Provider sues Minnesota Department of Human Services over suspended payments

A Roseville company that provides services that help adults with disabilities to live independently is suing the state Department of Human Services for pausing payments it says it needs to survive.

Bright Community Services said the state has been illegally withholding money it is owed for the past two months, and if the court doesn’t order those payments reinstated, the effects will be “catastrophic.”

“These payments are Bright’s only source of revenue, and the payment suspensions have had a devastating effect on Bright’s business and the many clients it serves,” according to the complaint filed Monday in Ramsey County District Court. “The rules for payment withholds are quite clear, and DHS’ violation of the rules is equally clear.”

The company has been forced to suspend services to its clients and many employees have had to file for unemployment, according to the complaint.

Bright Community Services provides what officials call Integrated Community Supports (ICS), which are intended to help adults with disabilities live independently. But in September, state officials announced they suspended payments to ICS providers, citing “credible allegations of fraud.”

DHS suspended payments to other providers in the Medicaid program. It’s not known if others are considering lawsuits.

In a statement Thursday, DHS acknowledged suspending Bright’s payments.

In its suit, Bright said there have been no allegations of wrongdoing on its part. And, absent that, the state must return its money.

“DHS has taken these actions not because the law requires or allows them, but because of public criticism for weak fraud enforcement in the past,” according to the civil complaint. “But rather than following the law and systematically rooting out actual fraud, DHS is unlawfully cutting off legitimate providers’ payments indefinitely without any evidentiary showing or meaningful opportunity to object.”

In August, Shireen Gandhi, temporary commissioner of the Department of Human Services, told state lawmakers that the department’s inspector general has found instances where providers billed for services that clients never received.

In a letter to lawmakers, Gandhi said DHS had suspended payments to 11 program providers and 17 affiliated providers in different Medicaid-funded programs.

“There’s no place in our system for providers who are taking money and not assisting clients,” Gandhi said. “We will work with counties and providers to minimize the impacts on clients, but the truth is that these providers are already failing the clients they claim to serve.”

“There is not a blanket freeze on all payments,” wrote Sarah Berg, a Department of Human Services spokeswoman. “As part of the review process, claims will be audited on an individual basis as they are submitted. Some Medicaid claims could be suspended for up to 90 days (and, of course, some may be denied).”

Berg said officials expect “clean claims” will be issued close to the 30-day payment turnaround providers “typically experience.”

A message left Thursday with Bright Community Services was returned, but the man who called did not identify himself and declined to discuss the case.