House committee expands probe into Minnesota fraud

Minnesota focuses on fraud prevention

After federal prosecutors highlighted a potential fraud of $9 billion, Minnesota state agencies are focusing on fraud prevention.

(FOX 9) - The House Committee on Oversight and Government Reform is expanding its investigation into Medicaid fraud in Minnesota, days after the U.S. Attorney's Office suggested the fraud could have cost the state billions.

Expanded investigation

What we know:

In a statement on Monday, Rep. James Comer said the U.S. House committee had sent letters to several officials with the Minnesota Department of Education and Minnesota Department of Human Services requesting transcribed interviews. Comer also requested a briefing from U.S. Attorney General Pam Bondi's office.

Citing "whistleblower" accusations, Comer is also seeking evidence that state officials attempted to "cover up" the full extent of the fraud.

Earlier this month, Rep. Comer announced the investigation into Minnesota's fraud cases, sending letters to Governor Walz and Attorney General Keith Ellison requesting documents related to the fraud investigations.

The backstory:

The new requests come days after Assistant U.S. Attorney Joe Thompson suggested fraud in 14 vulnerable Medicaid programs in Minnesota could total more than $9 billion when all is said and done.

Thompson was speaking on Thursday, announcing charges against five new people in a scheme that targeted the state's Housing Stabilization program. At the same time, Thompson announced search warrants investigating potential fraud within the Integrated Community Services program.

"You don't see fraud on this scale in other states," Thompson opined. And, part of that is just, we sit here as a team, and it's a relatively small team or a relatively small U.S. Attorney's Office. And every day we look under a rock and find a new $50 million fraud scheme. That shouldn't be the case in a state of our size. Certainly other states have problems with fraud, but I think our problem is unique."

The state is also facing other federal reviews, including a problem announced last week by the U.S. Department of Labor examining Minnesota's benefit programs.

Walz admin denies $9B figure

The other side:

The Walz administration has so far denied the supposition from the U.S. Attorney's Office, saying there isn't any evidence of fraud numbering into billions of dollars in Minnesota.

"We’ve seen evidence of tens of millions of dollars to this point," said Deputy DHS Commissioner John Connelly on Friday. "We don’t have evidence in hand to suggest we have $9 billion in fraud in these benefits over the last seven years and if there is evidence, we need it so we can stop payment."

It should be noted, fraud against the Federal Child Nutrition Program, including the massive Feeding our Future scheme, is estimated to have bilked $300 million from taxpayers, according to federal prosecutors. Prosecutors suspect fraud against the state's Housing Stabilization Program and autism programs also could number in the hundreds of millions of dollars.

Department of Human Services Inspector General James Clark said he has reached out to U.S. Attorney to share information. "I work at the Department of Human Services," said Clark. "I can shut off money to people and businesses where there is evidence of fraud… What I’m saying is I haven’t seen any evidence or information to suggest there is $9 billion worth of Medicaid fraud that’s happened in the state of Minnesota."

Local perspective:

In recent months, as more fraud schemes have been uncovered, the Walz admin has taken steps to combat the fraud, suspending or pausing licensing for programs that have raised red flags.

In October, the state began auditing the 14 high-risk Medicaid programs and last week Gov. Walz tapped Tim O'Malley to head a state fraud prevention program.