Justice Department sues New York over Medicaid home care ‘fraud scheme’

June 17, 2026 - 17:18

The U.S. Justice Department has filed a lawsuit against the New York State Department of Health, the state's Medicaid director, and a company that operates a massive home health program. The suit targets what federal officials describe as a fraudulent scheme within the state's $10 billion home care system.

According to the complaint, the state allowed a private company to improperly bill Medicaid for services that were not medically necessary or were never provided. The program, which provides in-home care for elderly and disabled residents, has been under scrutiny for years over its ballooning costs and lack of oversight. Federal prosecutors argue that New York officials knowingly permitted the company to exploit loopholes, resulting in hundreds of millions of dollars in improper payments.

The lawsuit alleges that the state's Medicaid director failed to stop the fraud despite repeated warnings from auditors and whistleblowers. The Justice Department is seeking to recover the misspent funds and impose penalties. New York State officials have defended the program, arguing that it provides essential care and that the federal government is overstepping its authority. The case is expected to set a precedent for how states manage federally funded home care programs.