The U.S. Department of Justice has filed a lawsuit alleging that New York’s Consumer Directed Personal Assistance Program (CDPAP) transition to a single fiscal intermediary was part of a fraud scheme that raided the state’s Medicaid program for millions of dollars.

The lawsuit, filed Tuesday, alleges that the New York Department of Health selected Public Partnerships LLC (PPL) as CDPAP’s single fiscal intermediary as part of a sham bid process and that the deal funneled millions of dollars of extra revenue to PPL.

“New York’s backroom deal with PPL has cost taxpayers millions of dollars and cast countless Medicaid patients to the curb,” Assistant Attorney General Colin M. McDonald for the Justice Department’s National Fraud Enforcement Division said in a statement. “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.”

The case is a civil complaint seeking injunctive relief.

PPL, an Alpharetta, Georgia-based financial management services company, was awarded the contract to be the sole administrator of the CDPAP program in October 2024. CDPAP’s transition to a single fiscal intermediary was fraught on several fronts, including a class action lawsuit, several registration deadline extensions, the resignation of the company’s president and a restraining order. 

A PPL spokesperson told Home Health Care News in a statement that the company strongly disagrees with the characterizations in the lawsuit and will respond fully through the appropriate legal process.

“Public Partnerships LLC (PPL) was selected through a transparent, competitive process to strengthen and modernize New York’s CDPAP program, and we are proud of our work to deliver greater accountability, consistency and support for the hundreds of thousands of New Yorkers who rely on it,” the statement read. “We have worked alongside the New York State Department of Health throughout the transition and at every step cooperated transparently with our state partners. We are proud of what we have achieved with the State of New York and stand by our performance.”

The lawsuit names PPL, Dr. James McDonald in his official capacity as the commissioner of the New York State Department of Health and Amir Bassiri, individually and in his official capacity as Medicaid Director at the New York State Department of Health.

In a statement shared with HHCN, New York’s Department of Health called the lawsuit baseless and inexcusable, and said it is an attempt by Washington Republicans to score political points.

“The fact of the matter is this administration saved CDPAP from a fiscal crisis by removing hundreds of wasteful administrative middlemen,” the statement read. “In the process, we reduced costs for state and federal taxpayers while protecting home care for those who need it. As the courts have confirmed, this was accomplished through a fair and legally sound competitive bidding process.”

The allegations

The DOJ’s complaint alleges that PPL made false statements about costs, readiness and transition progress and used the program to extract improper profits while causing disruptions to caregivers and medically vulnerable patients.

It also alleges that New York and PPL rigged the procurement process, and that PPL was effectively chosen before the formal procurement process even began.

The DOJ alleged that PPL won its contract by making false or misleading statements, including that the company’s workforce was not made up of qualified administrative professionals, but call center temp workers. The suit also alleges that PPL touted its in-house software, called PPL@Home, in its bid – but that PPL only created the software after it submitted its bid and that it would ultimately be “rife with glitches and breakdowns.” The DOJ also alleged that PPL misrepresented its finances, and did not in fact have the financial capital structure to support the startup costs associated with the CDPAP contract.

The selection process has been questioned previously. In December 2024, Congressman Ritchie Torres (NY-15) wrote a letter to the Inspector General of New York and the Inspector General of the United States Department of Health and Human Services, suggesting that “the Hochul Administration had all but chosen PPL to be the statewide [fiscal intermediary] for CDPAP long before issuing an [request for proposal].” Lawmakers have also introduced legislation to allow the creation of more fiscal intermediaries. 

The DOJ’s complaint also alleges that PPL used the program to extract improper profits while causing disruptions to caregivers and medically vulnerable patients. According to the lawsuit, PPL played an “hourly rate game” that allowed it to siphon as profits a small percentage of the cost of each hour of care.

“Because CDPAP bills approximately 350 million hours of care to New York each year, even taking a few cents per hour as revenue would mean tens of millions of dollars in ill-gotten gains,” the suit reads.

Further, the DOJ alleged that systemic failures in PPL’s operations led to widespread financial distress for caregivers and forced some patients into institutionalized settings against their will.

“Caregivers have worked without paychecks or abandoned their existing livelihoods after going unpaid under PPL’s management,” the suit reads. “Many caregivers have received materially lower pay under PPL than they previously received for their CDPAP services, or received paychecks from PPL that did not compensate them for all the hours they worked. Many patients lost their ability to continue to receive care from the caregivers of their choosing, or to receive care within the dignified confines of their own homes. Many were shunted into nursing homes or separated from their family caregivers as a result.”

Additionally, the suit alleges that PPL and New York’s Department of Health orchestrated a coverup of the fraud scheme, “peddl[ing] falsehoods” to hide the scope and nature of pre-bid award coordination.

The suit’s aims

The government is seeking a permanent injunction, a freeze on certain PPL funds and the possible appointment of a receiver.

According to the complaint, the injunction is necessary to stop the Department of Health and PPL from “making false statements and misrepresentations related to CDPAP, to stop PPL’s siphoning of funds from the federal coffers and to unwind the damage DOH and PPL have already caused through these violations of federal law.”

The government asked the court to freeze certain PPL funds based on information included in the company’s cost proposal, which indicated that PPL would accept a $68.50 per-member, per-month payment for the life of the contract as its sole compensation for running the CDPAP program, according to the suit. The freeze would extend to any funds beyond the $68.50 per-member, per-month payment and any amounts that have flowed to caregivers, such as the money PPL obtains as the difference between the amount it receives from the MCOs and the amounts it pays its caregivers.

The Civil Division’s Enforcement and Affirmative Litigation Branch investigated the case. Assistant Director Patrick Runkle and Trial Attorneys Francisco Unger and Shimeng Zhang are litigating the case.