New York’s Medicaid ride program is a fraud goldmine, audit finds

Federal audit flags massive overbilling

New York’s Medicaid transportation program has a fraud problem that keeps getting worse.

The HHS Office of Inspector General audited the state’s Non-Emergency Medical Transportation program and released findings in 2022.

Auditors reviewed nearly 4.8 million payments worth about $270 million in federal funds for rides that New York City transport companies provided in 2018 and 2019.

They found that up to $196 million of that total, over 72 percent, went to rides that did not meet Medicaid rules.

As of 2026, counties have not regained control of the program and New York still runs the program at the state level.

Only 17 of 100 rides checked out

The numbers paint a bleak picture. Of 100 randomly sampled payments, only 17 fully followed federal and state rules.

Auditors flagged 41 payments as flat-out unallowable. They could not even determine whether the remaining 42 met the requirements.

The OIG recommended New York refund at least $84.3 million to the federal government. The findings raised serious questions about how the state manages billions in Medicaid dollars meant for patient care.

How the ride program works

Medicaid requires states to give patients rides to and from medical appointments. New York’s program covers taxis, livery cars, ambulettes, public transit and personal vehicle mileage.

The state contracts with a broker called Medical Answering Services, which schedules rides, runs call centers and handles oversight.

Transportation companies enroll as Medicaid providers and bill the state for each trip. Patients pay nothing out of pocket, so they may not notice or report improper billing.

Common fraud schemes cost taxpayers millions

The schemes follow a familiar playbook.

Transportation companies bill Medicaid for rides that never happen. Drivers inflate mileage on trips to boost payments.

Companies tack on fake toll charges. Some firms claim group rides as separate individual trips, collecting multiple payments for a single drive.

In the worst cases, companies pay cash kickbacks to Medicaid patients in exchange for using their ID numbers to file false claims.

Shell companies hid the money

Purple Heart Transportation, based in Queens, collected over $29 million from Medicaid between late 2017 and early 2019.

 The company’s owner, Sean Ally, and employees allegedly paid weekly cash kickbacks to patients who lent their Medicaid IDs for fake billing.

Ally and his associates funneled the money through shell companies and used it for real estate purchases. Prosecutors said some funds moved overseas.

Ally and an accomplice pleaded guilty and received prison time. Investigators found similar patterns at dozens of other companies across the state.

AG James targets 54 companies

In January 2025, Attorney General Letitia James issued cease-and-desist letters to 54 transportation companies suspected of fraud.

The letters warned of financial penalties and prison sentences if the companies continued their alleged schemes.

By that point, her Medicaid Fraud Control Unit had already secured over $10 million in settlements and more than a dozen convictions through a five-year investigation.

The crackdown signaled that state law enforcement was escalating its response.

June 2025 brings major enforcement action

Five months later, James announced action against 25 transportation companies across the state. Sixteen companies agreed to pay back a combined $13 million.

Seven additional companies that had received cease-and-desist letters but allegedly kept cheating faced new lawsuits.

The cases spanned New York City, the Capital Region, Western New York, Central New York, Westchester County and Long Island. Two company owners pleaded guilty to criminal charges, and a third faced indictment.

Upstate companies also caught cheating

Angel Medical Transportation’s owner faced indictment for a $1.8 million Medicaid fraud scheme.

That company allegedly billed for individual rides that were actually unauthorized group trips and claimed rides that never happened.

Investigators also found the company paid kickbacks to patients seeking substance abuse treatment to use their services.

In a separate case, the AG’s office sued a Buffalo-based company for billing with inflated mileage and using a driver banned from Medicaid for a prior fraud conviction.

Costs surged after state took over

Before 2011, counties managed their own Medicaid transportation using local knowledge to keep costs down. Then the state took over and outsourced the program to private brokers.

After the switch, taxi and livery use in the program rose roughly 800 percent, according to the Medicaid Redesign Team II. Total spending jumped about 131 percent statewide.

In one striking example, Chautauqua County saw its costs spike 1,300 percent between 2013 and 2019, according to State Sen. George Borrello.

Lawmakers push to return county control

In July 2025, Borrello and several Senate Republicans sent a letter to Gov. Kathy Hochul urging her to dismantle the centralized broker model.

They cited more than $20 million in theft identified through guilty pleas, settlements and ongoing investigations in the prior year alone.

Borrello argued that counties understood their communities and could run the program at lower cost. The lawmakers also noted a $750 million Medicaid shortfall already expected that quarter, with federal funding cuts looming.

Problems go back over a decade

A federal audit as far back as 2011 flagged major problems with New York’s transportation oversight. The state said it would create a quality assurance program in response.

But the 2022 follow-up audit found the problems had grown worse, not better. The noncompliance rate climbed even after the state’s promised improvements.

Experts say the program is especially vulnerable to fraud because patients pay no copays and may never notice false claims filed in their names.

Taxpayers bear the growing burden

New York already spends more on Medicaid per person than any other state. Transportation fraud drains funds meant to help low-income and disabled New Yorkers reach medical care.

Federal auditors have recommended the state refund tens of millions to the federal government. As of early 2026, New York has not announced plans to move the program back to county control.

State and federal investigators say they will keep pursuing cases, and the AG’s office encourages tips through its hotline at (800) 771-7755.

This article was created with AI assistance and human editing.

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