Many courthouses have attorneys known primarily for press conferences rather than active case files. Letitia James, New York’s attorney general, built a national brand on targeting Donald Trump, campaigning on this issue before taking office and gaining prominence through cable news appearances.
However, while James developed her political profile, the Medicaid Fraud Control Unit she oversees began to decline. The U.S. Department of Health and Human Services has frozen $60 million in federal funding for New York’s unit effective immediately. HHS Inspector General Thomas March Bell concluded that James’ unit is among the lowest-performing large-state fraud operations despite receiving approximately $60 million annually and employing over 270 staff.
Between 2023 and 2025, New York secured only 53 criminal fraud convictions. The next-lowest comparable state achieved 129 in the same period. In four of the past five years, James’ office produced fewer than ten fraud indictments. Additionally, a third of open cases had been inactive for more than three years, and nearly 70 percent of referrals from New York’s integrity unit remained pending for at least two years.
First Assistant U.S. Attorney John A. Sarcone III noted the unit averaged just nine criminal indictments annually between 2021 and 2025, compared with over 100 per year before James took office. He stated: “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.”
The Department of Health and Human Services described the situation as a “deliberate leadership choice,” indicating it was not due to incompetence or budget issues.
Hawaii recently had its fraud funding suspended after three consecutive years without any indictments. The Trump administration has directed at least five states, including four led by Democrats, to account for their Medicaid fraud operations.
Republican Attorney General challenger Saritha Komatireddy accused James of “running New York’s Medicaid Fraud Unit into the ground” and failing to protect patients and seniors.
James described the situation as a “political distraction.”
The funding freeze runs through September 30, with potential loss of next year’s federal grant if improvements are not made.
