The Department of Justice has filed a lawsuit accusing New York officials of steering a $10 billion Medicaid contract to a preferred vendor, disrupting care for hundreds of thousands of people who rely on the CDPAP program and allowing millions in improper payments, while state officials publicly downplayed the problems.
The lawsuit focuses on CDPAP, the program that lets elderly and disabled New Yorkers hire their own caregivers, often family members, and serves more than 200,000 people. According to the complaint, Governor Kathy Hochul’s office consolidated many smaller administrators into a single statewide contractor and a competitive bidding process was required by law. Prosecutors say the procurement was a sham and that the winner was effectively chosen before the bid began.
Documents cited in the filing show a draft budget from April 2024 that would have simply named Public Partnerships LLC, or PPL, as the statewide contractor, but lawmakers pushed back and required a formal procurement. The complaint alleges the administration kept treating PPL as the presumptive choice even while the bidding rules were put in place, and internal communications paint the selection as predetermined.
PPL’s bid, the DOJ says, was based on a number the company internally called “recklessly” low, and prosecutors describe a plan to recoup the shortfall through billing practices explicitly prohibited by the contract. Rather than accept the flat administrative fee required by the deal, PPL allegedly planned to take a cut of every hour of care billed to Medicaid — a scheme described by prosecutors as an “hourly rate game.” With roughly 350 million hours billed annually, even a few cents per hour would translate to tens of millions of dollars.
Other bidders reportedly priced the contract in line with the written rules, while PPL’s proposal relied on later adjustments and billing workarounds. PPL requested nine months to migrate more than 200,000 patients and caregivers into the new system; the state granted only three months. The Governor’s Office, according to the complaint, dismissed any talk of extending timelines with the statement, “We will not be advancing statutory or regulatory changes at this time.”
State officials and PPL staff directed public messaging to minimize the scale of the transition by telling employees to say, “The only thing that is changing about CDPAP is that PPL will now be the company doing payroll.” But enrollment metrics told a starker story: after the first week of the transition, only 43 out of roughly 214,000 participants had completed enrollment, and a state email later confirmed only 112 consumers and caregivers had finished registration.
Caregivers went unpaid, patients lost long-standing caregivers, and some were forced into nursing homes, the complaint says. Officials allegedly instructed health department staff to withhold those shortfall figures and instead report the much larger number of people who had merely “started” the enrollment process, which obscured the true disruption facing families relying on continuous care.
By March 15, just 107,534 patients had registered, and two weeks after the registration deadline more than 97,000 remained listed as “Not Started.” The DOJ filing is said to run 57 pages and includes emails, enrollment reports, and internal communications that prosecutors argue illustrate a coordinated effort to conceal the operational failures and the financial arrangements that benefited PPL.
Assistant Attorney General Colin McDonald is quoted in the filing: “New York’s backroom deal with PPL has cost taxpayers millions of dollars and cast countless Medicaid patients to the curb.” The Hochul administration has rejected the lawsuit’s assertions, insisting the transition lowered costs and protected care for vulnerable New Yorkers, but the complaint alleges a pattern of intentional deception and improper payments tied to a contract process that never met the legal standard for competition.
The case raises questions about oversight, procurement integrity, and how decisions in Albany translated into real-world harm for hundreds of thousands of patients and their caregivers. Prosecutors say the arrangement let a favored contractor pocket millions in unauthorized taxpayer money while the public was told the change would be seamless, even as caregivers went unpaid and thousands of beneficiaries remained unregistered.
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