Feds issue warning, saying New York failing to act on huge Medicaid fraud

The Centers for Medicare and Medicaid Services (CMS) announced Oct. 21 that it had issued New York a compliance warning letter over alleged failures to oversee its Medicare and Medicaid programs that provide daytime social activities to seniors, resulting in millions of dollars in fraud. The state has 30 days to respond and 90 days to comply.

“The governor needs to take a hard look and make hard decisions not around the margins,” said Dan Brillman, CMS director of Medicaid and deputy administrator, at an Oct. 21 press briefing reported on by the Daily Caller.

CMS audited 15 social adult day care centers and found billing for people who were not participants, according to CMS official Kim Brandt. One center filed claims for wheelchairs and disability aids that Brillman said couldn’t be located. An audit conducted January 2019 – October 2024 by New York’s Office of the Comptroller and published in February 2026 found similar problems. 

Adult social day care programs are supposed to “provide care and companionship for seniors who need assistance or supervision during the day,” according to the Federal Longterm Care Insurance Program.  

CMS Administrator Mehmet Oz said the agency sent notices to more than half of the state’s social adult day care centers, and HHS Inspector General T. March Bell said more than 100 law enforcement personnel are involved in the New York case.  

Two women who operate an adult day care center on Forest Avenue on Staten Island were arrested Oct. 20 on an indictment with hundreds of counts, including health care fraud, CBS New York reported. The Staten Island district attorney alleges they billed for services never provided, including for seniors who had died, and took about $530,000. Both women denied wrongdoing through attorneys. Oz called the social adult day care program “a plague on the state.”

“Federal and state agencies worked together and got results,” state Comptroller Thomas DiNapoli said in a statement Oct. 21. His office said law enforcement partners made 57 arrests in Medicaid fraud cases over the past year, with $50 million in restitution. 

Federal prosecutors have announced several cases in New York. The Justice Department charged two Queens men, Inwoo Kim and Daniel Lee, in February with conspiring to commit health care fraud in an alleged $120 million scheme involving adult day care centers and a pharmacy. A Brooklyn owner, Zakia Khan, was sentenced in September to 76 months in prison in a Medicaid kickback scheme, and another owner, Eric Zhu, received 57 months in July.

Gov. Kathy Hochul on Oct. 20 directed the state Department of Health to consider ending the social adult day care benefit, which serves about 45,000 Medicaid members at an estimated cost of more than $500 million a year, the Epoch Times reported. 

“We will find you, we will prosecute you, and we will hold you accountable,” Hochul said.

CMS and New York have clashed before. In April, CMS admitted it had overstated by roughly tenfold the number of New Yorkers receiving personal care services in an earlier claim by Oz. STAT reported at the time that Hochul’s office had called the claim “patently false.”