Department of Justice charges 15 defendants in $90 million Minnesota Medicaid fraud takedown

"Minnesota will no longer serve as a safe haven for fraud, nor will any state in this country," said Acting US Attorney General Todd Blanche, asserting that the DOJ "will hunt down fraudsters wherever they are and systematically dismantle their predatory schemes."

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The cases involve seven state-managed Medicaid programs that were "systematically pilfered by fraudsters" who treated taxpayer funds as "their personal piggy bank," according to Colin McDonald, Assistant Attorney General for the DOJ's National Fraud Enforcement Division, who announced the indictments during a press brief.

One of the most notable instances, McDonald said, is Minnesota's Housing Stabilization Services (HSS) program, which was created to assist homeless and disabled people in finding and maintaining housing. Initially projected in 2020 to cost roughly $2.6 million per year, the program's annual cost skyrocketed to over $104 million by 2024, which McDonald blamed on fraud.

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This program "has been completely shut down because there's no money left. It's all gone," said McDonald, adding that, "now these services no longer exist for these vulnerable homeless populations."

Charges were brought against eight defendants in this case, who are accused of defrauding the HSS of approximately $15.7 million. "Some defendants were residents of Pennsylvania who engaged in fraud tourism, traveling to Minnesota for lucrative opportunities to commit fraud," the DOJ said in a press release.

Federal prosecutors also pointed to what they called questionable growth in other taxpayer-funded programs, such as an autism program whose annual expenses, according to McDonald, increased from $600,000 in 2018 to over $400 million just six years later. Two defendants were charged in connection with an approximately $46.6 million scheme to defraud the taxpayer-funded Early Intensive Developmental and Behavioral Intervention (EIDBI) program.

"As alleged, the defendants paid kickbacks to parents who brought their children to autism centers, diagnosed children with autism regardless of medical necessity, and billed for autism services that were not actually provided, depriving children who did need assistance of needed care," the press release states.

The Justice Department also announced child care fraud charges against two defendants accused of defrauding state and federal programs designed to subsidize child care. One defendant allegedly defrauded the state-funded Great Start Compensations Support Payment Program (GSCSPP) of $425,000, which offers reimbursements for in-classroom hours provided by teachers. The other defendant in this case allegedly defrauded the federally funded Child Care Assistance Program (CCAP) of $4.6 million.

Additionally, one individual was charged with a $1.4 million fraud scheme involving Minnesota's Integrated Community Supports (ICS) program, in which the defendant is accused of billing for Medicaid services that were not provided as represented. "The defendant in this prosecution announced today submitted claims for vulnerable recipients who required 24-hour care, one of whom was found deceased a day after being billed for services he did not receive," the DOJ said.

Lastly, two defendants have been indicted for allegedly defrauding Minnesota's Individualized Home Supports (IHS) program of $22 million, in which they acquired over 20 separate residences and concealed their ownership interest from Medicaid, according to the DOJ. The defendants are accused of using the proceeds of the scheme to purchase more real estate for personal gain, as well as spending the taxpayer funds on luxury automobiles and expensive jewelry.

"Let me be clear upfront about something," said McDonald. "This is not the end of our work in Minnesota. This is the beginning of our work in Minnesota. The fraud here in Minnesota is shocking."

Due to the scale of fraud, the Department of Justice announced on Thursday that it has hired 15 new prosecutors to "combat Medicaid fraud across the country."