ST. PAUL — An indication of how big a political issue fraud has become in Minnesota came the night of Tuesday, Feb. 24, when President Donald Trump delivered his State of the Union address.
"When it comes to the corruption that is plundering America, there has been no more stunning example than Minnesota," Trump said.
The next day, Vice President J.D. Vance announced the freeze of nearly $260 million in Medicaid payments to the state until Minnesota clearly demonstrates the money is being used for legitimate purposes.
Gov. Tim Walz called the move “illegal and unprecedented,” and said the Trump administration is unfairly targeting the most vulnerable people in the state.
The focus on fraud comes after nearly 80 people were charged with stealing as much as $300 million from a pandemic-era child nutrition program and federal prosecutors later alleged widespread fraud in other public programs.
At the state Capitol, Republicans in the House have been trying to force a vote on a bill that creates a new inspector general to oversee public programs. The Senate passed the legislation last year, but Democrats in the House say it needs more work.
Before the latest federal action, Minnesota legislators moved forward on another bill Monday requiring the Department of Human Services to disclose the existence of investigations to health care providers suspected of fraud.
The Republican-led Fraud Prevention Committee voted in bipartisan favor of a bill by Rep. Walter Hudson, R-Albertville. The bill says fraud investigations or payment withholdings must be made known to targeted providers within 30 days of requests to ensure the human services department is acting in an open way.
The bill is a response to several alleged cases of welfare fraud in the state’s Medicaid-funded program to provide necessary medical support for young people with autism spectrum disorder.
Due to a 700% growth in autism centers in the state in a five-year span, the DHS froze enrollment for new providers beginning November 2025. The freeze is expected to end on April 30, 2026, but is subject to change.
At the Monday meeting, acting DHS Commissioner Shireen Gandhi, Inspector General James Clark and DHS Deputy Commissioner and state Medicaid director John Connolly urged the committee to reconsider the bill. Clark raised concerns that investigations of fraud would be jeopardized if suspected parties were informed that the department was looking into them.
“Tipping off the subject allows them to destroy evidence, coordinate their stories, flee the state or the country,” Clark said. “We oftentimes see, unfortunately, unscrupulous providers, when they get wind that we’re investigating them for fraud, they start to threaten or try to influence vulnerable adults, recipients in those programs, to try to get them to change their tune.”
With guidance from the federal Centers for Medicare and Medicaid Services, the DHS introduced a plan outlining intentions to perform unannounced site visits on autism centers and evaluate ownership and credential information.
Despite the updated plan, committee chair Rep. Kristin Robbins, R-Maple Grove, said lawmakers lack trust in the department’s fraud prevention efforts.
“I gave a list of 72 child care providers a year ago to DHS and no one would ever tell me if they had done any follow-up,” Robbins said.
The committee voted to advance Hudson’s bill to the House Children and Families Finance and Policy Committee.
Report for Minnesota is a project of the University of Minnesota’s Hubbard School of Journalism and Mass Communication to support local news across the state.
