ST. PAUL, Minn. — Fighting fraud in state programs will likely be a focus in the state capital next year Federal investigators accused two autism centers of defrauding state Medicaid money and raided their offices on Thursday.
Shortly after the FBI executed these search warrants, DFL Governor Tim Walz told the Minnesota Star Tribune in an interview that there should be stiffer penalties for these crimes. He promised a “pretty important package” of fraud prevention measures.
A spokesman for his office said he will reveal details of the plan before the legislative session begins on January 14.
The federal investigation into the autism centers stemmed from the investigation into the $240 million Feeding Our Future scandal, a scheme to defraud a federal nutrition program, according to a federal search warrant. At least a dozen of the defendants charged for their roles in that case “received money from, or were associated with, autism clinics and other health care companies that received government money” for providing services to support children with autism, the warrant said.
Medicaid reimbursement claims for these services increased from $1.7 million in 2017 to $52 million in 2019 and then a total of $400 million in 2023 and 2024.
Republicans in the House of Representatives, who will share equal power at this point with Democrats in a closed chamber, want the state to block payments to providers linked to known or potential fraud in other programs. GOP chairwoman nominee Lisa Demuth said her caucus will push for answers and accountability next year when they co-chair committees.
She highlighted the work of the nonpartisan Office of Legislative Auditor (OLA), which has reviewed several agencies and state programs and found a pattern of inadequate oversight of safeguarding taxpayer dollars – from Feeding our future to a once-in-a-lifetime pandemic “hero pay” for first responders.
“OLA makes recommendations. We need to hear from the agencies on whether or not they have followed those recommendations and whether they are doing anything to combat fraud. We cannot afford more fraud in the state,” Demuth said.
Lawmakers return Jan. 14 for the 2025 session. They must approve the next two-year budget amid projections of a looming $5.1 billion deficit.
The Legislature approved a new inspector general at the Department of Education following the Feeding our Future scandal. A proposal likely to be advanced next year would do something similar at government agencies: Sen. Heather Gustafson, DFL-Vadnais Heights, wants to create an independent Office of Inspector General to crack down on fraud and ensure proper management of taxpayer dollars.
Demuth said Minnesota does not need to add a new department to curb the problem and believes agencies under their supervision should be held accountable for fraud.
“There should be bipartisan support to stop fraud in Minnesota, and that doesn’t include growing government,” she said.
In 2023, lawmakers directed the Department of Human Services to review the autism programs, now at the center of federal investigation, and make recommendations for regulatory changes. That report is still coming.
Sen. John Hoffman, DFL-Champlin, chairman of the Senate Human Services Committee, in a statement highlighted this provision and promised additional steps.
“Stealing from our most vulnerable is inexcusable and illegal, and the people who committed this fraud must be punished to the fullest extent of the law. We must investigate how the state can prevent this fraud in the future and catch and punish bad actors.” he said.
