The Department of Health and Human Services Office of Inspector General (HHS-OIG) has formally denied the recertification of the New York State Medicaid Fraud Control Unit (MFCU) and suspended its federal funding effective July 1, 2026.
According to HHS-OIG’s findings, New York’s MFCU—despite receiving roughly $60 million in federal funding each year and employing more than 270 staff—has repeatedly produced the lowest levels of criminal Medicaid fraud enforcement among large states.
In fiscal years 2023 and 2025, the Unit secured only eight to nine criminal indictments annually, while other states of similar size produced results numbering in the hundreds. Over that same period, the Unit obtained just four convictions involving patient abuse or neglect, despite receiving more than 2,000 such referrals each year.
HHS-OIG also identified long-standing issues that contributed to these outcomes, including slow case progression, a significant backlog in investigations, and systemic referral and tracking deficiencies under New York Attorney General Letitia James.
In response to these persistent gaps, the U.S. Attorney’s Office for the Northern District of New York, along with its partners in the Northern District of New York Healthcare Fraud Task Force, has continued to expand its federal enforcement efforts involving Medicaid fraud, patient abuse, and related offenses to protect program integrity and ensure accountability.
Statement on Federal Decertification of the New York Medicaid Fraud Control Unit
— U.S. Attorney NDNY (@NDNYnews) July 2, 2026
The Department of Health and Human Services Office of Inspector General (HHS-OIG) has formally denied the recertification of the New York State Medicaid Fraud Control Unit (MFCU) and suspended its… pic.twitter.com/1yD0WqQXs3
“Attorney General James’ apparent inability to explain the New York MFCU’s indefensible criminal enforcement performance is not a political distraction as she puts it,” said First Assistant U.S. Attorney John A. Sarcone III. “Instead, based on its own reported statistics, the New York MFCU—despite having a staff of 272 employees and a $60 million budget—has failed to address public benefits crime in any meaningful way. According to the data the unit is required to report to the HHS‑OIG for annual recertification, the New York MFCU averaged only nine criminal indictments per year from 2021 to 2025. Yet between 2016 and 2018—just prior to Ms. James taking office—the unit averaged more than 100 indictments per year.”
Sarcone continued, “Public benefits fraud and Medicaid fraud did not abruptly stop in 2019. Instead, under the failed leadership of AG James, criminal Medicaid fraud in New York State has been ignored. Highlighting civil recovery data—figures that may or may not combine New York’s results with those of other states to create an impression of financial success—only serves to gloss over and obscure the unit’s dramatic failure to enforce criminal law. Rather than spending resources ‘assessing legal options,’ the New York MFCU would better fulfill its mandate by focusing on investigating and prosecuting crime, as it is both required and funded to do.”
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