The U.S. Justice Department has filed a lawsuit against New York state officials, alleging they failed to stop a fraud scheme that generated millions of dollars in unauthorized profits funded by federal taxpayers through the takeover of New York’s $10 billion CDPAP program.

The complaint names former Health Commissioner James McDonald and Medicaid Director Amir Bassiri as having been charged in connection with a Medicaid fraud scheme. It alleges Governor Hochul’s administration rigged the transition of CDPAP services for Public Partnerships, LLC (PPL), allowing the company to siphon millions more than its contract allows.

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.”

Internal emails obtained by the Justice Department reveal that New York health officials wrote they were under “pressure from the Governor’s Office” as they vetted potential bidders for the CDPAP contract. When PPL requested an extension of the transition timeline from three months to nine months, state health officials refused to extend it.

The lawsuit further alleges that the governor’s office actively downplayed the severity of the transition disaster, causing thousands of disabled New Yorkers to face severe customer service issues while attempting to keep their caregivers paid.

The Justice Department claims PPL and New York repeatedly made knowing misrepresentations about the completion date of the CDPAP transition, intentionally concealing that the program would not be complete by April 1, 2025—the contractually designated transition date—and would result in severe disruptions to patient care. As a result, millions of dollars were siphoned from federal Medicaid funds without proper oversight.