Medicaid in Minnesota: Fraudsters owe millions but pay back little
MN fraud: Why millions in restitution owned by fraudsters remains unpaid
Since 2020, restitution has been ordered in at least 48 cases prosecuted by the Medicaid Fraud Control Unit at the Minnesota Attorney General’s Office. The combined restitution totaled more than $13.3 million. As of this spring, only $2.355 million has been re-paid (less than 18%). Nearly $11 million is still owed, according to a review by the FOX 9 Investigators.
ST. PAUL, Minn. (FOX 9) - The FOX 9 Investigators are following stolen Medicaid funding and tracking what happens after providers are convicted of fraud.
By the numbers:
Since 2020, restitution has been ordered in at least 48 cases prosecuted by the Medicaid Fraud Control Unit at the Minnesota Attorney General’s Office.
The combined restitution totaled more than $13.3 million.
As of this spring, only $2.355 million has been re-paid (less than 18%).
Nearly $11 million is still owed, according to a review by the FOX 9 Investigators.
The outstanding debts range from $69 to nearly $1.7 million.
In an interview with the FOX 9 Investigators, Attorney General Keith Ellison acknowledged it is difficult for prosecutors to recover those debts.
"For the person who just doesn't care and is trying to get away with wrongdoing, I think we need stronger medicine for people like that," Ellison said.
What we know:
In most Medicaid fraud cases, restitution is a condition of a defendant’s probation.
They are ordered to make monthly minimum payments based on their ability to pay.
If a defendant fails to make regular payments, their probation can be revoked or extended.
"So we can go back to court and say, ‘Judge, they haven't paid,’" Ellison said.
However, a defendant’s probation can only be extended up to two years, according to state law.
Ellison acknowledged probation can "unfortunately" end regardless of how much restitution is still owed.
The FOX 9 Investigators identified several fraudsters who were discharged from probation despite making few or even no payments.
READ MORE: Medicaid fraudster wants to shield bank account from prosecutors
Timeline:
Ali Ismail Warsame and several co-defendants owe $667,719 to DHS and several private insurers.
Warsame was convicted in 2022 on three felony counts of Aiding and Abetting Theft By False Representation for running a Medicaid scheme involving personal care associates.
He was ordered to pay at least $50 a month while serving a three-year prison sentence.
Warsame was released from prison in May 2024 to participate in a work release program. At that point, his payments were supposed to increase to $300 a month.
Despite not making a single payment, Warsame was discharged from probation this past January, according to state and court records reviewed by the FOX 9 Investigators.
"The legislature does need to increase the number of ways to make people pay back the restitution," Ellison said.
The backstory:
Warsame was mandated to pay all restitution no later than five years after being released from custody.
Most court orders include similar boilerplate language that requires restitution to be fully repaid before the end of their probation, regardless of how unlikely it might seem.
Judges and prosecutors acknowledge it is "mathematically impossible" for some debts to be paid.
Big picture view:
But the Minnesota Court of Appeals has found a defendant’s "inability to pay cannot extinguish a victim’s right to restitution."
Judges have broad authority to allow defendants to make smaller or "reasonable" payments over longer periods of time.
A defendant’s debt can also be reduced if a judge orders joint-restitution with their co-defendants — essentially a group tab that does not have to be evenly split.
If a defendant fails to make payment for two months, the outstanding debt is supposed to become due immediately.
While that doesn’t increase the likelihood of the debt actually being repaid, it can trigger additional financial penalties.
The court can forward the debt to the Minnesota Department of Revenue for collection, and a collection fee of up to 25% may be charged.
After that, the state has few tools to actually claw back the money.
Local perspective:
Ellison says the Medicaid Fraud Control Unit cannot use criminal or civil forfeiture to seize assets the way the federal government has done in the Feeding our Future cases.
The U.S. Attorney's Office for Minnesota has seized homes, luxury cars and designer jewelry which has helped them recover more than $65-million in stolen money that was supposed to help feed hungry children.
"The federal government does have that as a tool," Ellison said.
While state law allows certain law enforcement agencies to seek asset forfeiture, it does not explicitly list the Medicaid Fraud Control Unit.
"We need clarity in a law that we have the jurisdiction to do it. And we would need the resources to do it," Ellison said.
Until then, prosecutors' best chance at recovering significant amounts of restitution is to freeze bank accounts, which Ellison says his office has done aggressively.
"We can say to the court, ‘Hey, this person has this account, that account, the other account, there's money in those accounts that could be used to pay the restitution. Judge, freeze that,’" explained Ellison.
Dig deeper:
In 2024, a Hennepin County Judge agreed to freeze seven checking and savings accounts that belonged to Xiaoyan Hu.
Hu was convicted of four felony offenses related to Medicaid fraud and ordered to pay more than $500,000 in restitution to DHS and several private insurance companies.
Prosecutors used more than $284,000 from her bank accounts to pay back the restitution. Hu eventually paid back the entire amount.
But another defendant recently argued one of his business accounts should be off limits —even though he still owes more than a million dollars in restitution.
A judge will soon decide whether the state can seize another $650,000 to pay off the debt.
Judges handle restitution in various ways. Some delegate the responsibility to county probation officers who must come up with a payment plan.
Other judges review financial assessments and ability to pay studies before deciding on a reasonable payment.
In one case, a judge decided a defendant did not owe restitution because she didn’t have the ability to pay back $21,590.
The Attorney General’s Office appealed that ruling, arguing "full restitution" was part of her plea deal that resulted in seven charges being dismissed.
Restitution was eventually ordered, but the convicted fraudster has yet to make a payment. She is still on probation.
Why you should care:
The cases reviewed by the FOX 9 Investigators indicate defendants are more likely to make regular payments and put a sizable dent in their debt when their restitution seems realistic.
Many smaller debts have been repaid in a matter of years.
The FOX 9 Investigators identified more than 20 cases where restitution of $30,000 or less has been fully settled.
By comparison, defendants who owe more than $100,000 have typically paid back only a few thousand dollars.
The restitution data also reinforces the importance of stopping Medicaid fraud as soon as possible.
When more money goes out the door, the more unlikely the state will get it back.