ALBANY – A legal storm is brewing for Governor Kathy Hochul’s administration as the U.S. Department of Justice prepares to initiate a lawsuit over the controversial overhaul of New York State’s Medicaid homecare program. This lawsuit targets potential malpractices in the revamp process, as The Post has learned.

According to three insiders with knowledge of the DOJ’s ongoing investigation, the formal complaint, expected in the coming weeks, will focus both on Hochul’s administration and the company pivotal to the $11 billion program’s transformation. Central to the investigation are allegations of bid rigging and possible violations of Medicaid billing regulations.

This federal inquiry follows a probe by state Senators last year, which unearthed various issues with the homecare system. It underscores the broader concerns about the integrity of the program’s restructuring, particularly regarding compliance and transparency in the bidding process.

Simultaneously, 1199SEIU, a powerful healthcare union, is advancing its efforts to unionize thousands of home health aides working under this taxpayer-supported initiative. The union had previously advocated for a significant overhaul of the Consumer Directed Personal Assistance Program (CDPAP), which allows aides to care for family members at home.

In 2024, Hochul embarked on reforming CDPAP, citing widespread fraud and abuse as motivation. Her strategy involved streamlining the payment process by moving from a network of numerous intermediary firms to a sole company responsible for payroll services.

However, the transition has been fraught with controversy. Accusations have emerged that the selection process was biased, favoring Public Partnerships LLC (PPL), the company that secured the lucrative $1 billion contract. These allegations have placed Hochul’s administration under intense scrutiny as the DOJ steps in to untangle the complexities of this high-stakes Medicaid program overhaul.

Damning emails unearthed by the Empire Center for Public Policy Tuesday show top officials at the state Department of Health and in Hochul’s office hashed out details of the job with PPL employees — two weeks before state lawmakers even signed off on soliciting bids for the contract.

“We appreciate the opportunity to speak with you over the last few days. As discussed during this morning’s call, PPL is in the process of drafting a recommended implementation plan,” a PPL employee wrote in a 2024 email to state Medicaid Director Amir Bassiri and Medicaid Chief Operating Officer Amanda Lothrop, amid several meetings between the firm and top health officials at the time.

Bassiri would later be one of the individuals involved in scoring the contract bids, according to sources familiar with the process.

Angela Profeta, Hochul’s deputy secretary for health, was also looped in on the conversations, according to the emails obtained by the Empire Center.

A week after that email was sent — and still before the state budget deal involving the sweeping changes to CDPAP’s payment structure had been finalized — The Post previously reported that Hochul was trying to hand the contract to PPL. 

A rep for PPL told lawmakers during a blockbuster hearing in August that the company had no conversations with the Hochul administration before submitting its proposal for the job, then later rescinded that statement.

Patrick Runkle, assistant director of the DOJ’s Consumer Affairs branch, wrote in a court document in June that his team was also probing whether the rushed timeline to force aides and homecare recipients under PPL had violated consumer protection statutes.

Hochul has defiantly dug in on the CDPAP reboot – refusing to entertain extending the window for the transition to PPL last year and now doubling down that her changes have resulted in massive savings in New York’s exploding Medicaid spending.

“We saved over a billion dollars as a result,” state Budget Director Blake Washington said during a discussion with Citizens Budget Commission President Andrew Rein last week.

Hochul’s budget office hasn’t provided details to support its claim of $1 billion in projected savings, and the state still expects Medicaid spending as a whole to grow by a blistering 11% this year.

Hochul’s office declined to address the looming lawsuit or allegations it rigged the process in favor of PPL.

“Well before the Trump administration even took office, Governor Hochul was leading efforts to root out waste, fraud and abuse – including sweeping CDPAP reforms,” Hochul spokesperson Jonah Allon wrote in a statement.

A rep for PPL declined to say if the firm was cooperating with the federal investigation and maintained that its ultimate selection “followed a routine, lawful process.”

“When New York decided to transition CDPAP to a single fiscal intermediary to protect the program’s sustainability and save taxpayer dollars, PPL was an obvious contender as the national leader in consumer-directed care,” said PPL’s Vice President of Government Relations Patty Byrnes, the rep who retracted her statement to state senators.

The Department of Health and 1199SEIU didn’t respond to requests for comment.