New York State Health Labor

New York Medicaid Plans Are Responsible for Wage Theft, Lawsuit Charges

New York’s home care workers are suing insurance companies for systematically underpaying them for grueling, around-the-clock work.

Julia Rock · December 3, 2024

Photo collage of a home health aide fixing a dextrose IV bag, with a background of two large analog clocks showing a late hour.

Home care agencies need only pay aides for 13 hours of their 24-hour shifts under the law, provided the workers have three hour-long meal breaks and at least five hours of uninterrupted sleep. | Photos: Anna Shvets and RDNE Stock Project / Pexels | Illustration: Leor Stylar

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For years, Mei Zhen Xiao worked nonstop for a few days each week caring for an elderly woman who required constant attention. Xiao, a 64-year-old immigrant from China’s Fujian province, slept in a bed next to the patient’s bed and often awoke multiple times in the night.

“As soon as I would lie in bed, about to fall asleep, I would hear the patient call again,” Xiao told New York Focus in Fujianese through a translator. The patient needed frequent help using the bathroom and couldn’t be left to get up alone, Xiao said. “If I didn’t pay attention to her for one second, she would fall.”

In New York, home care agencies can legally pay home health aides like Xiao for only 13 hours of their 24-hour shifts, provided the workers have three hour-long meal breaks and at least five hours of uninterrupted sleep. Xiao, who was paid for 13 hours of each shift, claims she did not get the full meal breaks and rest required by the law.

After countless 24-hour shifts, she collapsed in 2019 and was taken to the hospital for a coronary artery bypass surgery.

Her doctor attributed her “dangerously poor health” to her inability to sleep, according to a new lawsuit filed against the home health agency that hired Xiao, called GreatCare, and the private insurance companies that cover home care through Medicaid.

Workers, advocates, and unions have long alleged that home care agencies are systematically underpaying aides for grueling, around-the-clock work. Now, Xiao and other aides are suing to hold the insurance companies accountable, too.

The suit, filed on September 30, accuses GreatCare and state Medicaid insurers of wage theft from workers on 24-hour shifts, claiming they acted as “joint employers” and are liable for labor law violations. It alleges the insurers authorized 24-hour shifts while paying agencies for only 13 hours of work, despite knowing that workers could not get adequate rest due to patients’ around-the-clock care needs.

According to the lawsuit, Xiao’s working conditions were in large part set by her patient’s state-contracted insurance plan, which controls the workers’ hours, pay, duties and working conditions.

Xiao returned to work 24-hour shifts soon after her surgery. But a few years later, in 2022, she experienced another cardiac event and had a second bypass, putting her out of work for a year. Her health has deteriorated so much that this November, Xiao applied for a home health aide herself through the state Medicaid program.

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Home care is the single biggest line item — and one of the fastest increasing — in the state budget for Medicaid.

The home care workforce has roughly doubled over the past decade to more than half a million people, a figure that includes friends and family members whom patients pick to work as their aides.

Nearly 90 percent of the workers are women and more than 60 percent are immigrants, according to the home care research and advocacy nonprofit PHI. Those workers’ median annual earnings are about $25,000, according to the group, and the workers have long charged that they are exploited in violation of state and federal wage laws.

The workforce is largely a creature of state policy; much of the work is paid for by Medicaid, and the industry has its own minimum wage, set by the state.

Aides have filed numerous wage theft lawsuits and formal complaints with the state Department of Labor, some of which resulted in settlements that awarded back pay to workers. However, for those aides who are part of 1199SEIU, the eastern US health care union, lawsuits are often not possible. That’s because the union’s collective bargaining agreements contain arbitration clauses that require workers to settle wage theft claims out of court.

Worker advocates have criticized those clauses for letting agencies off the hook and leaving aides with paltry settlements. For example, in 2022, the union won a mass arbitration award for over 100,000 workers across more than 40 home care agencies. That required employers to pay $250 per aide into a fund that was divided among workers according to a formula, even though some workers alleged they were owed far more in stolen wages.

Home care agencies have claimed that paying back all of the allegedly stolen wages could bankrupt the industry. The state Department of Labor and 1199SEIU have both echoed that claim.

“For at least the 10 years I’ve been working on this issue, a constant feature of any of the conversations is this idea of pending bankruptcy,” said Carmela Huang, a senior attorney with the National Center for Law and Economic Justice and one of the attorneys who brought the suit against GreatCare and the insurers. “They said, ‘If we were to pay the aides for all of the hours that they worked, these home care agencies would go out of business and all of the people who depend on home care services would be forced into nursing homes.’”

“The state is involved in stealing wages from mostly low-income women of color and immigrant New Yorkers.”

—Harvey Epstein

By contrast, many of the private insurers contracted by New York’s Medicaid program are subsidiaries of large national corporations like United Healthcare and Blue Cross Blue Shield, making the threat of bankruptcy less credible. In many cases, their coverage provides most of the revenue for the home care agencies, meaning they largely determine how much money is available to pay workers.

And they clearly shape the working conditions of home health aides, Huang said. In addition to authorizing 24-hour shifts, they also determine whether workers are eligible for overtime pay and have “adequate sleeping accommodations,” as well as the “scope, amount, and frequency of care,” according to the lawsuit.

“The insurers are the ones who say, ‘You need to assist this person with toileting all 24 hours. You need to turn this person and reposition their body every two hours so they don’t get bed sores’ … These details get turned into a work plan, which becomes the aides’ duties for the shift,” said Huang.

Both defendants in the lawsuit — GreatCare, the home care agency, and the insurer CenterLight — did not return requests for comment. (The lawsuit includes as defendants additional unnamed insurance plans; the plaintiffs have not yet identified which ones paid for the care they gave patients.)

Over a decade ago, former Governor Andrew Cuomo led an overhaul of New York’s system for covering care for elderly and disabled people. The move set up a new type of health care plan through the state Medicaid program, called managed long-term care.

Previously, people could seek home care through their county social services departments, and it was paid for by the state in a “fee-for-service” model. Under the new system, which started in 2011, private insurance companies — through contracts with Medicaid — are tasked with coordinating long-term care for patients and paying for it. The state pays the insurers a flat rate per enrollee each month.

Those insurance plans are the target of the lawsuit.

They’re also recently the target of lawmakers, advocates, and 1199SEIU, who want to get rid of them altogether.

New York State Senator Gustavo Rivera represents the 33rd Senate District in The Bronx and currently chairs the Senate Health Committee.

“It’s a failed experiment,” said Gustavo Rivera, the state Senate Health Committee chair.

Last year, Rivera introduced a bill to get rid of the managed long-term care plans and instead have the state pay home care agencies directly.

Critics charge that the plans are functionally payment intermediaries — as about 90 percent of their coverage is for at-home care — and are skimming hundreds of millions of dollars off the Medicaid program each year in administrative expenses. (1199SEIU has said scrapping the plans would save the state $3 billion annually, although other cost-saving estimates are lower).

“Just paying the plans to pay home care companies does not seem to us like a good use of dollars,” said Helen Schaub, interim political director of 1199SEIU.

Separately, lawmakers have also proposed legislation to end 24-hour shifts altogether. That would mean splitting up the shifts into two 12-hour shifts — and would require the state to pay for the 11 hours that currently go uncompensated. Such a measure would cost $1 billion a year, according to estimates from 1199SEIU and lawmakers.

“The state is involved in stealing wages from mostly low-income women of color and immigrant New Yorkers,” said state Assemblymember Harvey Epstein, who sponsored the bill to end 24-hour shifts. “If the state is going to pay for two 12-hour shifts, insurers are going to hire people to work two 12-hour shifts. The insurers are not going to spend the money if the state is not going to reimburse them for it.”

Update: This story was updated to include more information about the 2022 arbitration award.