The Justice Department 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 in connection with its takeover of New York’s $10 billion-dollar CDPAP program.”

“NY Health Commissioner James McDonald and Medicaid Director Amir Bassiri have been charged in connection with a Medicaid fraud being brought by the feds alleging the Hochul administration rigged the transition of CDPAP services for Public Partnerships, LLC and allowed the company to siphon millions more than it contract allows,” New York Post reporter Vaughn Golden said.

“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 M. McDonald for the Justice Department’s National Fraud Enforcement Division.

“Today’s action is the latest reminder that the Justice Department is mobilizing every available tool to protect taxpayer-funded programs from fraud and corruption,” McDonald added.

“One of the Justice Department’s key priorities is protecting the public fisc and delivering savings to American taxpayers,” said Assistant Attorney General Brett A. Shumate of the Justice Department’s Civil Division.

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“New York’s failure to police a favored vendor that unlawfully siphoned millions of dollars of Medicaid funding is egregious and betrays the public trust. The Justice Department is acting to ensure that federal laws regarding truthful statements and fair dealing in federal health care programs are upheld and to prevent additional harm from being exacted against the public by Public Partnerships LLC and New York,” Shumate continued.

More from the New York Post:

The suit names state Health Commissioner James McDonald and Medicaid Director Amir Bassiri but a 60-page complaint filed in US District Court for the Eastern District of New York doesn’t directly accuse Hochul of any wrongdoing.

But the complaint does include emails between the health department and the stumbling company PPL that show the Democratic governor was actively involved in not only the transition process, but also the awarding of the bid to the company.

The suit claims New York health officials wrote that they were under “pressure from the Governor’s Office” as they vetted other potential bidders in emails to health officials from other states.

PPL later secured the bid but proposed extending the timeline for CDPAP recipients and caregivers to transition to the new system – asking to stretch the requirement from three months to nine months as it scrambled to hire staff.

But Hochul’s office refused to extend the timeline according to internal emails from a state health department “principal” included in the complaint.

“I wanted to give you a heads up that Chamber is coming in hard on the [Statewide Fiscal Intermediary] launch, they really aren’t entertaining options to move off of a path that gets this done by 4/1,” the staffer wrote. “We will not be advancing statutory or regulatory changes [to extend the CDPAP transition timeframe] at this time.”

Over the next few months, Hochul’s office was actively involved in downplaying the seriousness of the transition disaster as thousands of disabled New Yorkers spent hours dealing with horrible customer service problems while they tried to keep their caregivers paid.

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“CDPAP is a Medicaid program that provides home care through lay caregivers to Medicaid patients with disabilities or significant medical needs. In spring 2024, the New York Legislature passed a statute that consolidated the management of CDPAP from hundreds of pre-existing ‘fiscal intermediaries’ to a single fiscal intermediary, setting up one of the most lucrative contracts for administering a Medicaid program in the nation,” the Justice Department stated in a press release.

“The lawsuit alleges that although New York purported to conduct a fair bidding process to select the single fiscal intermediary during summer 2024, New York pre-selected PPL for the billion-dollar contract by conducting a sham bid process that resulted in PPL being awarded the contract in late 2024,” it continued.

Cont. from the Justice Department:

The lawsuit further alleges that PPL and New York repeatedly made knowing misrepresentations to the public concerning the date by which PPL’s transition could be completed, intentionally concealing that, since the contract’s inception, both PPL and New York were aware that the transition would likely not be complete by April 1, 2025 – the contractually designated transition date – and would result in severe disruptions to patient care and harm to patients across the state. Worse yet, PPL and New York, without explanation, have disregarded key limits the contract imposed on the revenues and profits PPL was entitled to receive under the contract – limits that were central to the goal of saving hundreds of millions of dollars through the CDPAP transition.

Instead of ensuring that PPL complied with the contract and protecting the American taxpayers, New York has permitted PPL to raid the CDPAP program of millions of dollars in excess revenues, billing at hourly rates in excess of those anticipated by New York prior to the contract award. As a result of PPL’s self-dealing and New York’s failure to require it to comply with the terms of the contract, the purported cost savings that the CDPAP transition was to provide largely have been erased. To date, New York and PPL repeatedly and willfully have misled the public and the New York Legislature concerning important aspects of the CDPAP transition, including, without limitation, the gross mismanagement of the program by PPL and New York.

 

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