Gov. Walz unveils fraud plan, blasts Trump admin over Medicaid pause

ST. PAUL, Minn. (FOX 9) - Gov. Tim Walz laid out his own plan to take on fraud in Minnesota on Thursday while also lambasting the Trump administration for the announced pause to Medicaid funds.

Gov. Walz fraud plan

What we know:

Gov. Walz's plan focuses on stopping fraud through three pathways: better detection and oversight, investigative and enforcement authority, and increased criminal penalties for violators.

Among other proposals, Walz's plan would expand audit and internal control capacity, use analytics and machine learning to detect suspicious billing, ban legislatively named grants, establish a centralized Office of Inspector General, and create a new theft of public funds statute that would increase penalties by 20 percent.

Dig deeper:

Program Integrity Director Tim O'Malley, who was tapped by Gov. Walz to lead an investigation into the state's fraud problem last year, released a report this week on Minnesota's fraud situation.

It found failures by the state dating back to the 1970s and the state consistently failing to act on the recommendations of state and federal auditors to address weaknesses in fraud prevention.

The report also included analysis from former Department of Human Services workers who claimed department leaders urged "compassion over compliance" when it came to fraud prevention measures.

What they're saying:

"The person who's angriest about this fraud is me," said the governor. "There is certainly no political upside to having fraud in your state, and it undermines the very program that I have spent a lifetime advocating for and trying to implement."

The governor also railed against the Trump administration's announcement on Wednesday that it would pause some Medicaid funding for Minnesota. https://www.fox9.com/news/jd-vance-medicaid-funding-pause-fraud-minnesota-feb-25

"It is absolutely not serious," said Walz. "It's not meant to fight fraud. How taking health care from 400,000 children, pregnant women and the elderly… I would ask all of you, did you hear in there what specific steps they were going to take to stop the fraud, or what the specific fraud they were talking about?"

He also accused Republicans of using fraud as an election talking point rather than an issue they were serious about handling.

"This president has pardoned people who took part in Medicaid fraud, who were responsible for paying back almost $300 million, and because he pardoned them that went away," said Walz. "I'm counting on Republican leadership here in the legislature, to say we're going to give them the tools to put people in jail who commit fraud."

The other side:

Gov. Walz faced some pushback from fellow DFL members on his plan. DFL Senator Bobby Joe Champion said he wouldn't support a plan that includes an end to direct appropriations.

"Direct appropriations have not led to the fraud that our state government is confronting," wrote Sen. Champion in a statement. "I look forward to working with the governor on an anti-fraud package that does not actively or intentionally seek to harm communities of color and the organizations that seek to serve them. The Governor’s actions appear to blame direct appropriations for the fraud facing our state. I stand ready, willing and able to continue tackling the challenges related to fraud. However, I am not willing to blame avenues used to invest in communities across our state that includes, but is not limited to, communities of color, that are not the source of or a contributor to fraud across our state."

House GOP Leader Harry Niska also blasted the governor for his political rhetoric during the news conference.

"Governor Walz’s indignation theater this morning proved only one thing – Democrats in Minnesota are feeling the heat over the fraud they’ve enabled for years, and now they’re trying to do damage control. House Republicans have been sounding the alarm over fraud for years, and we’ve been blocked from acting at every turn by House Democrats – seven times on the Office of Inspector General bill alone. Governor Walz would rather talk about President Trump than the culture of fraud in his agencies, which he’s allowed to continue unchecked for his entire seven years in office. We hope Governor Walz and House Democrats will join us in making real strides on fraud as soon as possible."

DFL members introduce their plan

The backstory:

Attorney General Keith Ellison and Democratic leaders in the Minnesota leadership both released their own plans to take on frauds on Wednesday.

Ellison and Rep. Matt Norris pushed for a revised MAP Act on Wednesday which would increase staffing in the attorney general's fraud unit, give him increased subpoena powers, make it easier to prosecute Medicaid fraud cases, and increase the penalties for Medicaid fraud.

Later that day, DFL leaders also introduced a package of 13 bills aimed at taking on Medicaid fraud. The bills would allow for increased site visits, background checks on providers, electronic visit verification, and modernizing state computer systems.

GOP released their own fraud plan

The other side:

At the same time, GOP members have unveiled their Fraud Isn't Free Act, which would hold agency heads and staff accountable for not acting quickly enough to respond to fraud cases.

The bill would also include budget penalties for agencies that are dealing with fraud and salary penalties for the agency heads.

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