The Justice Department on Tuesday sued the New York State Health Department, the state’s Medicaid director and a company whose operation of an $11 billion home health care program has faced scrutiny, claiming the state failed to take action against the company’s glaring shortcomings.
The company, Public Partnerships L.L.C., misled the state regarding its readiness to take over the program, its ability to cut costs and its monthly fees per patient, the suit charges. Federal officials accuse Amir Bassiri, the director of New York State Medicaid, and Dr. James McDonald, the health commissioner, of being aware of its misrepresentations.
The lawsuit, filed in New York’s Eastern District, does not name the state’s Democratic governor, Kathy Hochul. And while it makes reference to what it called the “sham bid process” by which the company was selected, the suit does not directly charge the state with bid rigging.
The suit comes as the Department of Justice has increasingly pursued President Trump’s political opponents, including the New York State attorney general, Letitia James. There had long been signs that the Trump administration was interested in New York’s Medicaid programs, following revelations of a huge fraud scandal in Minnesota in 2025.
In a statement, a spokeswoman for Ms. Hochul, Kara Cumoletti, called the case “another sad attempt by the Trump administration to weaponize the justice system,” adding, “We are confident the facts are on our side.” Public Partnerships did not immediately respond to a request for comment.
New York’s Consumer Directed Personal Assistant Program, known as CDPAP, uses lay caregivers, including family members, to provide home care to disabled or medically incapacitated Medicaid patients.
Between 2017 and 2024, enrollment in the program exploded from 12,000 to 250,000, straining the state budget. In response, Ms. Hochul pushed lawmakers to pass legislation that consolidated its management, replacing 700 firms with a single one.
New York selected Public Partnerships L.L.C., also known as P.P.L., to run the program in 2024. But the transition was troubled from the start.
Patients complained that care had been disrupted, and workers went unpaid. A hotline to handle the transition was quickly overwhelmed. Public Partnerships blamed the outgoing fiscal intermediaries — even as the intermediaries sued to stop the transition in court.
One of those suits directly challenged the bidding process and whether it had been conducted lawfully. In a 2025 decision, the Appellate Division’s First Judicial Department found that the challenger had failed to show that the contracting decision was “arbitrary and capricious, affected by an error of law, an abuse of discretion, or done in violation of lawful procedure.”
New York officials say the move was a success, saving the state over a billion dollars in its first year. “The fact of the matter is this administration saved CDPAP from a fiscal crisis by removing hundreds of wasteful administrative middlemen,” said Cadence Acquaviva, a spokeswoman for the Department of Health.
But the Justice Department, in a statement, said that Public Partnerships had misrepresented both its cost-cutting intentions and its ability to handle the enormous program, causing “severe disruptions to patient care and harm to patients across the state.”
“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, an assistant attorney general, said in the statement.
The company also misled the state regarding “its staffing plan, its financial readiness to perform the contract, the quality of its in-house software and other key aspects of its plan,” according to the suit.
Most troubling, the Justice Department said, was the “backroom deal” by which the Health Department awarded the contract.
James Skoufis, a Democratic state senator, held a hearing last year over his concerns regarding big rigging after it emerged that the state was considering Public Partnerships even before the bill had been passed altering the home health care program.
In the hearing last August, Mr. Skoufis questioned the company’s vice president, Patty Byrnes, about whether it had had any contact with the state before the law was changed. She denied there had been contact, but later admitted in a letter to Mr. Skoufis that her testimony was inaccurate.
“P.P.L.’s testimony to the State Senate — under oath — was false, and their follow-up ‘correction’ was intentionally misleading,” Mr. Skoufis said on Tuesday. “While I have grave concerns with the ability of Donald Trump’s D.O.J. to impartially prosecute this case, P.P.L. and the Department of Health have a lot of answering to do.”
Bill Hammond, a health care policy analyst at the conservative-leaning Empire Center for Public Policy, said that the overlap between the Justice Department claims and the revelations of communications between the state and Public Partnerships before the contract was awarded suggested that the case was “not just a political hit.”
“What I can’t be sure about,” he added, “is where the precise legal boundaries are and whether they were technically crossed.”
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