Human Services Legal & Regulatory Upate - Quarterly Newsletter

Bond, Schoeneck & King PLLC is pleased to share its quarterly legal and regulatory update for human services providers. Contact Roger Bearden, Diana Waligora or the attorney with whom you regularly interact for assistance in understanding and navigating the impact of any of the below developments.

We are also proud to announce that the Human Services Legal Academy will return in Fall 2026, bringing essential legal updates and practical guidance for managing organizational risk to five locations across New York State. This training is designed to help compliance officers and other human services professionals stay ahead of rapidly evolving federal and state regulatory requirements affecting services for individuals with developmental disabilities, mental illness and substance use disorders. Attendees will gain insights into updated regulatory requirements, emerging compliance issues, government oversight and best practices for navigating today's complex compliance landscape. View dates and locations for the 2026 Human Services Legal Academy. Formal invitations and registration details will be distributed in September.

FEDERAL UPDATE

On June 18, 2026, the U.S. Department of Justice (DOJ), Office of Legal Counsel, released an Opinion that Title II of the Americans with Disabilities Act and Section 504 of the Rehabilitation Act do not require states to provide services in the most integrated setting. The Supreme Court’s 1999 decision in Olmstead v. L.C. held that unjustified institutionalization of individuals with disabilities can constitute unlawful discrimination under the ADA. Since then, the DOJ has relied heavily on Olmstead to investigate states and negotiate settlement agreements requiring expanded Home and Community-Based Services (HCBS), reduced institutionalization and increased community capacity. The release of the Opinion signals a retreat from this federal work to combat unnecessary institutionalization.

The federal administration has also continued its campaign against fraud, waste and abuse in the Medicaid program, announcing the suspension of a $60 million federal grant to the Medicaid Fraud Control Unit, a division of the New York State Attorney General’s Office, due to the alleged failure of that office to secure a sufficient number of criminal convictions.

The New York State Attorney General’s Office, along with 24 other states, sued the federal administration, challenging the Interim Final Rule issued by the U.S. Department of Health and Human Services (HHS) implementing the federal work requirements imposed in H.R. 1. As alleged, states may need more than a diagnosis to confirm that someone is medically vulnerable, including additional information about how severe their condition is or what care they receive. That information may not be available for many Medicaid members, which means fully eligible recipients may lose coverage if they cannot obtain the required paperwork.

The DOJ also filed a lawsuit challenging the procurement and implementation of the single statewide fiscal intermediary in the Consumer Directed Personal Assistance Program (CDPAP). The lawsuit alleges that the New York Department of Health (DOH) awarded Public Partnerships, LLC (PPL) the CDPAP contract after conducting a compromised bid process, and then, despite learning of PPL’s intent to deviate from the representations made in its bid and violate the financial terms of the contract, failed to take action to hold PPL accountable and to protect public funds from misuse. The resolution of this case may cause reconsideration of the single, statewide fiscal intermediary initiative or rebidding of the contract.

NEW YORK STATE UPDATE

Legislative Activity

The Governor and Legislature finally reached an agreement on the state budget in late May. The final enacted budget did not contain significant new compliance obligations for human services providers.

The late budget created a truncated legislative session. Bills that have passed both houses and are awaiting the Governor’s review include the “Traveling with Dignity Act” (A. 6219B), which would require adult changing tables in certain state-owned facilities, and a bill to establish a statewide group home families working group (A. 1130A).

Regulatory Activity

Following the February announcement of a deregulatory initiative called EXPRESS NY (Expediting Processes and Regulations to Enable Streamlined Services), on June 15, the Governor announced 50 actions across 22 agencies to modify or eliminate regulations. Identified actions include Office of Addiction Services and Supports (OASAS) revisions to detoxification and inpatient rehabilitation care regulations, simplification of the recertification process, modernization of outpatient treatment standards and streamlining of incident reporting; Office for People With Developmental Disabilities (OPWDD) updates to regulations on personal allowances; and Office of Mental Health (OMH) efforts to increase flexibility for Mental Health Outpatient Treatment and Rehabilitative Services (MHOTRS) providers.

OMH’s proposed regulations governing the MHOTRS program can be found here. The OPWDD, OMH and OASAS proposed regulations all appeared in the June 17, 2026 State Register, along with a DOH proposal to streamline Medicaid provider recordkeeping requirements.

The Office of Medicaid Inspector General (OMIG) released a new Applied Behavior Analysis (ABA) audit protocol on its website. The release of a new audit protocol typically precedes enhanced OMIG audit activity in that area.

Bond, Schoeneck & King PLLC will continue to monitor these legal and regulatory developments and provide updates as they become available. To receive updates on issues impacting the human services industry, register here.