New York's Health Firms Set to Gain Millions Meant for Care Workers

The Hidden Financial Gains of Health Care Companies at the Expense of Home Care Workers

New York’s home care workers, many of whom are women and immigrants, are facing a complex financial situation that could cost them millions of dollars each year. Two health care companies, Public Partnerships, LLC (PPL) and Leading Edge Administrators, have been found to be positioned to keep significant portions of money that should legally go to these low-wage workers.

PPL recently took over New York’s state-funded home health program, while Leading Edge was hired by PPL to provide insurance and other benefits to the hundreds of thousands of workers in the sector. This new coverage began in May, but investigations have revealed that Leading Edge has been using a business model that allows employers to retain funds that should be given to their employees.

According to a New York Focus investigation, this strategy could enable the two companies to hold on to nearly $100 million annually in New York. LaDonna Lusher, an employment law partner, noted that “that is them keeping the money that they were supposed to pay to the employees.” She suggested that the New York attorney general could investigate the matter further.

Despite these concerns, the attorney general’s office has not commented on the issue, and the state has not accused the companies of any wrongdoing. However, PPL is currently facing multiple lawsuits alleging underpayment of home care workers, who generally earn about $20 per hour. The company denies these allegations.

The Two-Part Model of Leading Edge

Leading Edge’s business model consists of two main components. The first involves deducting 40 cents per hour from every home care worker’s paycheck to fund a health plan. This plan primarily covers basic preventative care, such as annual physicals and mammograms, which many workers already have coverage for through other means.

Because most aides do not use the insurance, Leading Edge and PPL can keep the money taken from the workers’ paychecks instead of spending it on health care. There is no option for most workers to opt out of this arrangement. Maggie Ornstein, a home health aide, expressed her frustration with the plan, stating she already has insurance that she pays for and does not want anything to do with the Leading Edge plan.

The second part of the model involves deducting more money from hourly pay and placing it into an account for expenses like prescription drugs and transportation. Many aides find this account difficult to use, and the company admits that roughly a third of employee funds go unspent. This could result in tens of millions of dollars not reaching the workers each year.

A History of Concerns and Legal Issues

New York Focus’s investigation into Leading Edge has uncovered troubling details. Patients have been left in ruinous medical debt, and numerous suits by doctors and hospitals have accused the company of not paying bills. The founder, Jerry Weissman, was convicted of insurance-related felonies and served 18 months in prison.

Even how the company spends its profits is questionable. Weissman and his wife run a charity, the Modim Foundation, to which they and their companies have donated over $5 million since 2022. Despite repeated inquiries, the charity has refused to disclose where the money was sent, raising questions about its true charitable intent.

Some legislators have expressed concern about Leading Edge’s practices, but the company has not faced consequences or public scrutiny from government regulators. A legislative hearing to investigate PPL’s takeover of the home care program was postponed, highlighting the lack of immediate action.

The Impact on Home Care Workers

The programs offered by Leading Edge have their roots in a 2011 New York state law known as “wage parity,” which requires home care workers to be paid a supplemental amount in addition to the state minimum wage. However, companies like Leading Edge have found ways to circumvent this by offering benefits instead of cash.

Edward Larned, a vice president at Clarity Benefit Solutions, stated that these plans are often useless for workers because they already have public health insurance or coverage through another job. He described the Leading Edge plan as “the worst plan ever.”

There is no way to opt out of the Leading Edge plan unless workers purchase an even more expensive plan from the company, which also has huge gaps in coverage. Most workers are already covered under a different insurance, meaning the 40 cents per hour that they pay for the Leading Edge plan will likely go unspent.

In a 2018 podcast, Mayer Majer, an insurance and benefits specialist at Leading Edge, acknowledged that “utilization is really low” for these kinds of plans. According to a former employee, the average number of bills submitted under similar plans was less than one per employee per year.

The Broader Implications

Leading Edge’s business model relies on making benefits difficult to claim, allowing the company to save significantly when employees don’t use the full value of their benefits. This practice has led to significant profits for the company and its clients, with profit margins as high as 70 percent per year.

If the plan that Leading Edge is offering PPL hits that benchmark, it could mean that the two companies will reap nearly $60 million a year in profits. This highlights a broader issue of companies profiting from the wages meant for low-wage workers, raising serious ethical and legal concerns.

As the debate continues, it remains to be seen whether regulatory bodies will take action to ensure that home care workers receive the compensation they deserve. For now, many workers are left in a system that seems designed to benefit the companies rather than the individuals who need the support the most.