MN fraud report: Former workers say DHS put 'compassion over compliance' for fraud prevention
Minnesota fraud report: State ignored 50 years of warnings
Program Integrity Director Tim O'Malley discussed a new report looking at how Minnesota ended up in its fraud mess. O'Malley says there were warnings about vulnerabilities in the system dating back to the 1970s.
ST. PAUL, Minn. (FOX 9) - A new report looking at how Minnesota handled fraud found vulnerabilities dating back to the 1970s and inconsistent messaging from Department of Human Services leadership that encouraged "compassion over compliance" when it came to fraud prevention.
New Minnesota fraud report
What we know:
Program Intregrity Director Tim O'Malley laid out the report during a news conference Monday morning.
The report looked at past failures, the culture within the Department of Human Services, and how the state can combat fraud moving forward.
What they're saying:
O'Malley said the report shows that the state's vulnerabilities date back years and through multiple administrations. Even more troubling, O'Malley points out that state and federal auditors have "repeatedly identified internal control weaknesses, yet corrective actions were either not executed or inconsistently implemented."
"The review undertaken to identify those contributing causes of fraud shows that going back to at least the 1970s, every administration and legislative body was put on notice of the vulnerabilities to the program integrity," O'Malley explained. "Stronger prevention measures should have been taken."
O'Malley said it would be a long road to remedy the situation.
"Implementing deliberate, actionable steps to prevent fraud will only succeed through effective enforcement," said O'Malley. "Otherwise, well-intended plans will again not be executed. Changes will not become embedded in today's opportunity to get this right will be lost."
Gov. Walz reacts to new fraud report
Gov. Tim Walz reacts to a new report detailing the state's fraud situation.
‘Compassion over compliance’
Dig deeper:
The report includes some remarks from former DHS employees who opined that department leadership would "emphasize compassion over compliance" when it came to fraud prevention.
The report states, "Former leaders have said that DHS should be guided by 70% compassion and 30% compliance. In a 2023 DHS public presentation, leadership encouraged employees to embrace a 60/40 mindset. This is misguided."
It goes on to add, "Leadership is responsible for changing the mindset within state agencies to better balance priorities from a current approach of focusing inordinately on the compassion aspect of services provided to focusing rightly on safeguarding the funds. Compassion is a wellplaced motivational factor for many state employees whose commitment to helping others is commendable, but that noble motivation should not influence their critically important fraud prevention actions."
The report also raises concerns about a "too trusting mindset" within the state and a "system biased toward facilitating payments — rather than safeguarding funds" which officials say "contributed to creating opportunities for exploitation."
Legislators thwarting fraud prevention efforts
The other side:
The report also included an example of lawmakers undermining state employee efforts to enforce fraud prevention measures.
In 2020, when a day care center had its Child Care Assistance Program (CCAP) funding pulled by DHS for three years, the report states that after the funding was stripped, lawmakers later proposed a one-time grant for the center for an amount that matched the CCAP funding that was lost.
However, the bill, which received both DFL and GOP authors, never made it through committee.