On October 20, 2026, Governor Hochul announced that New York and federal agencies have opened a joint review of more than 100 social adult day care (SADC) providers suspected of fraud or other illegal activity. The review draws on the Department of Health, the Office of the Medicaid Inspector General (OMIG), the Attorney General's Medicaid Fraud Control Unit (MFCU), the U.S. Department of Health and Human Services Office of Inspector General, the FBI, and more than a dozen other federal, state, and local partners. The state's own figures show the scale of the effort: OMIG investigated 387 subjects tied to SADC operations between 2021 and 2025, and the Attorney General's Medicaid Fraud Control Unit secured 59 indictments and 13 convictions in the current fiscal year alone.
What New York Ordered
Governor Hochul directed the Department of Health and OMIG to require health plans to implement prepayment review of SADC claims and to pursue payment suspensions. The Department of Health must deliver recommendations to the Governor by December 31, 2026, that may include phasing out the SADC benefit and transitioning participants to other services. A moratorium on new SADC providers, in effect since July 2026, continues until at least January 2027 and may be extended. More than 400 SADC programs currently serve approximately 45,000 Medicaid members statewide, at an estimated annual cost of more than $500 million.
Why Regulators Are Looking At SADC Now
Federal prosecutors have already brought cases built on this fact pattern. In February 2026, prosecutors unsealed a complaint in Brooklyn charging two Queens men with an alleged $120 million scheme in which Medicare and Medicaid paid for adult day care and pharmacy services the complaint says were medically unnecessary, not provided, or induced by kickbacks; the defendants are presumed innocent unless and until proven guilty. The scrutiny is not new. A 2020 federal audit had already found that 18 of 20 New York adult day care facilities it reviewed did not comply with the health and safety requirements in the state's own managed care contracts, across staff training, physical environment, emergency preparedness, and staff health status.
New York's moratorium on new SADC providers, in place since July 2026, continues at least until January 2027, while the Department of Health decides whether to recommend phasing out the benefit entirely.
What This Means for Programs Not Named in the Review
Prepayment review and the possibility of a payment suspension now apply to the sector broadly, reaching providers who were never named in any enforcement action. Every SADC location that contracts with a managed long-term care plan still must certify its compliance with 9 NYCRR 6654.20 for each location. The moratorium blocks new providers from entering the program. An existing provider's certification and documentation duties remain unchanged, and a program that has never been the subject of an inquiry can still be selected for prepayment review or an audit.
First Steps If Your Program Receives an Inquiry
A program that receives a document request, a prepayment review notice, or a visit from investigators should retain healthcare defense counsel before anyone on staff answers questions or produces records, and should let any lawful site visit or document request proceed without interference. Records should be preserved exactly as they exist: nothing should be altered, destroyed, or created after the fact to fill a gap. Staff should not discuss the inquiry with members, their families, or each other in a way that could be read as coordinating accounts, since any of them could be a witness. These steps protect the program's position whether the inquiry resolves without further action or becomes something more.
Why Early Legal Counsel Is Critical
It is critical that social adult day care programs promptly retain experienced healthcare defense counsel upon receiving a document request, an investigative inquiry, a prepayment review notice, or any other government contact. Early legal intervention can protect the program's rights, ensure appropriate responses to government requests, avoid inadvertent admissions, and preserve defenses that are only available before an inquiry becomes a referral. Delaying legal representation can significantly affect the outcome of a matter and expose the program to unnecessary risk.
How Health Law Alliance Can Help
Health Law Alliance's healthcare fraud defense attorneys represent social adult day care programs and their owners in federal and state healthcare fraud investigations. Health Law Alliance has represented 2,500+ clients nationwide. If your program has received any inquiry connected to New York's SADC review, contact Health Law Alliance's healthcare fraud defense attorneys for a free, confidential consultation.
