REUTERS / Angelina Katsanis
(Albany, NY) – Ever since YouTuber Nick Shirley blew the lid off widespread fraud in Minneapolis, many have been increasingly focused on other potential thefts of taxpayer money. And now New York State is firmly in the crosshairs, with millions of dollars potentially pilfered — through the state’s Non-Emergency Medical Transportation program under Medicaid.
The NEMT program has experienced fraud and mismanagement, evidenced by a 2022 federal audit — as reported in the New York Post. The Department of Health and Human Services Office of Inspector General found that New York claimed up to $196 million in federal reimbursement for NEMT payments. These were purportedly to cover New York City transportation providers. But the rides in question “did not meet or may not have met Medicaid requirements.”
According to the audit, nearly half of the $445 million taxpayer funds paid out in 2018 and 2019 were mismanaged. This included the use of unlicensed drivers, improper documentation of the rides themselves, a failure to pre-authorize the rides (through a medical provider) — and even instances where the services were billed but no ride was ever provided.
This burgeoning issue is similar to what’s been seen in Minneapolis, Minnesota, where daycare services billed the federal government for allegedly non-existent kids. There were also convictions that resulted from schemes were “free meal programs” billed the federal government, but no food was made or served.
As a result of the 2022 audit, the federal government demanded New York repay $84 million immediately and placed another $112 million under review. The HHS also took the step of recommending that state officials work to “refund to the federal government any unallowable amounts.” The New York Post says it made inquiries to state officials but were unable to determine if those funds were repaid.
A notable case involves the owner and two employees at Purple Heart Transportation, a Queens-based company. The New York Attorney General indicted the trio for allegedly stealing $19 million, through a kickback scheme. Prosecutors say weekly cash kickbacks resulted from patients who lent the group their IDs, to facilitate fraudulent Medicaid billing. Up to 1,000 additional miles were fraudulently claimed each day, with proceeds then funneled overseas via shell companies. The group’s ringleader, Sean Ally, had illegally immigrated to the country from Guyana. He and an accomplice pleaded guilty, resulting in prison time.
Yet despite these issues, and the depth of the fraud exposed by the 2022 audit, Governor Kathy Hochul expanded the program. And in 2023 she awarded a $1 billion exclusive contract to Medical Answering Services (MAS) — which now has sole control over the statewide NEMT program.
Even more curiously, MAS has ties to big political donations. The owner, Russ Maxwell, and his husband, Syracuse firefighter Morgan McDole, donated $300,000 total to ex-Gov. Andrew Cuomo and his successor Hochul (including $236,000 to Cuomo and over $100,000 to Hochul). McDole donated $52,000 to Hochul in 2022. And in 2025, less than a month after the NY AG had announced lawsuits related to NEMT fraud, he donated an additional $16,000 to her campaign. Maxwell donated $26,000 to the New York State Democratic Committee, and hosted a Hochul fundraiser shortly before MAS got the big $1 billion contract in 2023.
The NEMT fraud problem is hardly going away. Over the past 12 months, the New York Attorney General’s Medicaid Fraud Control Unit reached agreements to reclaim $13 million from NEMT contractors. This includes two Bronx-based companies and a Manhattan firm that are accused of inflating mileage and billing for non-existent rides. False addresses and kickback schemes with passengers have also been alleged. A New York State Senator from the Western part of the state told the New York Post a patient died in one scheme that involved a patient seeking methadone treatment for drug addiction. Rather than taking the patient to a clinic, the transportation provider allegedly took the person to buy drugs, and pocketed half the fare money.
It would seem Medicaid fraud is costing New York taxpayers dearly. The AG’s office issued cease-and-desist letters to 54 transportation companies suspected of fraud and abuse in January 2025. Republican State Senator George Borrello wrote a letter to Governor Hochul last year, urging that NEMT be returned to county-level control, to have a fighting chance against the schemes. He wrote: “Medicaid transportation used to be a local responsibility, run cost-effectively by counties that understood their communities. Now it’s a billion-dollar boondoggle run by unaccountable brokers who answer to no one, while fraud is exploding and taxpayers are getting ripped off.”
Meanwhile, the New York Post spoke with Chris Pope of the Manhattan Institute, a Medicaid fraud expert. He says “Medicaid is generally vulnerable to fraud because its patients don’t usually pay copays, and so may not notice or report improper billing claims… Non-emergency transportation is particularly prone to fraud, because it allows people who aren’t licensed medical professionals to claim funds from the program.”
It’s worth noting that New York officials disputed the HHS’ 2022 audit. Only minor inconsistencies were admitted. Many issues were blamed on “bookkeeping challenges” as MAS expanded. New York is also less-than-transparent about its $115 annual Medicaid spelling. California logs the most annual spending per the KFF, formerly known as The Kaiser Family Foundation — but New York is in second.
Along with childcare providers, adult day care, and The Consumer Directed Personal Assistance Program (CDPAP) — it’s highly likely other state programs are rife with similar fraud.
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