The health network is accused of wrongfully obtaining and distributing COVID vaccines.
In a statement, the attorney general's office said James wanted to avoid "even an appearance of conflict."
Critics questioned her political ties to ParCare CEO Gary Schlesinger.
In December, ParCare returned 2,300 doses to the state after being accused of obtaining them illegally and offering shots on a first come, first serve basis.
MORE FROM CBS NEW YORK
- Must-See Video: Hollywood-Style Heist Leaves Bronx Business More Than $35,000 Light And In Danger Of Closingr
- 2021 Predictions: What Psychic Nikki Sees For Us In The Coming Year: A Slow Transition Back To Normal
- Squirrel-Mania! Queens Residents Describe In Graphic Detail Being Attacked By Crazed Rodents
for more features.