A major clash has erupted between federal authorities and New York state officials over the management of one of the nation’s largest Medicaid homecare programs, with the U.S. Department of Justice accusing state health leaders of steering a lucrative contract to a preferred company and allowing millions of dollars in public funds to be improperly collected.
The lawsuit, filed by the Trump administration, targets senior New York health officials and Public Partnerships LLC (PPL), the company selected to administer the state’s Consumer Directed Personal Assistance Program (CDPAP). Federal prosecutors contend that the company was effectively chosen in advance of a competitive bidding process and subsequently profited from a system that failed to protect taxpayer dollars.
CDPAP allows Medicaid recipients to hire and direct their own caregivers, including family members and trusted assistants. The program serves more than 200,000 patients and employs more than 260,000 personal aides across New York.
According to the complaint, state officials manipulated the procurement process to ensure PPL secured the contract, despite the presence of other qualified bidders. Federal lawyers argue that the arrangement enabled the company to collect excessive revenues and undermined the financial benefits that were supposed to result from restructuring the program.
The Justice Department is seeking court intervention to halt what it describes as ongoing misconduct. Among the remedies requested are measures to prevent further alleged misuse of Medicaid funds and the appointment of an independent receiver to oversee PPL’s operations.
Federal officials framed the case as a significant breach of public trust. They argue that state regulators failed to properly monitor the contractor and allowed Medicaid resources intended for patient care to be diverted through inflated administrative costs.
New York officials have forcefully rejected the allegations. Representatives for Governor Kathy Hochul’s administration described the lawsuit as politically motivated, arguing that the transition to a single fiscal intermediary has already generated more than $1 billion in savings while reducing fraud, waste and abuse within the system.
The state Health Department likewise defended the procurement process, insisting that the contract competition was conducted fairly and that the restructured program has improved accountability and service delivery.
PPL also pushed back against the accusations. The company said it was selected through an open and transparent process and maintained that its role has helped modernize administration of the homecare program.
At the center of the federal complaint is Medicaid Director Amir Bassiri, who prosecutors claim participated in efforts to sideline competing bidders. The lawsuit points to internal communications suggesting state officials were under pressure from the governor’s office while evaluating proposals. Prosecutors also allege Bassiri played a direct role in scoring PPL’s successful bid for the management contract.
The dispute stems from New York’s 2024 decision to consolidate oversight of CDPAP under a single administrator, replacing a network of more than 600 entities that previously handled various administrative functions. State leaders argued the move would streamline operations and generate substantial savings.
Federal authorities now contend that those expected savings were undermined because PPL allegedly charged higher-than-anticipated rates and retained millions in excess revenue. State officials counter that the reforms have strengthened oversight and ensured patients continue receiving needed care.
The lawsuit sets the stage for a high-profile legal battle over Medicaid administration, government contracting practices and the intersection of healthcare policy and election-year politics.
