By Hank Russell
A recent analysis by a think tank showed that the federal government was right to suspend funding for the New York Attorney General’s Medicaid Fraud Control Unit (MFCU), citing the unit’s poor performance in its enforcement efforts and lack of spending on cracking down on waste, fraud and abuse.
On June 30, Thomas March Bell, the inspector general for the U.S. Department of Health and Human Services, sent a letter to Attorney General Letitia James and MFCU Director Amy Held notifying them that the federal government has suspended funding for the next 30 days because both agencies “are not living up to this expectation or meeting the grant requirements.”
In his letter, Bell noted that, between 2023 and 2025, the New York MFCU was “the poorest performing Unit by a wide margin among similar-sized Units” and in 2023 and 2025, “only secured eight or nine criminal indictments while other similar-sized Units have secured hundreds, even though those other Units oversee Medicaid programs that are half the size of the New York Medicaid program.”
Bill Hammond, the Empire Center for Public Policy’s senior fellow for health policy, says the data from the inspector general “suggests that Bell’s criticism is well founded.” Calculations using federal data during James’ term as attorney general, from 2019 to 2025, show that New York was 49th for investigations per billion spent, 51st for indictments per billion and 51st for convictions per billion (see table). The statistics also show that the state’s Medicaid spending was less than the national average.
In addition, when James took office in 2019, the MFCU investigated 717 cases related to fraud, abuse and neglect, according to the HHS inspector general’s office. The following year, that number peaked to 830, but over the next few years, that number dropped to 419 in 2025 — a 49.5% decline. (See chart below.)
James blasted the Trump administration for suspending the funding. “This administration’s unprecedented attack on New York is another political distraction,” she said. “During my time as Attorney General, my office has recovered more than $627 million for Medicaid and was recognized by this very administration for leading the nation in anti-fraud efforts. The only people this decision benefits are the criminals we investigate every day. We are considering all legal options to stop this outrageous action.”
In fact, James said, the federal government said in its March 2026 report that “HHS highlighted that New York was one of the four states that accounted for half of the total civil recoveries in fiscal year 2025.”
Hammond called James’ defense “misleading in several ways,” noting that “the statistic she cited is about civil recoveries” and “ the inspector general was mostly faulting New York for inadequate criminal enforcement.” In addition, Hammond said the figure “was based on gross dollar amounts, without adjusting for the fact that New York operates the second-costliest Medicaid program in the country.” As a percentage of spending, according to the data, New York ranked 10th in civil recoveries in 2025, but only 38th in its criminal recoveries. Lastly, “the statistic covered only a single year’; during James’ whole term in office from 2019 through 2025, New York’s civil recoveries as a percentage of spending ranked 16th and its criminal recoveries sat near the bottom at 49th.
In response to the think tank’s analysis, the AG’s office stated, “Every year, New York recovers more funds for Medicaid than almost any other state, securing more than $627 million since 2019. If the federal administration actually wanted to combat fraud, they would be working with our office, just as past administrations from both parties have done. This administration’s reckless decision to play politics with critical funding to fight Medicaid fraud in New York will only embolden criminals and put vulnerable New Yorkers at risk.”