The federal government says New York rigged a $10 billion Medicaid contract, hid the fallout from the public, and let a favored company pocket millions in unauthorized taxpayer money.
At the center of the lawsuit is CDPAP, a Medicaid program that allows elderly and disabled New Yorkers to hire their own caregivers, often family members. More than 200,000 people depend on it.
When Governor Kathy Hochul’s team consolidated hundreds of smaller administrators into a single statewide contractor, state law required a competitive bid. According to prosecutors, the winner had been picked before the competition began.
A draft budget proposal from April 2024 would have simply named Public Partnerships LLC (PPL) as the statewide contractor. Lawmakers rejected that and instead required a procurement process.
Prosecutors allege it didn’t matter.
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State officials were already treating PPL as the presumptive choice while the legislation was still being finalized, and the complaint describes the resulting bid as a “sham process” that delivered the contract to PPL anyway.
PPL’s bid was built around a number the company internally described as “recklessly” low. According to the filing, PPL planned to win the contract first, then make up the difference through billing arrangements explicitly forbidden under the deal — what prosecutors call an “hourly rate game.” The contract required PPL to be paid a flat administrative fee.
Instead, prosecutors allege, PPL took a cut of every hour of care billed to Medicaid.
With roughly 350 million hours billed annually, even a few cents per hour adds up to tens of millions of dollars.
Other bidders priced the contract honestly under the rules; PPL didn’t.
PPL also sought nine months to move more than 200,000 patients and caregivers into the new system. The state gave it three.
The Governor’s Office killed any discussion of an extension:
“We will not be advancing statutory or regulatory changes at this time.”
Officials then told the public everything was fine.
A company script directed staff to say:
“The only thing that is changing about CDPAP is that PPL will now be the company doing payroll.”
The enrollment numbers told a different story.
After the first week of the transition, only 43 out of roughly 214,000 participants had completed enrollment.
A state email confirmed only 112 consumers and caregivers had finished registration.
Caregivers went unpaid.
Patients lost access to people who had cared for them for years.
Some were placed in nursing homes.
The complaint alleges Hochul’s office directed health officials not to disclose those numbers, instead instructing them to report the much larger figure of people who had merely “started” the process.
By March 15, only 107,534 patients had registered.
Two weeks later, after the registration deadline had passed, more than 97,000 were still listed as “Not Started.”
“New York’s backroom deal with PPL has cost taxpayers millions of dollars and cast countless Medicaid patients to the curb,” said Assistant Attorney General Colin McDonald.
Hochul’s administration calls the lawsuit baseless and says the transition reduced costs while protecting care for vulnerable New Yorkers.
The complaint is 57 pages of emails, enrollment reports, and internal communications that tell a very different story.
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