DOJ Goes After New York State Over Alleged Medicaid Scheme

The Trump administration sued New York officials for allegedly engaging in a Medicaid fraud scheme, the latest move in an ongoing federal attack against state health programs.

The Justice Department accused the New York State Department of Health and its officers of funneling “millions of dollars of extra revenue” to fellow defendant Public Partnerships LLC, a home caregiver company, according to a complaint filed Tuesday in federal court. That scheme “continues to cause substantial harm to many thousands of vulnerable home-care Medicaid patients and caregivers,” the DOJ said in its complaint to the US District Court for the Eastern District of New York.

“New York’s backroom deal with PPL has cost taxpayers millions of dollars and cast countless Medicaid patients to the curb,” Assistant Attorney General Colin M. McDonald for the Justice Department’s National Fraud Enforcement Division said in a statement announcing the lawsuit.

The department of health called the suit a “baseless complaint” that’s part of the Trump administration’s “latest attempt” to score political points at the expense of “vulnerable New Yorkers,” spokesperson Cadence Acquaviva said in an emailed statement. In fact, the state has saved taxpayers from “fiscal crisis” by removing wasteful middlemen, they said.

Tuesday’s lawsuit follows a rush of recent actions from the Trump administration alleging Medicaid fraud at the state level . That includes threatening to withhold Medicaid funds for states that don’t comply with anti-fraud statutes.

The New York Supreme Court First Appellate Department in October refused to reinstate claims against the state alleging its process for switching to a single fiscal intermediary to manage home care services was rigged.

The DOJ is now accusing New York’s health department of pre-selecting PPL as the sole “fiscal intermediary” for employing and managing home-care caregivers in the state’s Consumer Directed Personal Assistance Program via a “sham bid process.”

“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,” Assistant Attorney General Brett A. Shumate of the Justice Department’s Civil Division said in a statement.

The case is United States v. Public Partnerships, E.D.N.Y., No 1:26-cv-03601, Complaint 6/16/26.