DOJ Files a Statement of Interest in a Federal Lawsuit Against the NY Department of Health and Court Issues a Preliminary Injunction

As previously discussed, in Engesser v. McDonald, a class of Medicaid beneficiaries who receive personal care and home care services through New York’s CDPA Program (Consumers), and two independent living centers (collectively, the Plaintiffs) filed a lawsuit in a New York federal court alleging that their CDPA Program services were at immediate risk of suspensions or terminations, in violation of the Medicaid Act and the U.S. Constitution’s Due Process Clause. The Plaintiffs argued that a TRO and/or preliminary injunction were warranted due to the NY Department of Health’s failures and misrepresentations throughout the Statewide Fiscal Intermediary (SFI) transition process, and the resulting imminent harms, including Personal Assistants (PAs) being forced to seek other employment, and putting Consumers at risk of institutionalization.

Since March 31, 2025, a TRO (terms discussed in further detail here) has remained in effect, while the parties worked together to propose joint language for a preliminary injunction.

On April 9, 2025, the U.S. Department of Justice (DOJ) filed a Statement of Interest in the case, pursuant to federal statutes that authorize the DOJ “to attend to the interests of the United States” by “argu[ing] any case in a court of the United States in which the United States is interested.” 28 U.S.C. §§ 517, 518. The DOJ stated that the interests of the United States relate to whether:

1. the NY DOH “is complying with federal law governing the provision of Medicaid services;”
2. “the State of New York has made material misrepresentations to” Consumers, PAs, and the public “regarding an ongoing transition of federal health care benefit programs;” and
3. “privacy-protected patient data is being shared without patient consent.”

Within the Statement of Interest, the DOJ opined that the “Plaintiffs credibly allege that this transition process has burdened vulnerable CDPAP patients and threatened their ability to maintain critical care.” The DOJ also noted that the Plaintiffs’ allegations “suggest[] that vulnerable CDPAP patients and their caregivers may have been misled by formal and informal representations and omissions” by the State of New York “regarding the mechanisms of the CDPAP transition and the corresponding effect on their healthcare.”

On April 10, 2025, the court entered an order approving a stipulated Preliminary Injunction that was jointly proposed by the parties (the PI Order). The PI Order creates a three-tiered system to categorize Consumers and PAs based on their respective registration and onboarding statuses with PPL, with corresponding requirements for each category.

Category A – “Fully Registered Consumer, Fully Onboarded PA Group”: PAs “shall be employed and fully and timely paid by PPL back to the later of (a) April 1, 2025, or (b) the last date for which the PA was paid by their Prior FI.”

Category B - “Fully Registered Consumer, Not Fully Onboarded PA Group”: “At the Consumer’s election, the PA will be employed and paid by the Prior FI, provided that” certain criteria specified in the PI Order are met.

Category C - “Not Fully Registered Consumers Group”: “At the Consumer’s election, the PA will be paid by the Prior FI provided that” certain criteria specified in the PI Order are met. Additionally, the NY DOH “shall direct MCOs and LDSS to contact all Consumers who are not Fully Registered with PPL by direct contact to the Consumer through the Consumer’s preferred means” by April 15, 2025. 

The PI Order remains in effect through June 6, 2025, unless extended. Additionally, considering that the “United States has a significant interest in ensuring fair treatment and continued, uninterrupted, and critical care for the thousands of vulnerable New Yorkers in the CDPAP program affected by this transition,” the DOJ intends to “monitor this litigation to ensure that this interest is served by the CDPAP program.”

The full content of the PI Order can be found here. FIs should contact counsel to discuss the criteria specified in the PI Order that must be met in order for them to continue providing services.