Minnesota can release records on Medicaid providers accused of fraud — but won’t

Just two months after a jury delivered guilty verdicts in the eye-popping Feeding Our Future fraud, Minnesota lawmakers voted to give state agencies broad authority to stop payments to individuals and companies suspected of defrauding the government.

They also allowed the Minnesota Department of Human Services to disclose when it’s withholding payments from a company over credible allegations of fraud.

But while DHS requested the ability to disclose that information, often, it won’t.

The Minnesota Star Tribune has requested records of housing stabilization providers after the FBI searched several offices last summer. DHS subsequently suspended the entire Medicaid-funded program but declined to provide the records of the suspended providers.

The records request is one of more than 10 filed by the news organization related to the department’s handling of fraud. In most instances, the department declined to release the information or hasn’t provided any data yet.

Minnesota’s U.S. Attorney issued indictments against eight people alleged to defraud housing services this summer. It also charged one person for allegedly defrauding an autism program.

The state’s refusal to release the records comes as Gov. Tim Walz navigates and manages a sprawling fraud investigation. With less than a year before voters decide whether he should serve a third term, his critics and political opponents are working to make fraud a campaign issue.

“We have no tolerance for fraud in the State of Minnesota,” Walz said in a news release. “Abuse of taxpayer dollars takes resources away from the people who need them most.”

In October, Walz ordered an audit across 14 high-risk services to analyze Medicaid claims. He took the action after federal authorities charged nine people with defrauding state housing and autism services. DHS has also withheld payments to Medicaid providers 485 times this year, state officials said.

In denying lists of providers subject to payment withholds, DHS said “disclosure must not jeopardize the investigation and is not required.”

In an email earlier this month, DHS spokeswoman Sarah Berg said the department is also “working to respond to a recent surge in requests” by adding staff and streamlining requests.

“We are committed to providing appropriate and prompt responses, which we understand is especially important to reporters who are often working on deadline,” she said.

But officials argue it “still needs to consider the underlying integrity of our investigations” and ensure state officials and law enforcement “have the best chance at obtaining sufficient evidence to take action against fraudulent actors.” The measure was part of a larger effort to give state agencies more tools to confront fraud in state government.

Matt Ehling, a board member for Minnesotans for Open Government, argues the state should release the records.

“The public should know what the government is doing in regard to who they’re paying and who they’re not,” he said.

The Star Tribune’s outside counsel, Leita Walker, wrote to the Minnesota Department of Human Services on Nov. 3 to say the newspaper’s requests “often seem to go into a black hole, receiving no substantive response for weeks or months.” Walker, a partner at Ballard Spahr, said the department failed to disclose data on a reasonable timeline and withholds data that isn’t grounded in the law.

“Further, that rationale is often a moving target, seemingly based more on protecting the public image of DHS and its leadership as opposed to protecting the integrity of any DHS investigation or complying with the letter and spirit of the [Minnesota Government Data Practices Act].”

“So far, we’re batting zero here,” Robbins said of her requests.

While DHS has refused to release detailed list of providers suspected of fraud, it has disclosed payment holds to specific companies, creating a system where state officials provide information on a case-by-case basis.

After initially declining to disclose information on investigations to the Star Tribune, DHS confirmed last month that it was investigating five companies tied to individuals indicted for allegedly defrauding Housing Stabilization Services.

DHS’ attorney, Alexandra McDonough, said in a letter responding to Walker that DHS was not required to confirm those investigations but did so to assist with the Star Tribune’s reporting.