The feds sued Gov. Kathy Hochul’s administration Tuesday, claiming officials rigged a bid on an $11 billion Medicaid homecare program – allowing a handpicked company to “siphon” millions in taxpayer money.

The suit from President Trump’s Department of Justice lays out startling new claims supporting allegations that top state health officials schemed to consolidate payroll services for nearly 250,000 homecare recipients.

Public Partnerships LLC was brought in to replace middlemen in the Consumer Directed Personal Assistance Program, or CDPAP, in a move the state claimed would save costs in 2024 – but led to a disastrous transition.

“New York’s failure to police a favored vendor that unlawfully siphoned millions of dollars of Medicaid funding is egregious and betrays the public trust,” Brett A. Shumate, assistant attorney general for the Department of Justice’s Civil Division, said in a statement.

“The Justice Department is acting to ensure that federal laws regarding truthful statements and fair dealing in federal health care programs are upheld and to prevent additional harm from being exacted against the public by PPL and New York,” Shumate added.

The state ignored warning signs that the transition would be chaotic as PPL took over CDPAP, a program that pays friends and family members – rather than traditional home health aides – to care for chronically ill or disabled individuals.

The suit names state Health Commissioner James McDonald and Medicaid Director Amir Bassiri but a 60-page complaint filed in US District Court for the Eastern District of New York doesn’t directly accuse Hochul of any wrongdoing.

But the complaint does include emails between the health department and the stumbling company PPL that show the Democratic governor was actively involved in not only the transition process, but also the awarding of the bid to the company.

The suit claims New York health officials wrote that they were under “pressure from the Governor’s Office” as they vetted other potential bidders in emails to health officials from other states.

PPL later secured the bid but proposed extending the timeline for CDPAP recipients and caregivers to transition to the new system – asking to stretch the requirement from three months to nine months as it scrambled to hire staff.

But Hochul’s office refused to extend the timeline according to internal emails from a state health department “principal” included in the complaint.

“I wanted to give you a heads up that Chamber is coming in hard on the [Statewide Fiscal Intermediary] launch, they really aren’t entertaining options to move off of a path that gets this done by 4/1,” the staffer wrote. “We will not be advancing statutory or regulatory changes [to extend the CDPAP transition timeframe] at this time.”

Over the next few months, Hochul’s office was actively involved in downplaying the seriousness of the transition disaster as thousands of disabled New Yorkers spent hours dealing with horrible customer service problems while they tried to keep their caregivers paid.

On Jan. 13, 2025, a week after the transition window opened, only 43 of the 214,000 people in PPL’s system had completed, per PPL records unveiled in the lawsuits.

Three days later, McDonald wrote in a statement saying “the facts and data show that the transition is proceeding efficiently and effectively.”

The complaint also alleges PPL violated federal criminal healthcare fraud statutes, alleging it inflated its costs that are directly billed to Medicaid as well as the administrative rate it receives from the state in direct violation of its contract.

The company made what it described itself on an internal presentation as a “recklessly low bid,” purposely setting its administrative rate low enough that it would win, even if it wasn’t profitable, the feds said.

PPL banked on the Hochul administration helping it force healthcare plans into reimbursing it at a “direct care” rate higher than just the salaries and benefits for home health aides.

A request for proposals warned bidders that such a so-called “spread” would not be allowed.

The healthcare plans cried foul late last year when PPL ultimately followed through on its plan to hike the direct care rates.

“If PPL insists on its one-size-fits-all, non-negotiable rate, it will put at risk services to members and will undoubtedly undermine the very financial savings that the State projected,” the New York Health Plan Association wrote in a letter obtained by The Post.

The feds said the new lawsuit was a reminder that the DOJ “is mobilizing every available took to protect taxpayer-funded programs from fraud and corruption.”

“New York’s backroom deal with PPL has cost taxpayers millions of dollars and cast countless Medicaid patients to the curb,” Colin McDonald, assistant attorney general for the Justice Department’s National Fraud Enforcement Division, said in the complaint. 

Hochul spokesperson Kara Cumoletti dismissed the new revelations as a political attack from the Trump administration.

“This is just another sad attempt by the Trump administration to weaponize the justice system to attack political opponents in an election year,” the Hochul spokesperson wrote.

“As many courts have already held, the transition to a single fiscal intermediary was lawful and appropriate. We are confident the facts are on our side,” she continued.

Hochul is seeking her second full-term in office, facing Republican and Trump ally Bruce Blakeman in the November election.

The state Department of Health also dismissed the lawsuit as a “baseless” political move and asserted that the allegedly fraud-laden setup should be a “model” for DC/

“We look forward to the day where these disingenuous attacks can stop and our partners in Washington can look to New York as a model for how to improve to control costs and root out abuses while preserving and improving quality of care,” a spokesperson said.