The Minnesota State Capitol in St. Paul: The Legislature must take care to make sure that small health providers have a measure of due process available to them. (Steve Karnowski/The Associated Press)

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The idea that someone would divert public dollars away from providing care to vulnerable Minnesotans for their own enrichment is abhorrent. Similarly, the idea that a small service provider might lose their life’s work because of an administrative error is unconscionable. Unfortunately, the operational practices of the Minnesota Department of Human Services (DHS) have allowed both to occur with tragic frequency over the last two decades.

Fraud vs. administrative oversight

At the federal level, the Health and Human Services Department and the Department of Justice utilize several laws to investigate and combat fraud. Those agencies used those laws to prosecute some of the major alleged fraud cases in Minnesota that the state’s DHS apparently missed. Unfortunately, with a few exceptions, the department has not chosen to deploy the same tools.

Instead, DHS uses a broad statutory authority to sanction providers for fraud, theft or abuse. The agency’s definition of “abuse” is just as broad. In the department’s eyes, abuse can include practices as innocuous as failure to maintain records that perfectly comply with state laws. In these instances, DHS deemed the record imperfections as “abuse” and grounds to consider the claims paid to be an “overpayment” subject to repayment, even when there is no dispute that the services were provided, were provided by the appropriate staff, and were medically necessary.

There is a difference between fraud and administrative error. While the federal government is rooting out fraud, DHS through its practices seems more focused on policing clerical mistakes. For a culturally specific residential services provider or a small, rural personal care assistance agency, these alleged overpayments are enough to close the agency. It is impossible for them to repay significant amounts when most of the Medicaid funds went to pay wages and benefits for staff who provided the care. As a result, many of my clients have had to close shop and watch their longtime clients scramble to find alternative support. What’s more, because DHS’ direct oversight is largely focused on the medical assistance fee-for-service program, those who find themselves suddenly without care are predominantly individuals with disabilities and older people.

Is more authority the right move?

Earlier this month, the outgoing DHS commissioner requested a series of program reforms and new authorities from the Minnesota Senate. While the requested investments in data analytics and AI are long overdue, we must be cautious about providing the state additional authority without ensuring due process for providers. Today, a state law gives DHS the authority to immediately terminate payments to a provider when “the commissioner determines there is a credible allegation of fraud for which an investigation is pending under the program.”

While DHS should be able to suspend payments while investigating potential fraud, it is important to ensure providers have access to due process. Under current law, there is no time limit on how long DHS can investigate. I’ve represented clients who were “investigated” for a year or more and who, during that time, had to close their business only to be eventually told that DHS did not identify any fraud. Not only did my client lose their business, but, more importantly, their clients (often hundreds of low-income individuals with disabilities) were forced to scramble to find new providers for no reason. Providers currently have no ability to appeal those temporary suspensions and ask a judge to determine whether the allegations are even credible.

Let’s look at the bigger picture

Going forward, the Minnesota Legislature should take a comprehensive look at the state’s health care fraud and abuse laws and reorganize the authorities under which DHS enforces the law. It should adopt and direct DHS to utilize the federal laws not currently in state statute and provide prosecutors the same kinds of civil and criminal penalties. It should ensure that DHS has the ability to cut off payments when appropriate, but impose limits so that providers, particularly those who provide services only covered by medical assistance, have access to an impartial third-party review before they lose their livelihoods forever. We owe it to the small businesses trying to provide our communities these essential services and to the people who so desperately need them.

Matthew Bergeron is an attorney at Larkin Hoffman in Minneapolis. He represents a variety of private and nonprofit organizations providing services to Minnesotans on medical assistance.