Trump administration sues New York over Medicaid homecare bidding scheme

The Trump administration has sued New York over a Medicaid home-care overhaul that put Public Partnerships LLC in charge of a roughly $10 billion program and, federal lawyers say, turned the bidding process into a vehicle for fraud. The civil complaint, filed in Brooklyn federal court, named the New York State Department of Health, Medicaid director Amir Bassiri, Health Commissioner Dr. James McDonald and Public Partnerships LLC, which is based in Alpharetta, Georgia.

At issue is the Consumer Directed Personal Assistance Program, known as CDPAP, a New York Medicaid program that lets eligible members who need home care choose and hire their own personal caregiver, including a friend or family member in many cases. The Justice Department said the alleged scheme generated millions of dollars in unauthorized profits funded by federal taxpayers and sought an order to stop the conduct, including the appointment of a receiver for PPL.

New York’s health department moved the program from more than 600 fiscal intermediaries to a single statewide contractor after the state legislature changed the law in the 2024-25 budget. State records show the request for proposals for that statewide intermediary was issued on June 17, 2024, and the state later selected PPL as the sole fiscal intermediary, effective April 1, 2025. The state said members were in the middle of transitioning to PPL through March 28, 2025, and that about 245,000 consumers had taken action by March 27.

Federal lawyers say the switch was not just a routine procurement decision but a manipulated process that let one company secure control of the system and then extract more money from it. The complaint says the company’s takeover harmed patients, caregivers and taxpayers, and the Justice Department has framed the case as an effort to halt ongoing fraud tied to New York’s home-care system.

New York has defended the consolidation as a way to standardize and control a fragmented program. Governor Kathy Hochul’s office called the lawsuit an attempt to weaponize the justice system, while PPL said it strongly disagreed and maintained that it won the contract through a transparent competitive process.

The case lands at a sensitive moment for vulnerable New Yorkers who rely on home-based care to stay out of institutions and keep familiar aides in place. It also puts a national spotlight on how states manage sprawling Medicaid programs, where procurement decisions can quickly become fights over cost, oversight and who controls the delivery of care.