Products are selected by our editors, we may earn commission from links on this page.
New York’s Medicaid program spends $110 billion a year, and the man now overseeing federal healthcare dollars says organized crime is skimming off the top. On July 19, Dr. Mehmet Oz, administrator of the Centers for Medicare & Medicaid Services, told radio host John Catsimatidis that criminal groups tied to China are exploiting the state’s massive safety net, according to the New York Post. He said the fraud runs through senior care centers, sketchy pharmacies, and a billing system he claims New York built to look the other way.
Oz zeroed in on Flushing, Queens, home to 64 social adult day care centers serving mostly Chinese and Korean seniors. He toured the neighborhood alongside independent journalist Nick Shirley and said what he saw stunned him: block after block of pharmacies that seemed to serve no real patients. Oz alleged the centers and their pharmacy partners have submitted enormous volumes of questionable bills to Medicaid, a program meant to cover medical costs for low-income Americans.
According to Oz, the scheme works by bribing seniors for access to their Medicaid and Medicare cards. “There are a dozen pharmacies on one block. Why? They’re all fake,” he said, describing operators who take beneficiary numbers and build fake businesses to launder the payouts. He claimed the operation has generated $2.1 billion against New York’s Medicaid rolls, funding equipment nobody received and treatments patients never got.
This article was created with the assistance of AI and reviewed by our editorial team for accuracy and clarity.
“They’re All Fake”: Oz Claims Fake Pharmacies Generated $2.1 Billion in Fraud
Oz described a pattern he says repeats across the network: phantom wheelchairs, phantom prescriptions, phantom appointments. “They pretend they’re sending this really expensive wheelchair,” he said of the operators, adding that fake medications and unattended tests and treatments padded the bills further. He argued the fraud is large enough to squeeze out honest providers, since fraudulent operations generate so much revenue that legitimate businesses cannot compete for the same Medicaid dollars.
Oz argued New York created the financial mechanism that lets programs like Flushing’s day care centers draw federal money in the first place. Normally, he said, the federal government would not fund this kind of service. Washington already covers more than half of Medicaid’s costs nationwide, with state and local governments splitting the remainder, and Oz said New York’s willingness to build extra funding channels made the state especially vulnerable to abuse.
He argues the state’s Medicaid problems extend past adult day care. Oz said New York’s personal care program, which pays relatives to look after family members at home, has ballooned out of control too. He pointed to the Consumer Directed Personal Assistance Program specifically, telling Catsimatidis the state has let a powerful health care union organize the very attendants being paid through that public money.
Oz Accuses Hochul of Letting Union Dues Bankroll Democratic Campaigns
Oz said the state has allowed SEIU Local 1199 to unionize personal care attendants paid with Medicaid dollars, a decision he cast as more than a labor issue. “It’s a jobs program,” he said, arguing federal money used to pay salaries also funds union dues, and those dues help finance Democratic campaigns in New York. He called it political patronage layered on top of a public benefits program, according to the New York Post.
Taking aim directly at Governor Kathy Hochul, Oz asked pointedly whether the arrangement made sense for someone leading the state. “Is that a really smart thing to do if you lead the State of New York?” he said. He went further, accusing Albany of treating Washington as an open wallet. “They’re using the federal government as a piggy bank,” Oz added, tying the union dynamic back to his broader claim that fraud persists because state leaders benefit from it.
State Comptroller Tom DiNapoli’s office recently found that New York’s $40 billion share of Medicaid spending has surpassed what the state spends on K-12 education, a figure Oz used to argue the program has grown unchecked. “Fraud is rising because government wants it to exist,” he said, framing New York’s spending as evidence of a system built to tolerate abuse rather than stop it.
Hochul’s Office Fires Back as Trump Officials Vow Federal Crackdown
Oz tied his claims to a broader Trump administration effort, saying the Department of Health and Human Services under Secretary Robert F. Kennedy Jr. is coordinating with Vice President JD Vance, the IRS, and other agencies through the White House Task Force on Fraud. He framed the effort as a signal to New York and other states that federal scrutiny of Medicaid spending is intensifying, per the New York Post.
Hochul’s office responded directly to the allegations, saying her administration was already working to eliminate waste before Oz raised the issue. A spokesperson pointed to CDPAP reforms that shut down what the state called wasteful Medicaid middlemen, saving more than $2 billion for taxpayers while preserving home care access. The spokesperson said New York remains willing to work with federal officials to identify genuine bad actors within the program.
Hochul’s office argued the real motive behind Oz’s claims is political, accusing the Trump administration of using fraud accusations to justify cutting programs that serve vulnerable New Yorkers. Oz has not named the specific criminal organizations he says are behind the Flushing scheme, and no charges tied to his allegations have been filed. What remains on record is a public dispute between a federal official and a state government, each defending a $110 billion program neither has fully proven or disproven.