Gov. Tim Walz on Monday, July 28, said his administration has halted payments to 50 of the largest providers in the state’s Housing Stabilization Services program, which federal investigators say is the source of a massive fraud scheme.
Earlier this month, the FBI raided five Minnesota businesses that have received millions in Medicaid money for services they didn’t provide, according to unsealed search warrants. The Housing Stabilization Services program is intended to help older adults and people with disabilities find and maintain housing.
Acting U.S. Attorney Joe Thompson told KSTP that the “vast majority” of the Housing Stabilization Services program is fraudulent. He said that when his current investigations are finished, fraud in programs administered by Minnesota could exceed $1 billion, stemming from a pandemic-era food aid program known as Feeding Our Future, the state’s autism program and rapidly increasing sums allegedly pilfered from other Medicaid programs.
Walz, at a ceremonial bill signing in Delano, said that earlier in the day Monday — nearly two weeks after the FBI raids — his administration halted payments to “most of the people involved” in the Housing Stabilization Services program. The governor said he “fully expects” some providers could wind up suing to resume payments, as occurred in a now infamous Feeding Our Future lawsuit in 2021. He agreed with Thompson that fraud in Minnesota could exceed $1 billion.
Asked whether his administration should be held accountable, he gave a lengthy answer.
“Well, I think you’re always accountable for when things happen, but I think the accountability piece that we’re going to have to try and understand is — we’ve seen fraud, whether it’s in United Healthcare, we’ve seen it in other places,” Walz said, referring to a series of investigations of the Eden Prairie-based health insurance giant.
“The question is, in state government, our job is to carry out the programs to try and get the resources to the people who need them. We work with our partners in the counties and so forth, but I think on this one, the question I’m asking is, is the safeguards in place strong enough?”
Walz said fraudsters took advantage of the flow of money moving through government during the pandemic, when policymakers were more concerned with getting money out the door during an emergency rather than enforcing typical safeguards to prevent fraud.
“Anytime, especially during COVID and post-COVID, when you have that much money moving and the idea is to move it as quickly as possible, folks will take advantage of that.”
“So my goal is, and thanks to the Legislature we’ve got some pretty good tools right now, but I think in talking to the U.S. Attorney, one of the things we have to think more of is, these people are being arrested and they’re going to prison. Right now the folks who are involved in this, you will be going to prison.”
Walz said that as a result of the investigations, state government is bound to move slower as it seeks to create more barriers to fraud.
“All of us are going to have to candidly recognize there is going to be legitimate organizations and legitimate need for people in good programs that are just going to have to be a little bit slower and a little more barriers put in place because even right now, the folks can find the loopholes,” Walz said.
Rep. Kristin Robbins, R-Maple Grove and chair of the House fraud prevention committee, asked the feds to conduct an audit of the Minnesota Department of Human Services, which administers the House Stabilization Services program.
“This culture of corruption must end. It’s time for real accountability, and that starts with a full, independent federal audit,” Robbins said in a news release.
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