Attorney General James Puts Medical Transportation Industry on Notice, Announces New Actions to Stop Ongoing Fraud

NEW YORK – New York Attorney General Letitia James today announced new measures to stop a major source of Medicaid fraud by transportation companies that use fake billing schemes to steal from Medicaid and exploit vulnerable patients. The Office of the Attorney General (OAG) today issued cease and desist notices to 54 transportation companies throughout the state, warning them of potential financial penalties and prison sentences if they continue their alleged illegal schemes of overcharging Medicaid for fraudulent services. The OAG’s investigations into the medical transportation industry for ongoing fraud have already secured over $10 million and led to criminal convictions of 11 individuals. In addition to issuing the cease and desist notices today, Attorney General James announced recent settlements with four transportation companies totaling over $847,000 for their illegal billing schemes.

“Companies that illegally profit by exploiting Medicaid patients steal taxpayer money and undermine the health care system that all New Yorkers rely on,” said Attorney General James. “Today I am putting the entire medical transportation industry on notice to stop these schemes that take advantage of vulnerable New Yorkers and steal critical funds intended to provide health care to those in need. My office has already recovered millions of dollars and secured prison sentences for those committing this fraud. I will continue to do everything my power to shut down these schemes and ensure that state funds meant to help New Yorkers in need are not stolen through fraud and corruption.”

Medicaid reimburses authorized businesses for transporting Medicaid patients to and from covered medical services. A licensed taxi company enrolls with the state as an eligible provider and is then randomly assigned to provide trips to patients to specific, non-emergency, medical appointments. The companies must use licensed drivers, proper vehicles, and bill only for services actually rendered. They are allowed to bill Medicaid for a base rate for the trip, plus an amount for mileage and any tolls.

The OAG’s Medicaid Fraud Control Unit (MFCU) has investigated transportation companies across the state for using fake billing and other fraudulent tactics to steal Medicaid funds. The companies’ schemes often involve billing Medicaid for fake trips, adding fake tolls to inflate costs, fraudulently extending the mileage of trips, and using unlicensed drivers. In some cases, companies exploit vulnerable Medicaid recipients by paying them kickbacks in exchange for requesting transportation services from the company. These kickback schemes can put already vulnerable New Yorkers at even greater risk. MFCU investigators have uncovered cases in which transportation companies exploited Medicaid recipients in need of substance abuse treatment to recruit passengers to use in fake billing schemes.

Today, Attorney General James announced new measures to shut down this method of Medicaid fraud. The OAG has served cease and desist notices to 54 transportation companies operating throughout the state, ordering them to stop fraudulent billing practices that steal funds and put Medicaid patients at risk. Fifteen of these companies have also received demands for repayment of fraudulently obtained funds. The notices sent to these companies highlighted their violations and outlined potential penalties if they do not comply with the law. Medicaid providers who knowingly violate laws and regulations are subject to civil and criminal penalties, including prison time and financial penalties. If the companies do not change their practices, OAG will pursue all legal remedies to recover funds and punish the companies’ operators.

In addition to the cease and desist notices, Attorney General James announced four new settlements with transportation companies for violations of Medicaid transportation rules that will return over $847,000 to the state. These include:

• City Service Transportation, Inc. in Erie County will repay $373,216.11. 
• AJ Medical Transportation Co. in Albany County will repay $350,000.
• Safe Ride of WNY, Inc. in Erie County and its owner, Robert Sapienza will repay over $66,000.
• Half Moon Medical Transportation, Inc. in Saratoga County has agreed to pay back $58,000.

Attorney General James thanks the United States Department of Health and Human Services – Office of the Inspector General, the New York State Department of Health, the Office of the Medicaid Inspector General, and the State’s transportation administrator, Medical Answering Services LLC, for their cooperation in these investigations.

These investigations were conducted by Auditor-Investigators and Data Analysts led by MFCU Chief Auditor Dejan Budimir, MFCU Detectives led by former Deputy Chief  Commanding Officer, MFCU  William Falk  and Deputy Chief  Ronald Lynch, Acting Commanding Officer, MFCU, and MFCU Regional Directors, Special Assistant Attorneys General, and legal support analysts from each of the Medicaid Fraud Control Unit’s seven regional offices, coordinated by MFCU Chief of Criminal Investigations Thomas O’Hanlon and MFCU Chief of Civil Enforcement Alee Scott and AAG Emily Auletta.. MFCU is led by Director Amy Held and Assistant Deputy Attorney General Paul J. Mahoney. The Division of Criminal Justice is led by Chief Deputy Attorney General José Maldonado under the oversight of First Deputy Attorney General Jennifer Levy.

MFCU’s investigations have led to criminal convictions of fraudulent transportation providers across the state. In December 2024, Attorney General James announced the convictions and sentences of five taxi company owners and their seven companies for stealing more than $4.4 million in Medicaid funds through fake billing and illegal kickback schemes, as well as money laundering. In October 2024, Attorney General James secured the convictions of three owners of a transportation company in Monroe County for fake billing and illegal kickback schemes. The leaders of the scheme will serve prison and jail time and must pay back over $2.1 million. In March 2023, Attorney General James secured over $860,000 from a Capital Region transportation company for fraudulently billing Medicaid. In 2020, Attorney General James secured the conviction of a Niagara Falls transportation company owner for stealing from Medicaid by billing the state for rides that they never provided. The owner and his drivers were ordered to pay $1.2 million in restitution to the state. In 2019, Attorney General James announced the indictment and arrest of the owner of Purple Heart Transportation in New York City for stealing from Medicaid using billing fake transportation services that were never provided. The leaders of this scheme have been sentenced to prison and jail sentences and paid back $4.5 million to date.

Reporting Medicaid Provider Fraud: MFCU defends the public by addressing Medicaid provider fraud and protecting nursing home residents from abuse and neglect. If an individual believes they have information about Medicaid provider fraud or about an incident of abuse or neglect of a nursing home resident, they can file a confidential complaint online or call the MFCU hotline at (800) 771-7755. If the situation is an emergency, please call 911.

New York MFCU’s total funding for federal fiscal year (FY) 2025 is $70,502,916. Of that total, 75 percent, or $52,877,188, is awarded under a grant from the U.S. Department of Health and Human Services. The remaining 25 percent, totaling $17,625,728 for FY 2025, is funded by New York State.

If You Need Assistance obtaining Medicaid Transportation services, you can contact New York’s Medical Transportation Broker at the following numbers:

NYC, Long Island and Westchester: 844-666-6270; Upstate: 866-932-7740 or using the MAS website.