Minnesota DHS failed to investigate kickback complaints in autism program: Auditor

ST. PAUL, Minn. (FOX 9) - A new auditor's report looked into how the Minnesota Department of Human Services investigated allegations of kickbacks in the state's autism program.

Auditor's report on kickbacks

The backstory:

The report focused on allegations of kickbacks in the Early Intensive Developmental and Behavioral Intervention, which provides services for people under the age of 21 who are on the autism spectrum.

That program has recently been the focus of a federal investigation. In December, six people were charged in connection to fraud schemes involving the autism program.

Key findings:

The report from the Office of the Legislative Auditor (OLA), released on Tuesday, found that the Department of Human Services' (DHS) Inspector General reviewed and reasonably closed the complaints based on the evidence they collected. Of the cases, 25 didn't require investigation and seven had been investigated.

Complaints not investigated

Dig deeper:

The cases that weren't investigated were closed for seven different reasons, including:

• Not an allegation of fraud, theft, abuse, or error involving fee-for-service MA payments (10 complaints)
• Allegation unsubstantiated based on OIG’s initial assessment of the complaint (4 complaints)
• Not enough information to investigate further (4 complaints)
• Kickback allegation (3 complaints)
• Provider was not authorized to provide MA services (2 complaints)
• Allegation was referred outside DHS (1 complaint)
• Duplicate complaint combined with another complaint (1 complaint)

The other side:

However, the OLA found three kickback complaints the Inspector General failed to investigate. DHS told the auditor that it lacked the authority to investigate those cases because, as its officials believed, it could only investigate kickback cases in the autism program if those kickbacks also included allegations of non-kickback conduct that fell under "fraud, theft, abuse, or error."

DHS Commissioner Shireen Gandhi pointed out Tuesday that the complaints were referred to other law enforcement for investigation.

"In three instances, there were questions of kickbacks and how the OIG handled them and what they found is it's actually a very narrow situation," Gandhi explained. "When there's only a kickback and no other evidence of fraud, so it's very rare that this happens. But in those instances, our inspector general's office referred those to federal authorities but did not believe that alone DHS would be able to successfully refer those and to law enforcement and to have law enforcement successfully prosecute them."

Gandhi added that "legal attorneys can always differ on opinions" but says the OLA and DHS are now ont he same page when it comes to the law.

OLA says state could have investigated kickbacks

What they're saying:

The OLA disagreed with that assessment, finding that DHS already had the authority to investigate kickback cases.

The OLA believed that DHS was "overly cautious" in its interpretation of the law. However, in 2025, the legislature changed the law to explicitly give DHS the power to investigate and sanction kickbacks.

Big picture view:

The OLA also found that since 1995, DHS's administrative rules have contained an error in their definition of fraud, citing the wrong federal statute. The auditor noted that the error made it unclear if DHS had the authority to suspend payments while investigating kickback allegations. The OLA points out that DHS could have fixed this error at any point in the past three decades.

What they're saying:

The Department responded to the report with the following letter signed off by Commissioner Shireen Gandhi:

"The department values the Office of the Legislative Auditor’s evaluation of this issue. We have worked intently to detect and prevent fraud while improving program integrity and oversight of essential programs and services in Minnesota. We cannot achieve this alone, and strive to work in partnership with others to strengthen our controls against fraud, waste and abuse.

"We are pleased that the auditors found the work of the Office of Inspector General to be thorough and appropriate in most of the cases sampled. And while the Department believes it currently has legal authority to suspend payments to a Medicaid provider while investigating credible allegations of kickbacks, we agree with the recommendation that fraud should be defined to more clearly include kickbacks."

DHS also plans to revise its definition of fraud to include kickbacks, which was among the recommendations submitted by the OLA.

House GOP responds to report

What they're saying:

In a statement, House GOP leaders wrote:

"For years, credible allegations of kickbacks in the Early Intensive Developmental and Behavioral Intervention program were brought to the Walz Administration, and for years they refused to investigate, hiding behind the false claim that they lacked authority to act. Today’s report proves that excuse was never true. We now know that they always had the authority to investigate these claims and once again chose not to act to protect tax dollars. This is more than incompetence, it’s a clear pattern of prioritizing spending taxpayer dollars over accountability and compliance."

The full report can be read below: 

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