The Justice Department filed a civil lawsuit on June 16, 2026, in the Eastern District of New York against the New York State Department of Health, state Medicaid Director Amir Bassiri, and Public Partnerships LLC, a Georgia-based fiscal intermediary, alleging a coordinated fraud scheme tied to New York's Consumer Directed Personal Assistance Program [1]. The suit claims the defendants manipulated a $10 billion state Medicaid contract and disrupted home-care services for more than 200,000 patients [1][2]. As extraordinary relief, DOJ asks the court to appoint a federal receiver over Public Partnerships LLC [1].
The Consumer Directed Personal Assistance Program, known as CDPAP, allows Medicaid-eligible patients in New York to hire and direct their own home-care aides [2]. The DOJ complaint alleges that Public Partnerships LLC, headquartered in Alpharetta, Georgia, was pre-selected for the CDPAP fiscal intermediary contract through a sham competitive bidding process, then billed at artificially inflated rates [1][3]. The department invokes the False Claims Act as the statutory basis for the action, framing the conduct as a scheme to defraud the federal Medicaid program, which co-funds CDPAP alongside New York State [1]. Colin M. McDonald is identified in connection with the matter in court filings [1].
Politically, the lawsuit landed in an already adversarial posture between the federal government and Albany. Governor Kathy Hochul publicly dismissed the suit as politically motivated, signaling the state intends to contest the allegations rather than negotiate a prompt resolution [2][3]. The receivership request sharpens the stakes: if granted, a court-appointed receiver would assume operational control of Public Partnerships LLC, displacing state-sanctioned management of a contractor currently processing payments for a program serving hundreds of thousands of vulnerable New Yorkers [1].
The case now proceeds in the Eastern District of New York, where DOJ will need to establish both the merits of the False Claims Act claims and the grounds for the unusual receivership remedy [1]. New York State's anticipated motion practice challenging the suit's legal and political premises will set the near-term litigation calendar. Federal courts have granted receiverships over government contractors in prior fraud cases, but the scale of CDPAP and the direct involvement of a state health agency make this filing procedurally distinct [1][2]. The outcome will carry significant implications for how federal authorities can intervene in state-administered Medicaid programs when they allege ongoing fraud [2][3].