The U.S. Department of Justice has entered a federal lawsuit involving New York’s Medicaid program, and a court has issued a preliminary injunction to safeguard beneficiaries receiving personal care and home care services.
What happened
In Engesser v. McDonald, Medicaid beneficiaries and two independent living centers sued the New York Department of Health (NY DOH), claiming that changes in the Consumer Directed Personal Assistance Program (CDPAP) jeopardized access to critical care. The plaintiffs alleged that missteps and misrepresentations during the Statewide Fiscal Intermediary (SFI) transition led to service disruptions and placed them at risk of institutionalization.
On April 9, 2025, the DOJ filed a Statement of Interest, asserting that the U.S. has a stake in whether the NY DOH complied with Medicaid laws and patient data privacy. One day later, on April 10, 2025, a court approved a jointly proposed Preliminary Injunction (PI), outlining a tiered system to ensure ongoing care for affected individuals.
The backstory
The lawsuit stems from a transition initiated by the NY DOH that affected how personal care assistants (PAs) are employed and paid. The plaintiffs say the process caused instability, forcing some PAs to leave their roles and leaving vulnerable patients without care.
A temporary restraining order (TRO) issued on March 31, 2025, sought to prevent further disruption. As the case progressed, parties negotiated the terms of a more permanent measure, culminating in the PI Order entered in April.
Going deeper
The Preliminary Injunction Order categorizes beneficiaries and caregivers into three groups:
- Category A: Fully registered consumers with fully onboarded PAs—PAs must be paid retroactively by PPL.
- Category B: Fully registered consumers with not fully onboarded PAs—PAs may be paid by the previous fiscal intermediary (FI) if criteria are met.
- Category C: Consumers not fully registered—PAs may still be paid by the prior FI under certain conditions. NY DOH must ensure direct outreach to these consumers by April 15.
The order remains in effect through June 6, 2025.
What was said
In its Statement of Interest, the DOJ wrote: “Plaintiffs credibly allege that this transition process has burdened vulnerable CDPAP patients and threatened their ability to maintain critical care.” The DOJ further stated: “The interests of the United States relate to whether the NY DOH is complying with federal law governing the provision of Medicaid services… [and] whether privacy-protected patient data is being shared without patient consent.”
Additionally, the DOJ emphasized its role in ensuring: “Fair treatment and continued, uninterrupted, and critical care for the thousands of vulnerable New Yorkers.”
In the know
The Consumer Directed Personal Assistance Program (CDPAP) allows Medicaid recipients to hire and manage their own caregivers, often family members. The shift to a new statewide intermediary (PPL) was meant to streamline services but instead disrupted employment and payment systems for thousands.
Fiscal intermediaries (FIs) are third-party entities that handle administrative tasks like payroll for these caregivers. With the state now consolidating these services under one intermediary, many caregivers and beneficiaries have found themselves lost in bureaucratic limbo.
Why it matters
This case directly impacts thousands of Medicaid beneficiaries in New York who rely on the CDPAP program to live independently at home rather than being institutionalized. The NY DOH’s transition to a new fiscal intermediary model disrupted how caregivers are hired and paid, jeopardizing continuity of care for vulnerable individuals.
The DOJ’s involvement highlights concerns about state-level mismanagement that may violate federal Medicaid law, mislead beneficiaries, and compromise patient privacy. The court’s injunction serves as a safeguard against immediate harm while the broader legal and policy implications are examined. If left unchecked, similar transition processes in other states could also result in widespread service disruptions.
The bottom line
The DOJ’s involvement sends a message that transitions within federally funded healthcare programs must comply with both due process and privacy laws. Agencies and intermediaries alike should proactively review their procedures to ensure uninterrupted care and compliance.
FAQs
What is a Statement of Interest from the DOJ?
A Statement of Interest is a legal filing where the DOJ shares its views on legal issues in a case it is not a party to but has a strong federal interest in.
Who is PPL and what is their role in this transition?
PPL (Public Partnerships LLC) was selected as the sole statewide fiscal intermediary responsible for handling payroll and administrative services for CDPAP.
What criteria determine if a consumer is considered "fully registered"?
A fully registered consumer is one who has completed all enrollment and onboarding steps required by PPL or the NY DOH under the new SFI model.
What happens after the Preliminary Injunction expires on June 6, 2025?
Unless extended, the parties may need to renegotiate new terms or proceed to trial while the court evaluates the permanent resolution.
How are caregivers being paid during the injunction period?
Depending on the consumer’s category, caregivers are either paid by PPL or by their previous fiscal intermediaries under specific conditions.
