New York Attorney General Letitia James promised voters she would dig up a charged and prosecute President Donald Trump.
While she was doing that, Medicaid fraud criminals were running wild in her own backyard… and the Trump administration has finally had enough.
The U.S. Department of Health and Human Services froze $60 million in annual federal funding for New York’s Medicaid Fraud Control Unit on July 1 after concluding James’ office had the worst-performing large-state fraud operation in the country.
“The New York MFCU was the poorest-performing Unit by a wide margin among similar-sized Units,” HHS Inspector General Thomas March Bell said.
The fraud numbers are staggering.
Between 2023 and 2025, the New York fraud unit, which is staffed by more than 270 employees at $60 million per year in federal taxpayer funds, secured just 53 criminal fraud convictions. The next-lowest comparable state more than doubled New York at 129.
In four of the past five years, James’ unit produced fewer than ten criminal fraud indictments annually. Other states of comparable size produced hundreds.
The Empire Center for Public Policy, a non-partisan New York think tank, found that during James’ tenure from 2019 to 2025, New York ranked 49th out of 51 jurisdictions in investigations per dollar spent on Medicaid. Under James, the Empire State ranked 51st, dead last, in criminal indictments per dollar spent.
One-third of the unit’s open cases had been sitting for more than three years. Nearly 70% of referrals from New York’s Medicaid Program Integrity Unit had been sitting untouched for at least two years.
“Attorney General James’ apparent inability to explain the New York MFCU’s indefensible criminal enforcement performance is not a political distraction,” said First Assistant U.S. Attorney John Sarcone. “Public benefits fraud and Medicaid fraud did not abruptly stop in 2019. Instead, under the failed leadership of AG James, criminal Medicaid fraud in New York State has been ignored.”
James is just the latest Democratic attorney general to face a federal reckoning over failure to prosecute Medicaid fraud.
In fact, the pattern is very disturbing.
In Hawaii, Democratic AG Anne went from 2022 to 2025 without a single Medicaid fraud indictment or conviction. The federal government decertified Hawaii’s unit on June 4, pulling its funding entirely.
“Not a single indictment, not a single conviction,” Vice President J.D. Vance said at a White House press conference. “If you’re committing fraud in Medicaid in Hawaii, at least up until now, you’ve had effectively free rein.”
In Minnesota, Democrat AG Keith Ellison faces $350 million in deferred federal Medicaid payments after reports that Gov. Tim Walz “looked the other way” on millions in documented fraud. The Trump administration has opened a criminal liability investigation into whether Minnesota officials actively covered up known fraud.
In California, Democrat AG Rob Bonta absorbed the largest Medicaid funding deferral in CMS history: $1.3 billion withheld over fraud concerns. It is estimated that at least half of the hospices in the Los Angeles area alone are fraudulent. Eight hundred hospice providers have been suspended just this year.
Vance put the pattern plainly in May.
“We have red states and blue states that go after fraud aggressively,” he said. “But we also, unfortunately, have some states — mostly blue states, unfortunately — that do not take Medicaid fraud very seriously.”
Federal Trade Commission Chairman Andrew Ferguson went further.
“Some states have turned anti-fraud money into a jobs program for blue state lawyers,” Ferguson said.
The national average return on every dollar spent fighting Medicaid fraud is $4.64.
Under James, New York’s unit returned just $1.84.