Fraud is a focus for Minnesota lawmakers this year. Here are measures they’re pitching to fix it

Coming into the 2025 legislative session, reckoning with fraud and adding layers of protection against it were central to legislative wishlists for DFL and GOP lawmakers alike.

On the heels of dozens of arrests and convictions tied to the Feeding Our Future nutrition aid scandal, Minnesota officials said the state needed to shore up defenses against future efforts to funnel government funds for unauthorized uses. 

Feeding Our Future was the broader group that sponsored meal distribution sites for children in need during the COVID-19 pandemic. Federal prosecutors say the organization and its partners siphoned more than $250 million falsely reported the number of meals they were serving and spent it on homes, luxury items, and travel. Dozens of people have been federally charged since 2022. Juries have convicted seven, including Feeding Our Future founder Aimee Bock.

Ahead of the legislative session this year, Gov. Tim Walz presented a package of requests he said would give state agencies extra tools to weed out fraud or to prevent it. And Republicans, as part of their power-sharing deal in the tied House of Representatives, pushed for the creation of a new panel specifically geared at rooting out fraud.

A flurry of proposals are in the mix, ranging from using artificial intelligence to flag potentially problematic payments to instituting a DOGE-like entity in Minnesota to allowing more communication between agencies about potentially improper payments. Ahead of a May 19 adjournment date, here are a handful that are moving at the Capitol.

Creating a state Office of the Inspector General

Lawmakers in both chambers want to create a new Office of the Inspector General that could probe state spending and root out potential fraud. The proposal was the first bill filed in the House and it’s the subject of ongoing, bipartisan deliberations in the Senate.

Some state agencies have an office or position like this now, but supporters have said it’s important to have an inspector general keeping track of all state spending and authorized to track state dollars that move through private entities.

“The current oversight structure leaves us too often reacting after fraud has occurred rather than preventing it,” said Sen. Heather Gustafson, DFL-Vadnais Heights, noting her bill would provide tougher “teeth” to go after fraud. 

“It's a forward-looking, independent entity focused not just on rooting out fraud, but deterring it through system improvements, early detection and professional accountability,” she said. “Even in a year where we're being asked to make tough budget decisions, this investment makes sense.”

Gustafson and Republican Sen. Michael Kreun, of Blaine, have been workshopping the proposal and there are some details still being ironed out. But it’s scheduled to come up for a vote in the Senate Finance Committee on Wednesday that would send it to the Senate floor.

Additional resources to probe Medicaid fraud

Early this year, Walz recommended a set of bills that would increase the number of investigators in the attorney general’s office that look into potential fraud in the state’s Medicaid program, Medical Assistance and increase the penalty for those who knowingly apply for and abuse Medicaid funds.

The proposals were passed as part of House and Senate state and local government budget bills approved last week. 

Another bill would send some new funding to the Department of Human Services to use artificial intelligence to go through Medicaid claims and flag potentially fraudulent claims. That’s not been included in state budget proposals that have passed so far but could emerge in a House health and human services budget.

“I think the Legislature is committed to giving us the tools that we need to get that done. We're hearing them on this,” Walz said. “The question will be, and this is just fair: Are there political issues that are people going to give up on thinking they've got a political topic to talk about or actually fix an issue?” 

The governor said he’s ready to sign those bills, along with the inspector general bill, if they make it to his desk. Some Republicans, though, have raised concerns about sending more money to the attorney general’s office when other departments are facing cuts. They also voiced concerns about how Ellison handled matters involving the Feeding Our Future scandal.

“As these numbers have increased, so has the waste, fraud and abuse with Minnesotans’ hard-earned taxpayer dollars. I highly recommend that we be fiscally responsible,” Rep. Ben Davis, R-Merrifield, said. “I don’t want us to continue the unprecedented growth of government.” 

Republican-led committee weighs two bills

That House Fraud Prevention and State Agency Oversight Committee is set to take up two bills Monday morning. One would create a state anti-kickback statute, mirroring federal law, and make it illegal to offer something of value in exchange for awarding a state grant. The other sets up new education requirements for people in state government who oversee grants.

Rep. Kristin Robbins, R-Maple Grove, chairs the committee. She acknowledged that it’s late to be bringing these bills but she’s hopeful they can make it through. Robbins also said the efforts to guard the state against fraudsters could take several years.

“We've identified gaps in statute where the agencies say, well, there isn't a crime of kickbacks. We need that in state law. The state law says we may stop fraud, but it doesn't say we must stop fraud,” Robbins said. “So those are bills now I've introduced that will tighten statute, tighten those gaps.”

The other side of that GOP-run committee deals with government oversight. And at many hearings this year they’ve brought up agency heads to ask them about how they're running their departments. Or in the case of the attorney general’s office, they brought him before the committee last week to ask about why he met with business owners later indicted in connection with the Feeding Our Future case. The panel will get an update from the attorney general’s Medicaid fraud control unit on Monday.

DFL committee members have repeatedly called on the GOP chair to bring in more people to testify on how fraudsters target their marks — whether in state government or elsewhere — and find ways to build up their defenses. Rep. Emma Greenman, DFL-Minneapolis, said the committee should have worked up bills and passed them much earlier in session.

“If the work of this committee is actually serious and not political, what we should be asking is, what are we learning to ensure that we are protecting public funds and taxpayer dollars so that we can continue to deliver the services that people rely on and need?” Greenman said. 

Robbins said it’s tough to get investigators or state agencies tasked with anti-fraud roles to testify because they don’t want to tip off would-be fraudsters. She said she hopes to hold hearings over the interim to continue delving into reports of potential misuse of state funds.

“This is a committee dedicated to rooting out fraud, waste and abuse, and it's going to take time to find everything,” Robbins said.

MPR News senior reporter Clay Masters contributed to this report.