The U.S. Department of Justice has filed a lawsuit against New York state officials, alleging they enabled a fraud scheme that generated millions in unauthorized profits from federal taxpayer funds tied to New York’s $10 billion CDPAP program.

According to the complaint, former NY Health Commissioner James McDonald and Medicaid Director Amir Bassiri were central to a scheme that allowed Public Partnerships LLC (PPL) to siphon millions beyond its contractual limits. The lawsuit claims the Hochul administration improperly facilitated PPL’s transition of CDPAP services, causing severe disruptions for thousands of disabled New Yorkers who lost critical caregiver support.

Assistant Attorney General Colin M. McDonald of the Justice Department’s National Fraud Enforcement Division stated: “New York’s backroom deal with PPL has cost taxpayers millions of dollars and cast countless Medicaid patients to the curb.” The complaint further reveals internal emails show state officials wrote they were under “pressure from the Governor’s Office” during bidding processes for CDPAP, while New York refused to extend the transition timeline despite warnings about systemic collapse.

The Justice Department alleges PPL and New York repeatedly misrepresented the completion date of the transition, intentionally concealing that the program would not be finalized by April 1, 2025—the contractually mandated deadline. This has left thousands without adequate care as they struggle with broken systems and unpaid caregivers.

In a press release, the Justice Department asserted: “New York purported to conduct a fair bidding process… but pre-selected PPL for the billion-dollar contract through a sham bid.” The suit details how PPL and New York disregarded contractual revenue limits, erasing potential savings while billing at hourly rates far exceeding projections. Internal communications indicate Governor Hochul’s office actively downplayed the crisis as thousands faced hours of customer service chaos.

The lawsuit names state Health Commissioner James McDonald and Medicaid Director Amir Bassiri but does not directly accuse Governor Hochul. However, emails reveal her office played a decisive role in the transition process, including rejecting PPL’s request to extend timelines from three to nine months while maintaining that statutory changes would not be made. The Department of Justice emphasized this case is part of its ongoing effort to protect taxpayer-funded programs from fraud and corruption.