New York Medicaid Fraud Scandal: Empty Queens Day-Care Centres Bill 733 Million Dollars in Cash

A staggering concentration of Social Adult Day-Care (SADC) centres operating within a single square mile in Flushing, Queens, has sparked an intense national controversy after claiming upwards of $733 million from New York's Medicaid programme between 2018 and 2024.

While official documentation suggests these facilities provide vital supervision and structured activities for tens of thousands of frail seniors, journalists visiting the highest-billing locations discovered locked doors, dimmed lighting, and rows of empty tables.

According to a recent New York Post investigation, the massive funding influx, accounting for roughly 14 percent of all social adult day-care spending across the entire state, has exposed severe vulnerabilities in oversight mechanisms, fueling allegations of illegal kickbacks and prompting urgent investigations from state comptrollers and federal authorities.

The New York Medicaid fraud scandal has fuelled suspicion that taxpayers' money is being siphoned off while genuinely needy patients are used as cover.

None of the centres highlighted has been charged with a crime, but the numbers alone have triggered alarm in Albany and Washington.

Inside Flushing's 'Empty' Medicaid Day-Care Boom

The vibrant, largely East Asian neighbourhood of Flushing looks from the outside like an unlikely backdrop for a major Medicaid scandal. Yet the sheer density of New York Medicaid day-care providers there is wild, even by city standards.

A one‑mile radius holds 77 SADCs, which collectively bill more than $100 million a year, roughly 14% of all social adult day-care spending in the entire state.

When journalists visited some of the highest‑billing centres, they did not find the sort of scenes you might expect from facilities supposedly serving tens of thousands of frail patients.

At Livingwell Day Care on Northern Boulevard, which federal health data show billed around $27 million between 2018 and 2024 for more than 26,500 patients, the lights were dimmed over rows of empty tables near the entrance.

No seniors were visible during a weekday visit, and a man at the front desk refused to answer questions, reportedly chasing a journalist and cameraman out and threatening to call the police.

Bao Kang Adult Day Care on Blossom Avenue told a similar story. The centre billed about $32 million over the same period and was associated with 43,900 patients in federal records.

A worker, who gave her name as Wendy, said the facility usually serves between 100 and 200 people a day, but when asked about the Medicaid totals, she replied, 'I don't know.'

A security monitor behind her desk, showing the common areas, reportedly displayed only empty rooms at the time.

Other outfits followed the same pattern. Merry Adult Day Care, which billed roughly $25 million for 31,500 patients, had a masked worker briefly poke her head out before asking reporters to leave.

Kang Hua on Main Street billed $22 million for 25,800 patients, Greater New York Social and Health billed $28 million for 32,500 patients, Evergreen Adult Day Care took in $32 million for 57,500 patients, and Sunrise Senior Service billed $45 million for 56,800 patients, according to the data.

As of this writing, none of these facilities has been officially accused of fraud, and officials stress that high billing alone does not prove wrongdoing.

How the New York Medicaid Fraud Scandal Works on the Ground

Those who live and work around the centres say the New York Medicaid fraud scandal is not some abstract policy argument. It shows up in the most basic transactions of daily life.

Kenny Chan, who runs a local pharmacy, described how seniors come in and ask bluntly, 'Do you have any benefits for me?'

In Flushing, that phrase is commonly understood as code for illegal kickbacks, where a patient receives cash in exchange for allowing a provider to bill Medicaid in their name.

Chan told investigators he refuses to play ball and has paid a steep price. 'I say, no, we don't do that here. I've lost so much business. I've had to pull money out of my own pocket to keep the business going,' he said.

During a half‑hour conversation, he did not have a single customer, and pointed down the street to another tiny pharmacy that he claimed was a fraud hotspot, packed with seniors and staff wielding clipboards.

'The new pharmacies, the ones that have been here five or 10 years, they offer a lot of "benefits". About 60 or 70% of them have a connection with the daycare centres,' he added. 'If I did that, I would be very busy.'

An earlier investigation found that in a typical SADC scam, seniors can receive between $500 and $1,000 a month in kickbacks, while the centre bills Medicaid upwards of $3,000 per patient.

According to city and federal figures, Flushing's 77 SADCs billed a combined $733 million from 2018 to 2024.

When reporters toured more than a dozen facilities earlier this year, they found a mixture of apparently legitimate services and operations that looked barely distinguishable from ordinary senior centres, which should not be funded through Medicaid.

In some, active, apparently healthy older people played mahjong and table tennis, rode exercise bikes and enjoyed lunches from local restaurants. On the face of it, none of that met the higher threshold of medical need that the state's own rules say SADCs must satisfy.

Officials Split as Oversight Failures Exposed

State and federal officials began trading blame over who should have spotted the problems sooner.

New York State Senator John Liu, who represents Flushing, argued that the explosion of Medicaid‑funded day-care sites may partly reflect a lack of conventional senior‑centre provision.

'You come to Flushing, you cannot help but see a preponderance of older residents, older Asian residents,' he said. 'And with that concentration, for there to be only one senior centre in downtown Flushing, that speaks to the lack of resources, which perhaps all these centres have sprung up in order to fill the void of.'

He added that it would be 'misguided' to paint all the centres with the same brush or to label Flushing 'the epicentre of this kind of fraud, if it exists'. That cautious note contrasts sharply with the view from Washington.

Administrator Centres for Medicare and Medicaid Services Dr Mehmet Oz has been blunt, accusing New York officials of allowing lax oversight to turn SADCs into 'cash cows for criminal syndicates'.

'Due to a lack of proper state oversight, these centres have become cash cows for criminal syndicates, who use kickbacks and other illegal practices to steal millions from Medicaid,' he said.

Pointing to the fact that Flushing alone accounts for around 14% of all SADC spending in the state, he argued that it is 'pretty obvious that these centres aren't popping up solely to fulfil a legitimate need in the community'.

A 2026 audit by the New York State Comptroller's Office backed up concerns about weak controls. Reviewing payments between January 2019 and October 2024, auditors found that managed long‑term care plans had reported about $2.4 billion in SADC spending.

More than $285 million of that was flagged as 'questionable' because providers continued to receive payments after being terminated from at least one of six managed care networks examined.

Roughly $28.6 million involved providers removed for reasons related to fraud, waste, abuse, integrity or quality issues. The Comptroller recommended that the Department of Health scrutinise those payments, claw back money where appropriate and tighten its systems for tracking terminated providers.

Criminal Cases Show the System's Weak Spots

Separate criminal cases in New York have already exposed how social adult day care can be weaponised inside wider Medicaid scams.

In February 2026, federal prosecutors charged Flushing residents Inwoo Kim and Daniel Lee in what they allege was a $120 million scheme involving a pharmacy and two SADCs.

According to the US Department of Justice, the pair are accused of paying Medicaid recipients cash and supermarket gift cards to join their day-care centres or obtain prescriptions from their pharmacy.

Medicare and Medicaid then allegedly paid out around $120 million for drugs and day-care services that were medically unnecessary, never provided or arranged through illegal kickbacks, sometimes exceeding the centres' permitted capacity.

Kim and Lee have been charged with conspiracy to commit healthcare fraud and remain presumed innocent while the case proceeds.

In a separate prosecution, Brooklyn operator Eric Zhu surrendered in July to begin a 57‑month prison sentence after admitting 'kickback scheme' through Prime Life Adult Day Care. Court records show that Prime Life billed Medicaid about $3.2 million for services that recipients never received after being paid cash to enrol. Zhu was ordered to repay nearly $3.2 million and forfeit $1.5 million in proceeds.

None of this proves that every quiet SADC in Flushing is part of a scam, and state officials insist that many centres do provide a lifeline to people with genuine care needs. Yet when a single New York neighbourhood can run up three‑quarters of a billion dollars in day-care bills in six years while some of its flagship sites sit all but empty, it is hardly surprising that taxpayers and honest providers like Chan are asking who exactly the system is really serving.

Social Adult Day-Care programmes, known as SADCs, are supposed to be a safety net for people who are elderly or living with chronic illness or disability, giving them structured activities, meals and supervision so they can remain in their communities rather than be pushed into nursing homes.

Under New York's Managed Long-Term Care scheme, only adults who are clinically assessed as needing a nursing home level of care, or significant help with daily tasks such as bathing or eating, should be enrolled.

The state's Department of Health policy requires those needs to be documented in a care plan and reviewed over time. Senior centres open to anyone over 60, by contrast, are not funded by Medicaid and are meant to be more like community clubs.

In Flushing, that distinction has become so blurred that even local politicians and staff interviewed in the area admitted they were unsure where one category ended and the other began.