New York Attorney General Faces Criticism Over Medicaid Fraud Unit

New York Attorney General Letitia James has come under fire from Republicans following the Trump administration’s decision to cut federal funding to the state’s Medicaid Fraud Enforcement Unit (MFCU). Federal officials argue that the investigation into Medicaid fraud has stalled due to a history of poor leadership and ineffective enforcement.

This federal action has given Republicans new talking points as James campaigns for re-election. Her Republican opponent, Saritha Komatireddy, has made the performance of the Medicaid Fraud Enforcement Agency a central issue, claiming that James has not done enough to combat fraud effectively. The recent findings from federal oversight bodies bolster these criticisms.

“Letitia James has weakened New York’s Medicaid fraud unit, leading to fewer cases and years-long delays,” Komatireddy said in a statement. “As a result, tax dollars are being lost to fraud, and vulnerable populations are being overlooked without accountability.”

The Republican Attorneys General Association also highlighted this funding freeze, suggesting it illustrates a fundamental divide between Republican and Democratic attorneys general concerning fraud prevention.

“While Republican attorneys general are committed to fighting fraud and waste, Democrats like Keith Ellison in Minnesota and Letitia James in New York are actively enabling these issues,” RAGA Executive Director Adam Piper stated. “Republican AGs look forward to collaborative efforts to protect taxpayer money and enhance accountability.”

On June 30, the Health and Human Services Office of Inspector General (OIG) issued a letter denying the department’s annual recertification, describing New York’s Medicaid Fraud Enforcement Division as the worst-performing large division in the nation. This comes despite receiving around $60 million in federal funding annually and employing over 270 individuals.

The letter noted, “New York MFCU has not effectively prosecuted any Medicaid fraud crimes,” reporting only 53 fraud convictions from 2023 to 2025—the lowest among similar agencies, with the next lowest at 129. It also mentioned that in the past five years, New York ranked last in criminal prosecutions, and many cases have languished unresolved.

Federal authorities found that 34% of cold cases within the department are over three years old, and 69% of referrals from the state’s Medicaid Program Integrity Division have remained unresolved for at least two years, causing a significant backlog of investigations.

According to the OIG, these failures stem from leadership decisions that prioritized civil fraud cases at the expense of criminal prosecutions, making the office ineffective in addressing Medicaid fraud.

Though federal officials acknowledged some effectiveness in civil collections, they emphasized that this does not counterbalance the decline in criminal enforcement efforts. “The unit sacrificed its ability to effectively combat criminal fraud to achieve civil recoveries similar to its peers,” stated the report.

James responded to the funding cut by accusing the Trump administration of politicizing the issue, claiming, “This administration’s unprecedented attack on New York is yet another political turmoil.” She pointed out that her office has recovered over $627 million in Medicaid funds and has been recognized as a leader in anti-fraud efforts.

Her office mentioned that HHS designated New York as one of four states responsible for half of the civil recoveries nationwide in fiscal year 2025. Recently, James also highlighted several significant Medicaid fraud cases her office has pursued.

“The only ones who will gain from this decision are the criminals we strive to investigate,” she commented. “We’re exploring all legal avenues to counter this unacceptable action.”

Federal prosecutors in New York are also ramping up their investigation into Medicaid fraud and patient abuse concerns. Assistant U.S. Attorney John A. Sarcone III, leading the Healthcare Fraud Task Force, addressed the ineffective enforcement record of the New York City MFCU, emphasizing that the number of criminal charges declined dramatically under James’ leadership.

“Fraud didn’t just stop in 2019, but under Secretary James, it has been largely ignored,” Sarcone remarked.

A moratorium on funding took effect on July 1 and will last until September 30 unless New York addresses a series of mandated improvements, including reducing the case backlog and increasing criminal prosecutions. Failure to make these changes could jeopardize future federal funding for the MFCU in fiscal year 2027.