CDPAP Legal Storm Continues: New Lawsuit Targets DOH's RFP Implementation, Single FI Structure - Healthcare - Food, Drugs, Healthcare, Life Sciences (2024)

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A second lawsuit has been filed challenging recent changes toNew York's Consumer Directed Personal Assistance Program (CDPAPor the Program), this time taking aim at the new single fiscalintermediary (FI) structure that will displace the 600-plusbusinesses currently serving approximately 246,000 consumers andtheir personal assistants. On Aug. 12, 2024, Save Our ConsumerDirected Home Care, Inc., a not-for-profit association representingFIs and other entities participating in the Program, argued in itspetition that the New York State Department of Health's (DOH)implementation of a Request for Proposal (RFP) for FI services andthe changes made to the CDPAP violate several legal andconstitutional standards. This action comes on the heels of anotherlawsuit filed on July 22, 2024, detailed in a prior blogpost, in which several FIs contested DOH's revisedreimbursem*nt methodology for the Program as procedurally flawedand arbitrary. Both lawsuits highlight the significant legalchallenges facing the state's management of the Program.

In the current lawsuit, the petitioner alleges that theamendments to Section 365-f of the Social Services Law replacingthe FIs with a single Statewide FI (SFI) chosen at DOH's solediscretion and without the usual oversight of the Office of the NewYork State Comptroller represent a significant deviation fromestablished legal norms. Federal regulations require thatprocurements involving federal funds, such as those in the CDPAP,must adhere to stringent standards ensuring transparency,competition, and fairness. New York State law similarly mandatescomptroller oversight to ensure contracts are awarded fairly and inthe best interest of taxpayers. The petitioner alleges that thefailure to clearly outline all necessary requirements for potentialcontractors and the lack of specified criteria for evaluating bidsor proposals of SFI bidders, combined with granting DOH unilateraldiscretion to reject applications and select proposals based onsubjective judgment without the Comptroller's oversight,violate these mandates and undermine the integrity of theprocurement process, increasing the risk of fraud, waste and abuse.Additionally, this consolidation, according to the petitioner,risks abrupt transitions for consumers, disrupting established carerelationships.

The petitioner further asserts that the RFP imposes excessivelyrestrictive and anticompetitive requirements creating nearlyinsurmountable barriers for entities aiming to qualify as the SFI.These requirements include having provided statewide FI services inanother state as of April 1, 2024, securing a $100 million line ofcredit, and adhering to collective bargaining agreements and NewYork's prevailing wage laws. The petitioner claims thesecriteria are irrelevant to the core services required of an FI andprimarily serve to limit competition, which will prevent currentFIs from continuing their operations and supporting the consumersand personal assistants they serve.

The lawsuit also alleges that the requirement for SFI bidders tohave 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, theRFP's adoption, which impacts the $8 billion per year CDPAP,allegedly occurred without sufficient public dialogue orstakeholder input.

The petitioner asserts that the RFP and the amendments toSection 365-f impose an undue burden on interstate commerce byrestricting competition through out-of-state experiencerequirements, violate the U.S. Constitution's Contracts Clauseby impairing existing contracts and breach the Equal ProtectionClause of the 14th Amendment by discriminating against certaingroups. The petitioner further claims that the amendments and RFPfunction as a bill of attainder that targets entities forpunishment without trial, infringe on Medicaid beneficiaries'freedom of choice by selecting a single FI provider without properwaiver and unjustifiably segregate individuals with disabilities.Finally, the petitioner alleges that DOH failed to providerequested records under New York's Freedom of Information Law(FOIL) concerning the amendments and RFP development, therebycompromising transparency and accountability.

The petitioner seeks an injunction preventing DOH from takingfurther action on the RFP and an order declaring the amendments toSection 365-f invalid.

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