Cayuga Centers Lawsuit: ADA, Retaliation, and Federal Audit

Cayuga Centers, the Auburn, New York nonprofit that grew into the country’s largest foster care provider for unaccompanied migrant children, is the subject of multiple active lawsuits and federal investigations. A Cayuga Centers lawsuit filed in November 2025 by its ousted longtime CEO under the Americans with Disabilities Act is the most prominent, but the organization is also defending a Title VII retaliation case brought by its former head of human resources, facing Federal Tort Claims Act claims over harm to migrant children in its foster network, sitting under a Senate oversight investigation and a federal audit, and cutting 335 jobs as its finances collapse.¹²³

The Former CEO’s ADA Lawsuit

Edward Myers Hayes ran Cayuga Centers for three decades. In November 2025 he sued the organization in the U.S. District Court for the Southern District of New York, in a case captioned Hayes v. Cayuga Home for Children, Inc. (1:25-cv-09333). Along with Cayuga Centers, he named Board Chair Dr. Andy Lopez-Williams, outside auditor Elaine Buffington, and the accounting firms Buffington & Hoatland CPAs LLC and Dannible & McKee LLP as defendants.¹

Hayes alleges he lost an arm to a rare infection he contends was work-related, and that Cayuga Centers forced him out in 2025 only weeks after the amputation while he was still recovering. His complaint asserts disability discrimination, retaliation, and defamation, and he is seeking reinstatement together with damages calculated through 2031.⁴

Cayuga Centers has pushed back hard. In its December 2025 answer and counterclaim, the organization alleges Hayes was responsible for millions of dollars in losses and engaged in misconduct. Hayes denies those allegations.⁴ The court sent the case to mandatory mediation in January 2026. As of mid-2026 it is still in discovery, with no settlement.¹

The Graber Retaliation Lawsuit

Before Hayes sued the organization, two members of the Graber family sued him. Kathryn Nolan Graber, who spent eight years as Cayuga Centers’ Vice President of Human Resources, filed suit against Cayuga Centers and Hayes personally in the Northern District of New York in April 2024 (Graber v. Cayuga Home for Children, 5:24-cv-00468). Her claims arise under Title VII and the New York State Human Rights Law, alleging retaliation and constructive termination.²

According to the complaint, Graber took part in an internal investigation in early 2023 into age discrimination claims that a chief operating officer had filed against Hayes. After that investigation, she alleges, Hayes retaliated by stripping her of responsibilities, trying to have her husband fired, cutting her out of communications, criticizing her publicly, and replacing her while she was on family medical leave.²

The court denied the defendants’ motion to dismiss in November 2024, finding Graber had pleaded plausible claims for constructive discharge, retaliation, and a retaliatory hostile work environment. It denied a motion for reconsideration in January 2025.⁵ A related Section 1983 employment discrimination case brought by Christopher P. Graber (5:24-cv-00470) settled after mediation and was dismissed in April 2025.⁶

Child Safety Claims Against Cayuga Foster Homes

Cayuga Centers holds the largest federal contract for placing unaccompanied migrant children with foster families, and several of those placements have produced legal claims. Legal filings reviewed by PBS Frontline and the Los Angeles Times identified three of four documented incidents of physical harm to separated migrant children as occurring in Cayuga Centers homes.⁷

One memo filed in a federal family-separation case describes a foster parent finding a three-year-old girl being forced by another child into sexual contact. In another matter, a mother filed a $6 million claim alleging that her five-year-old daughter suffered lasting emotional trauma, including nightmares and a strong fear of uniformed authority figures, during her placement in a Cayuga foster home.⁷

Families are pursuing these claims under the Federal Tort Claims Act, which allows suits against the federal government for harm inflicted while children are in government custody. Attorneys have said dozens more claims are likely. A broader FTCA case, C.M. v. United States (2:19-cv-05217, D. Ariz.), filed in September 2019 by five asylum-seeking mothers and their children, alleges intentional infliction of emotional distress and negligence tied to family separation. The court denied the government’s motion for summary judgment in late 2023, and the case is pending.⁸

Cayuga Centers has said child protection is its “number one priority,” that allegations are reported to the New York State Office of Children Services, the NYPD, and the Office of Refugee Resettlement, and that children are removed from a foster home immediately when an allegation is made, with the home suspended pending investigation.⁷

Incidents at the Auburn Campus

The Auburn residential campus has generated hundreds of emergency calls involving runaways and violent episodes. Between 2017 and 2018, juveniles repeatedly fled the facility. In May 2017, seventeen-year-old Destani Williams ran away from a Cayuga Centers residential program and was found dead in Dunkirk, about 170 miles away.⁹ Other incidents included residents injuring police officers and staff, teens throwing chairs through windows, and two escaped residents arrested for an attempted armed robbery in June 2017.¹⁰

In the year leading up to May 2017, three Cayuga Centers workers were arrested on abuse charges, and the agency faced a negligence lawsuit tied to these incidents. In August 2017, Auburn police union president Joseph Villano wrote to the Cayuga Centers board of trustees, accusing the organization of having “evolved into a business whose priority is making money as opposed to a family service that helps youth meet the challenges of life.”⁹

Senate Oversight and Federal Audit

Cayuga Centers is one of 23 contractors and grantees targeted by Senator Chuck Grassley’s oversight investigation into the Department of Health and Human Services’ unaccompanied children program. Grassley has said those 23 organizations have collectively received more than $9.3 billion in taxpayer funding and have failed to respond fully to congressional inquiries, or have given what he called “incomplete and obstructive responses.”¹¹

Grassley’s investigation alleges “shocking mismanagement” and “potential evidence of child smuggling and trafficking” within the program, including claims that HHS placed minors with sponsors linked to MS-13 or possible trafficking rings. He sent letters to the 23 organizations in February and April 2024 and renewed his demands in March 2025. At his January 2025 confirmation hearing, HHS Secretary Kennedy pledged departmental cooperation.¹¹

Separately, a 2026 report noted that Cayuga Centers faced a federal audit over the improper use of federal funds intended for housing unaccompanied children.¹²

Financial Collapse and 2026 Layoffs

The legal exposure sits on top of a financial emergency. An independent audit for the fiscal year ending June 2024 flagged “substantial doubt about this organization’s ability to meet its financial obligations and continue operating for the foreseeable future,” and also found material noncompliance with legal and contractual requirements and material weaknesses in internal financial controls.¹³

Cayuga Centers reported $120.3 million in revenue against $145 million in expenses that year, a net loss of nearly $24.8 million. Liabilities of $74.9 million outstripped assets of $67.3 million, leaving negative net assets of $7.6 million.¹³ Reports have attributed more than $20 million in losses to leadership misconduct and mismanagement.³

In April 2026, Cayuga Centers filed a Worker Adjustment and Retraining Notification (WARN) notice with the New York State Department of Labor announcing 335 job cuts. Of those, 319 were at the East Harlem facility at 1916 Park Avenue that houses unaccompanied migrant children, 14 at the Auburn headquarters, and one each in Albany and Utica. The layoffs were scheduled to take effect on June 30, 2026.³¹⁴

One Cayuga Centers federal contract remains active: a cooperative agreement for the Home Study and Post-Release Services program, awarded in January 2024, with a total obligation of about $50 million and a performance period through December 2026.¹⁵ Whether the foster care and shelter contracts have been formally terminated has not been publicly confirmed; the federal government has declined to release a list of ended contracts.¹²

1
CourtListener. Hayes v. Cayuga Home for Children, Inc.
2
Midpage. Graber v. Cayuga Home for Children
3
Finger Lakes Daily News. Report: Cayuga Centers Slashing Auburn Jobs
4
Finger Lakes 1. Former CEO of Cayuga Centers Fights Firing After Amputation
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CaseMine. Graber v. Cayuga Home for Children
6
PACER Monitor. Graber v. Cayuga Home for Children et al
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PBS Frontline. Migrant Kids Split at Border Harmed in Foster Care
8
American Immigration Council. Separated Family Members Seek Monetary Damages
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The New York Times. Cayuga Centers Immigration Separated Children
10
Syracuse.com. Cayuga Centers Coverage
11
U.S. Senate Committee on the Judiciary. Grassley Reignites Oversight of HHS’s Unaccompanied Migrant Children Program
12
New York Focus. Unaccompanied Immigrant Children ORR Contracts
13
ProPublica Nonprofit Explorer. Cayuga Home for Children
14
PIX11. Nonprofit Closing NYC Facility, Laying Off Hundreds of Workers
15
USAspending.gov. Award: ASST NON 90ZU0627 7590