A second lawsuit has been filed challenging recent changes to New York's Consumer Directed Personal Assistance Program (CDPAP or the Program), this time taking aim at the new single fiscal intermediary (FI) structure that will displace the 600-plus businesses currently serving approximately 246,000 consumers and their personal assistants. On Aug. 12, 2024, Save Our Consumer Directed Home Care, Inc., a not-for-profit association representing FIs and other entities participating in the Program, argued in its petition that the New York State Department of Health's (DOH) implementation of a Request for Proposal (RFP) for FI services and the changes made to the CDPAP violate several legal and constitutional standards. This action comes on the heels of another lawsuit filed on July 22, 2024, detailed in a prior blog post, in which several FIs contested DOH's revised reimbursement methodology for the Program as procedurally flawed and arbitrary. Both lawsuits highlight the significant legal challenges facing the state's management of the Program.
In the current lawsuit, the petitioner alleges that the amendments to Section 365-f of the Social Services Law replacing the FIs with a single Statewide FI (SFI) chosen at DOH's sole discretion and without the usual oversight of the Office of the New York State Comptroller represent a significant deviation from established legal norms. Federal regulations require that procurements involving federal funds, such as those in the CDPAP, must adhere to stringent standards ensuring transparency, competition, and fairness. New York State law similarly mandates comptroller oversight to ensure contracts are awarded fairly and in the best interest of taxpayers. The petitioner alleges that the failure to clearly outline all necessary requirements for potential contractors and the lack of specified criteria for evaluating bids or proposals of SFI bidders, combined with granting DOH unilateral discretion to reject applications and select proposals based on subjective judgment without the Comptroller's oversight, violate these mandates and undermine the integrity of the procurement process, increasing the risk of fraud, waste and abuse. Additionally, this consolidation, according to the petitioner, risks abrupt transitions for consumers, disrupting established care relationships.
The petitioner further asserts that the RFP imposes excessively restrictive and anticompetitive requirements creating nearly insurmountable barriers for entities aiming to qualify as the SFI. These requirements include having provided statewide FI services in another state as of April 1, 2024, securing a $100 million line of credit, and adhering to collective bargaining agreements and New York's prevailing wage laws. The petitioner claims these criteria are irrelevant to the core services required of an FI and primarily serve to limit competition, which will prevent current FIs from continuing their operations and supporting the consumers and personal assistants they serve.
The lawsuit also alleges that the requirement for SFI bidders to have provided statewide FI services in another state since April 1, 2024, and for subcontractors to have done so since April 1, 2012, is arbitrary and lacks a rational basis. Additionally, the RFP's adoption, which impacts the $8 billion per year CDPAP, allegedly occurred without sufficient public dialogue or stakeholder input.
The petitioner asserts that the RFP and the amendments to Section 365-f impose an undue burden on interstate commerce by restricting competition through out-of-state experience requirements, violate the U.S. Constitution's Contracts Clause by impairing existing contracts and breach the Equal Protection Clause of the 14th Amendment by discriminating against certain groups. The petitioner further claims that the amendments and RFP function as a bill of attainder that targets entities for punishment without trial, infringe on Medicaid beneficiaries' freedom of choice by selecting a single FI provider without proper waiver and unjustifiably segregate individuals with disabilities. Finally, the petitioner alleges that DOH failed to provide requested records under New York's Freedom of Information Law (FOIL) concerning the amendments and RFP development, thereby compromising transparency and accountability.
The petitioner seeks an injunction preventing DOH from taking further action on the RFP and an order declaring the amendments to Section 365-f invalid.
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