HHS Inspector General Bell suspended New York's Medicaid Fraud Control Unit funding, targeting Democratic AG Letitia James

On June 30, 2026, HHS Inspector General Thomas March Bell sent a letter to New York Attorney General Letitia James and Medicaid Fraud Control Unit Director Amy Held, suspending federal funding for the state's MFCU through at least September 30. Bell cited the unit's lower criminal conviction rate compared to four similarly-sized state units. His letter simultaneously acknowledged that New York had deliberately focused on "high impact, complex fraud cases" — a strategy HHS-OIG had previously recognized as producing among the nation's highest civil recoveries, with New York accounting for a disproportionate share of national Medicaid civil recovery totals in 2025.

The suspension is part of a broader pattern of anti-fraud enforcement the Trump administration has directed disproportionately at Democratic-led states, including funding actions against Minnesota and California and formal investigations targeting at least five states, four of them Democrat-governed. The action closely follows the administration's own admission of a "glaring error" in the figures used to justify an earlier fraud probe into New York's Medicaid program. James, who has multiple active legal proceedings against Donald Trump, called the move "an unprecedented attack on New York" and vowed to fight it, noting her office had recovered over $627 million for Medicaid during her tenure.

The Department of Justice had named New York's MFCU as a prosecutorial partner in a national Medicaid fraud takedown announced just days before Bell's suspension letter — underscoring the inconsistency of treating the unit simultaneously as a valued enforcement partner and a target for defunding. Hawaii's MFCU was the first suspended this year, in early June 2026.