Housing Stabilization Services program to be terminated amid fraud investigation

Impact of housing stabilization fraud in MN

A Maple Grove man details the impact of the housing stabilization fraud in Minnesota. FOX 9's Mike Manzoni has more.

ST. PAUL, Minn. (FOX 9) - The Minnesota Department of Human Services (DHS) announced that it will terminate the Housing Stabilization Services (HSS) program after allegations of widespread fraud came to light. 

The investigation came to light in July after the FBI raided several homes and businesses connected to providers accused of defrauding the program.

READ MORE: MN Housing Stabilization Services fraud investigation: Feds raid homes, businesses

Termination of Housing Stabilization Services 

Big picture view:

Officials say the termination is necessary despite it being "regrettable" for the people who rely on the service. 

The HSS program began in 2020, and utilized Medicaid funds to secure housing for clients. 

DHS said it issued 11 new immediate payment withholds to HSS providers, and stopped 50 payments that were already issued in the past month after reviewing billing data analysis and investigations conducted by its Office of Inspector General. 

The organization also suspended payments to a total of 77 housing stabilization providers that were enrolled in Minnesota's Medicaid program so far. 

READ MORE: GOP lawmakers ask feds to audit state’s Medicaid program

The announcement comes after DHS Temporary Commissioner Shireen Gandhi sent a letter to Acting U.S. Department of Health and Human Services Director Caprice Knapp.

That letter can be found below: 

What they're saying:

Gandhi shared this statement on the terminated services: 

"DHS is rooting out fraud wherever we find it. We cannot allow one more cent of taxpayer money going out the door to providers who claim to serve Minnesotans in need of stable housing while lining their pockets for personal gain. As I made clear in my letter to CMS, our own data analysis has shown that this program does not have the necessary controls to stop bad actors, and we are urging CMS to approve our request to end this program as swiftly as possible."

DHS Inspector General James Clark shared this statement on the end of the program: "As our OIG data and investigations have revealed, too many fraudulent, unqualified bad actors have likely stolen money from our state’s taxpayers, and also cheated Minnesotans who need housing services. The termination of this program, while regrettable for those who need these services, is the necessary step at this time."

READ MORE: Before FBI raids, Maple Grove man saw 'red flags' with housing program provider

What's next:

Officials say the remaining providers will be monitored and evaluated as the program is terminated. 

DHS said it intends to "redesign and relaunch the benefit" by working with lawmakers and other community members to build a program that prevents bad actors from taking advantage of it.