused Bassiri of being part of an effort to disqualify other qualified bidders after he had “personally scored” PPL’s successful bid for the $1 billion management contract.
According to the complaint, Bassiri was part of last-minute email exchanges with other states, in which Health Department officials said they were “under some sort of ‘pressure from our Governor’s Office'” to see if other bidders were qualified.
The Justice Department said New York has let PPL raid CDPAP of millions of dollars in excess revenue, billing at higher-than-expected hourly rates, erasing the cost savings that consolidating the program’s management was supposed to generate.
State officials said the changes have resulted in a “more accountable” CDPAP, reduced waste and helped ensure that patients obtain the care they need.
(Reporting by Jonathan Stempel in New York; Editing by Jamie Freed)
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