New York hospital staffers resign amid allegations state defrauded Medicaid in financial scheme

Several hospital staffers at the Nassau University Medical Center (NUMC) have submitted their resignations effective in June amid investigations to examine if the State of New York has been defrauding Medicaid with what one lawmaker called "a large financial scheme" involving matching payments for hospitals totaling more than $1 billion.

The allegations that New York might be cheating Medicaid first surfaced a few months ago in civil litigation and in a New York Post column. State legislators increased pressure for an investigation and resolution, and staged a rally at the State Capitol.

Claims going back 20 years

A hospital staffer who had first-hand information but chose to remain anonymous told Just The News that the hospital completed an extensive review and assessment of all books and records last summer, and brought questions to an outside law firm.

The staffer said they received a legal opinion and, after reviewing documents filed by the New York State Department of Health (NYSDOH) to CMS in June 2024, they learned that NYS [New York state] halved the hospital's DSH [Disproportionate Share Hospital] funding year after year for two decades. Allegedly, more than one billion dollars were steered away from NUMC.

They said they spent over a decade working with New York state for over a decade and neither the NYSDOH nor the governor's office have accepted initiatives to meet with them over the past three years.

In December 2024, it was reported by The New York Post that NUMC was suing New York for $1.06 billion, alleging the state has defrauded the hospital of financial resources over the past 20 years.

The staffer told Just the News that 80% of patients at the NUMC are ensured by Medicaid and Medicare. NUMC is the only public hospital in the county, and a large percentage of its 275,000 patients are low income, uninsured, as well as on Medicare and Medicaid. The hospital includes a nursing home and jail infirmary, Long Island’s only burn unit and its largest inpatient psychiatric treatment center.

A spokesperson for Democratic Gov. Kathy Hochul's office has denied these allegations, stating that they are "false claims."

Last month, Rep. Eric Burlison, R-Mo., urged Attorney General Pam Bondi and FBI Director Kash Patel to investigate the matter. "In what appears to be a large financial scheme uncovered by hospital leadership, the State of New York stands accused of violating the terms of federal contracts by failing to fund the state's share of Medicaid payments from authorized sources," Burlison wrote in a letter.

"Substantiated evidence shows the transferring of money from NUMC's own accounts to the state. By law, this then enabled matching federal funds to be sent to the state," the letter continued. 

Burlison said NUMC stated that the funds were "transferred back to the state, requiring NUMC to effectively fund the State of New York's share itself."

NY state budget strips away local control, handed to governor

Earlier this month, New York lawmakers passed a $254 billion state budget for Fiscal Year 2026 that would impact NUMC by having the Nassau Health Care Corporation board structure be controlled by Hochul and state Democrats instead of Nassau County Executive Bruce Blakeman.

Hochul signed the state budget into law on May 9.

The unnamed hospital staffer told Just the News that this transfer of power led to multiple people at the hospital resigning. Just the News reviewed documents showing staffers submitting resignations that will be effective in June. 

"The unprecedented passing of this NYS bill, which gives Albany control and not local control over the County’s only public hospital, coupled with the constant attacks in Newsday calling for my removal and the removal of my executive team, I believe caused staff to choose to leave," they said. "These are professionals who are experts in their fields, reside in our community and are dedicated to seeing NUMC thrive. This is a sad situation."

The staffer said they are uncertain what the future holds for the hospital, noting that NUMC will likely close most services, outsource medical services to clinics and slash significant staff numbers.

Hochul's office has not responded for comment at this time.