NY Federal Court Issues TRO Against the NY Department of Health

As previously reported, in April 2024, New York’s Social Services Law was amended to include a substantial change to the state’s Consumer Directed Personal Assistance Program (CDPA Program), a Medicaid-funded program allowing chronically ill and/or disabled individuals to employ personal assistants to perform home care services. Specifically, the amendment called for a single Statewide Fiscal Intermediary (SFI) to replace over 600 entities that had been operating as Fiscal Intermediaries (FIs) in the CDPA Program to provide wage and benefit processing and administrative services. Importantly, the amendment prohibited all FIs, other than the SFI and its subcontractors, from providing FI services directly or through contract as of April 1, 2025.

One day before the April 1 deadline, on March 31, 2025, a federal judge issued a temporary restraining order (TRO) against the New York State Department of Health (NY DOH) Commissioner, James V. McDonald, thereby allowing FIs to continue servicing CDPA Program participants who have not yet registered with the SFI.

The case, Engesser v. McDonald (1:25-cv-01689-FB-LKE), was filed in the Eastern District of New York on March 27, 2025, on behalf of a class of Medicaid beneficiaries who receive personal care and home care services through the CDPA Program (Consumers), and two independent living centers (collectively, the Plaintiffs), who alleged that their CDPA Program services were at immediate risk of suspensions or terminations, in violation of the Medicaid Act, 42 U.S.C. § 1396 et seq., and the Due Process Clause of the Fourteenth Amendment to the U.S. Constitution. The Plaintiffs argued that a TRO and/or preliminary injunction were warranted due to the NY DOH’s failures and misrepresentations throughout the SFI transition process, and imminent harms, including personal assistants being forced to seek other employment, and Consumers at risk of institutionalization to avoid serious and life-threatening harm. 

On March 31, 2025, the court held a hearing and granted the Plaintiffs’ TRO motion, prohibiting the NY DOH Commissioner from implementing two sections of the amendment. Specifically, the court’s order temporarily restrains the NY DOH from:

1. requiring managed care plans, managed long-term care plans (MLTCs), and/or local social service districts (LDSSs) to contract with the SFI to provide all FI services to Consumers; and
2. prohibiting entities other than the SFI and its subcontractors from providing FI services directly or through contract.

This means that FIs can continue providing services to Consumers and/or personal assistants who have not yet registered with Public Partnerships, LLC (PPL), and MLTCs and LDSSs can continue to contract with FIs for the provision of such services until the TRO is lifted.

Notably, the order does not prevent PPL, the entity that was chosen by the NY DOH to become the SFI, from operating, processing applications, servicing and paying CDPA Program participants who have already registered with PPL. 

The court will hold a hearing regarding the Plaintiffs’ preliminary injunction motion on April 4, 2025.

Littler will continue to monitor the legal developments in this case and with respect to the CDPA Program.

UPDATE: 

On April 2, 2025, the court held an emergency hearing to clarify the March 31, 2025 TRO, and to make clear that the NY DOH has a responsibility to ensure that all Consumers who participated in the CDPA Program prior to April 1, 2025, continue to receive care from their existing PA(s), regardless of the individual circumstances and current registration statuses of Consumers and/or their PA(s). The court’s order also mandates that PAs be timely paid for their services. The court did not specify a manner in which the NY DOH must accomplish these ends but ordered the NY DOH to “take whatever action necessary to ensure” continuity of care for Consumers by their existing PA(s) in exchange for timely payment.

After the court’s April 2, 2025 clarifications to the March 31, 2025 TRO, the NY DOH posted a Notice, providing specific directions for MCOs and LDSSs. Specifically, the Notice provides instructions for different scenarios as follows:

1. If a Consumer has “started or completed their registration with” PPL, and the Consumer’s PA “has started or completed their registration with PPL,” PPL “is instructed to pay” the PA “weekly for all CDPAP time reported regardless of personal assistant registration status and regardless of authorization status.”
2. If a Consumer has “started or completed their registration with” PPL, and the Consumer’s PA “has not yet started registration with PPL,” the MCO or LDSS “must make best efforts to ensure” the PA “is paid, regardless of authorization status.”
3. If a Consumer has “not yet started their registration with PPL,” and the Consumer (or Designated Representative) “personally makes a request to the MCO or LDSS to stay with their prior FI, the MCO or LDSS must make best efforts to ensure” that the PA “is paid, regardless of authorization status.”

On April 4, 2025, the court held a hearing, and the Parties discussed the pending order to show cause for a preliminary injunction. The court held that the terms of the existing TRO will remain in effect, while the parties work together for joint language for a preliminary injunction. The judge directed counsel for the parties to report by letter on April 8, 2025, as to their progress. If the parties are not able to agree on a joint proposal for appropriate language for the preliminary injunction order, the court will schedule a conference to discuss the matter further.