DOJ Slams New York’s $10B Medicaid Gambit

A stethoscope next to a puzzle piece labeled 'Medicaid'

The Trump Justice Department has dropped a bombshell lawsuit accusing New York’s Democrat power structure of using a sham bid to steer a $10 billion Medicaid homecare contract to a handpicked firm and milk federal taxpayers.

Story Snapshot

Justice Department alleges New York ran a “sham” bid to preselect Public Partnerships LLC for a $10 billion Medicaid homecare contract.
Federal lawyers say the scheme harmed disabled patients, caregivers, small businesses, and taxpayers while boosting a favored contractor’s profits.
The case targets New York’s Department of Health and its Medicaid director, not Governor Hochul personally, but focuses on her CDPAP overhaul.
New York officials and the contractor deny wrongdoing, calling the suit baseless and politically driven, despite prior warning signs and lawsuits.

What The New DOJ Lawsuit Says Happened In New York

The United States Department of Justice has filed a civil lawsuit in federal court accusing New York’s Department of Health and Medicaid Director Amir Bassiri of helping a Georgia company, Public Partnerships LLC, grab control of a $10 billion homecare program through a rigged bid process.^[14] Prosecutors say officials “pre-selected” the firm to run the Consumer Directed Personal Assistance Program, which pays family members and aides to care for disabled Medicaid patients at home.^[13] The suit claims the state’s so-called competition was a façade that shut out honest bidders and opened the door to abuse.^[15]

According to the Justice Department’s own filing, the state held a formal request for proposals in 2024 but had already decided Public Partnerships LLC would win and then ran the paperwork to match.^[14] The complaint says that after this “sham bid process,” the company became the sole “fiscal intermediary,” replacing hundreds of local agencies that had previously handled payroll and benefits for caregivers.^[15] Federal lawyers argue this setup funneled millions in extra revenue to the out-of-state company while many small and medium New York homecare businesses were pushed out of the market.^[12]

How Patients, Caregivers, And Taxpayers Were Allegedly Hurt

The Justice Department says this is not just a paperwork issue but a real-world disaster for vulnerable people.^[15] The lawsuit alleges the scheme “caused and continues to cause substantial harm” to thousands of Medicaid patients and their caregivers, as well as to small homecare firms and taxpayers who now foot a larger bill for worse service.^[12] Federal lawyers say Public Partnerships LLC billed at higher-than-promised hourly rates and blew past contract profit limits, erasing planned cost savings that were supposed to reach “hundreds of millions of dollars.”^[13]

On top of the money, Washington officials say New York and the contractor misled the public about how fast they could move everyone into the new system, even though they knew they would miss the April 1, 2025 transition deadline.^[14] The complaint claims both sides hid the likely delays and disruptions, which then showed up as payroll problems and gaps in care across the state.^[15] For families already struggling with disability and medical needs, that meant late paychecks, confusion, and fear that their loved ones might lose the caregivers they trust.^[12]

Hochul’s Overhaul, Earlier Red Flags, And The Denials

The lawsuit is aimed at the Department of Health and senior health officials, but it squarely targets Governor Kathy Hochul’s controversial decision to scrap hundreds of “middleman” agencies and hand the entire Consumer Directed Personal Assistance Program to one company.^[6] Critics had already raised alarms that the state appeared to favor Public Partnerships LLC, pointing to emails and draft legislation that mentioned the firm’s role even before lawmakers formally approved the bidding process.^[4] Other homecare companies sued in state court, claiming the bid was rigged against them.^[6]

New York health officials and Public Partnerships LLC reject the charges and insist the process was legal and fair.^[1] The Health Department has called earlier accusations of bid-rigging “blatantly false,” arguing it followed the standard procurement rules approved by the legislature and saying the single vendor model would cut waste and save over $1 billion.^[1] After the federal lawsuit was filed, state officials again labeled the case “baseless” and politically motivated, while the company said it was chosen through a transparent and competitive process.^[6]

Why This Fight Matters For Conservatives Across The Country

For years, watchdogs have warned that New York’s Medicaid system is plagued by weak oversight and improper payments, including tens of millions in bad managed long-term care reimbursements found by federal inspectors.^[19] The new Justice Department case fits a larger pattern where complex, union-backed health programs grow huge budgets, then hide behind red tape while insiders profit and taxpayers eat the losses.^[2] When a single politically connected contractor controls an entire $10 billion program, the risks to accountability, patient choice, and local providers only get worse.^[6]

🚨BREAKING: The DOJ just filed a lawsuit against Kathy Hochul’s admin, alleging it rigged the bidding on an $11 billion Medicaid homecare program.

I WARNED ABOUT THIS LAST YEAR

The bidding on the BIGGEST contract in NY history was insanely rigged and corrupt:

– The consulting… https://t.co/TN4wtyDr9j

— Libs of TikTok (@libsoftiktok) June 16, 2026

For conservatives, this lawsuit is a reminder of why strong federal oversight of blue-state machine politics still matters, even while we push for leaner, more honest government overall. Medicaid is funded by hardworking Americans in every state, not just New Yorkers. If the Justice Department proves New York and its chosen vendor abused a program meant for disabled patients, it will underscore how quickly big-government schemes can morph into patronage and profit at the expense of families, small businesses, and the rule of law.^[14]