Letitia James hammered after NY Medicaid fraud unit funding frozen over ineffective enforcement
new York Attorney General Letitia James is facing renewed criticism from Republicans after the Trump administration suspended federal funding for the state’s Medicaid Fraud Control Unit (MFCU), citing years of poor sentencing performance and leadership decisions that federal officials say have outpaced fraud investigations.
The federal action gives Republicans a new line of attack against James, who is campaigning for re-election. Her Republican opponent, Saritha Komatireddy, has made the state’s tough Medicaid Fraud Control Unit a key issue in the race, arguing that James has failed to aggressively prosecute fraud. The findings of federal watchdogs now lend new weight to these allegations.
“Letitia James destroyed New York’s Medicaid Fraud Unit, and now we know why: a deliberate leadership choice to open fewer cases and let those cases drag on for years,” Komatireddy said in a statement to Fox News Digital.
“This means New York taxpayers are losing their hard-earned money to scammers, the sick and the elderly are being harmed or neglected, and no one is holding them accountable.”
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The Republican Attorneys General Association also objected to the funding freeze, arguing that it reflected broader differences between Republican and Democratic attorneys general in fighting fraud.
“While Republican attorneys general are aggressively fighting fraud, waste, and abuse, Democratic AGs like Keith Ellison in Minnesota and Letitia James in New York are knowingly aiding and abetting fraud and fraud in their states,” RAGA Executive Director Adam Piper said in a statement. he said.
“Republican AGs are excited to roll up our sleeves and work with J.D. Vance, Republican AG staff Andrew Ferguson, Scott Brady, and the White House Task Force to save taxpayers billions of dollars and ensure maximum accountability.”
GOP candidate Saritha Komatireddy for New York Attorney General blasted AG James for failing to adequately investigate and prosecute Medicaid fraud.
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In a June 30 letter denying the unit’s annual recertification, Health and Human Services said Office of Inspector General (OIG) officials concluded that New York’s Medicaid Fraud Control Unit has become the lowest-performing large state agency in the nation for criminal Medicaid fraud enforcement, despite receiving nearly $60 million annually in federal funding and employing more than 270 staff members.
“New York MFCU does not effectively prosecute criminal Medicaid fraud,” the letter said. “The Unit reported just 53 fraud convictions from 2023 to 2025. This is by far the lowest rate among Units of similar size, while the lowest number of fraud convictions reported for this period was 129.
“That’s enough.”
The report also noted that New York ranked last in criminal indictments, with fewer than 10 alleged fraud charges in four of the last five years.
Federal officials also found that 34% of the unit’s open cases were more than three years old, while 69% of referrals from the state’s Medicaid Program Integrity Unit remained pending for at least two years, contributing to the growing backlog of investigations.
The HHS letter concluded that the unit’s poor performance was largely due to: ““A deliberate leadership choice to prioritize high-impact civil fraud cases over criminal prosecutions,” finding that the strategy left the office ineffective at pursuing criminal Medicaid fraud despite its size and resources.
While federal officials acknowledged that the state’s fraud unit remains competitive in civil recovery, they said those results did not outweigh the decline in criminal penalties.
“The unit sacrificed its ability to effectively combat criminal fraud to obtain civil damages that were largely in line with its peers,” the report said.
James reacted to the funding freeze by accusing the Trump administration of targeting New York for political reasons.
“This administration’s unprecedented attack on New York is yet another political distraction,” James said in a statement to Fox News Digital. “During my time as attorney general, my office has raised more than $627 million for Medicaid and has been recognized by this administration as leading the nation in anti-fraud efforts.”
James’ office noted that HHS singled out New York as one of four states responsible for half of civilian recoveries nationwide. fiscal year 2025. The attorney general also noted several recent Medicaid fraud cases, including multimillion-dollar fraud cases announced in recent weeks.
“The only people this decision benefits are the criminals we investigate every day,” James said. “We are considering all legal options to stop this outrageous act.”
Meanwhile, federal prosecutors in New York said they were expanding the investigation. Investigate Medicaid fraud and patient abuse.
First Assistant U.S. Attorney John A. Sarcone III, who spearheaded the NDNY revival, said, “Attorney General James’ apparent inability to explain the New York MFCU’s indefensible criminal enforcement performance is not, as he has stated, a political distraction.” Healthcare Fraud The Task Force said in a statement.
Sarcone noted that New York MFCU received an average of just nine criminal complaints per year between 2021 and 2025, compared to more than 100 criminal complaints per year during the three years prior to James’ tenure.
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“Public benefit fraud and Medicaid fraud did not suddenly stop in 2019,” Sarcone added. “Instead, under AG James’ failed leadership, criminal Medicaid fraud in New York State has been ignored.”
The suspension went into effect July 1 and will remain in effect until Sept. 30 unless New York completes a series of corrective actions ordered by HHS, including reducing the backlog of cases, increasing criminal indictments and improving coordination with federal investigators. If these deficiencies are not corrected, the Office of Inspector General has warned New York that it could lose its federal Medicaid Fraud Control Unit grant for fiscal year 2027.
Original article source: Letitia James takes a hit after NY Medicaid fraud unit funding is frozen over ineffective enforcement
