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Feds suspend $60M in Medicaid fraud funding for New York

Federal officials said the unit had too few indictments and convictions, and the freeze could end early if New York corrects the problems.

  • The federal government suspended $60 million in funding for New York's Medicaid Fraud Control Unit due to poor criminal enforcement and leadership issues that caused investigation delays and backlogs.
  • From 2023 to 2025, New York's Medicaid Fraud Control Unit had only 53 criminal fraud convictions, the lowest among large states, with fewer than 10 indictments in four of the past five years.
  • Attorney General Letitia James blamed the funding suspension on political targeting while highlighting the state's recovery of over $627 million for Medicaid beneficiaries and recent fraud prosecutions.
  • Republicans criticized the unit's ineffectiveness under current leadership, noting a significant decline in indictments and alleging a deprioritization of criminal fraud cases in favor of civil cases.
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Fortune broke the news in New York, United States on Thursday, July 2, 2026.
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