FBI searching autism centers in Minneapolis, St. Cloud after finding ‘substantial evidence’ of health care fraud

The FBI is searching at least two Minnesota autism centers Thursday morning as part of an investigation that it said revealed “substantial evidence” of fraudulent Medicaid claims made by many companies participating in a state program to serve people under 21.

Agents were searching at least two locations as of Thursday morning, according to a 54-page search warrant application: Smart Therapy Center’s business office in Minneapolis and Star Autism Center’s office in St. Cloud. A Star Tribune reporter observed FBI agents in the hallway of Smart Therapy Center’s office early Thursday morning.

The searches are in connection with an investigation into fraud related to the state-funded Early Intensive Developmental and Behavioral Intervention (EIDBI) health care program that serves people under 21 with autism spectrum disorder.

Smart Therapy Center received about $13.8 million in Medicaid reimbursements between 2020 and 2024 to provide EIDBI-related services, the warrant states. Star Autism has received more than $6 million since it was formed in 2020.

The state became one of the first to offer Medicaid coverage for EIDBI services in 2017 and, according to the search warrant, “dozens and dozens of autism clinics and other companies purporting to offer EIDBI treatment have been created in Minnesota.” That includes several people involved in the Feeding Our Future fraud scheme, according to FBI special agent Kurt Beulke.

Minnesota’s EIDBI program has seen an exponential growth in Medicaid billing submitted for its services: Minnesota companies billed the state for roughly $400 million in such services in both 2023 and 2024 for Minnesota Medical Assistance and related public health plans, the warrant describes.

Beulke wrote that the FBI’s investigation “has found substantial evidence that many of these companies have been submitting fraudulent claims for EIDBI services that were not actually provided or that were not covered by the EIDBI program.

According to the search warrant, the EIDBI fraud scheme was discovered through the U.S. Attorney’s Office prosecution and FBI investigation into the massive Feeding Our Future case. The U.S. Attorney’s Office tapped agents to review claims data for Medicaid submitted in Minnesota for EIDBI services and found that Medicaid payments for such claims soared since the program started in 2017 – and in a manner similar to the federal child nutrition money trends.

Minnesota received about $1.7 million in Medicaid reimbursement claims for EIDBI-related services, which grew to about $3.1 million in 2018. That soared to $54 million the next year and $77 million in 2020 before reaching nearly $400 million last year and again this year.

“The investigation has shown that many of these entities appear to be submitting fraudulent Medicaid claims for EIDBI services that were not actually rendered or services that are not covered by the EIDBI program,” Beulke wrote.

Abdinajib Hassan Yussuf was listed as Star Autism Center’s organizer in the LLC’s original state business filing in 2020.

”Everything is new to us, so we will figure out what’s going on,” he said in a call Thursday. When asked about the fraudulent billing allegations, he said, “No. There was nothing like that, but I have nothing to say at the moment.”

He declined to comment further. Asha Hassan, who is listed as Smart Therapy Center’s manager in state business filings, could not immediately be reached for comment.

According to the warrant, Smart Therapy and its owners were involved in both the Feeding Our Future scheme and a scheme to fraudulently obtain Medicaid payments based on false claims for EIDBI services not actually provided. Smart Therapy LLC was registered with the Minnesota Secretary of State’s Office in November 2019.

Smart Therapy participated in the federal child nutrition program under the sponsorship of Feeding Our Future in 2020. Aimee Bock, Feeding Our Future’s executive director, told the Minnesota Department of Education that Smart Therapy and other autism clinics “operate like child care programs in that the parent drops the child off and leaves them there for several hours – like a daycare center does.” The MDE approved Smart Therapy’s participation in the federal food aid program based on Bock’s description. Bock is awaiting trial next year on federal criminal charges related to Feeding Our Future case.

Smart Therapy claimed to be working with a vendor called S&S Catering, whose owner, Qamar Hassan, has since pleaded guilty to federal fraud charges. Hassan admitted in her plea agreement that the sites that contracted with S&S Catering made “grossly inflated” claims of serving thousands of children daily.

According to the search warrant, Smart Therapy submitted fraudulent claims for EIDBI services not actually rendered and took in about $13.8 million in reimbursement from Medicaid for EIDBI-related services.

Federal agents spoke with a behavioral technician formerly employed by Smart Therapy, who described one of its two owners as being related to Hassan. The employee said they received no training after starting at Smart Therapy and was just told to go with one of the clients and do “goals.” According to the former employee, most of those who worked at Smart Therapy were 18- or 19-year-old relatives of the owners who had no formal education beyond high school and no training or certification related to autism treatment.

The employee “explained that the owners hired relatives because they could pay them less than qualified medical professionals” and that they also favored hiring relatives “because they would not question what was going on at the company.”

The employee described a typical day at Smart Therapy as starting with patients being dropped off around 9 a.m., mostly by hired drivers who billed the state for transportation services. Each client was assigned to a behavioral technician, the employee said, some of whom tried to work on “goals” with them. But the younger technicians related to Smart Therapy’s owners “were usually just on their phones all day,” according to the employee.

Clients’ individual treatment plans were not completed on schedule because technicians were not qualified and did not provide necessary treatment, the employee told agents.

Clients remained at the clinic until being picked up by hired drivers around 5 p.m. each day. But technicians regularly arrived late to work, often at 11 a.m. or later. Supervisors would cover for the technician and the clinic would still bill Medicaid for the entire eight hours of treatment and observation, “even when the behavioral technician was not present for a significant portion of the day.”

Many of those receiving EIDBI services at Smart Therapy did not appear to be autistic, the employee told agents, but did have other developmental delays such as speech delays.

According to the employee, Smart Therapy’s owner “actively recruited” new clients by talking to parents they knew and even knocking on doors in the community to try to talk parents into getting their children into autism treatment.

According to Beulke, Smart Therapy billed Medicaid for EIDBI services purportedly rendered by medical providers who did not work at Smart Therapy and were not on the clinic’s payroll, and also submitted claims for services purportedly rendered by medical providers who were outside of the country at the time the services were allegedly rendered.

Federal investigators say Star Autism Center and its owners were “similarly involved in a scheme to fraudulently obtain Medicaid payments” based on fraudulent claims for EIDBI services that were not actually provided.

This included billing Medicaid for EIDBI services from medical providers who did not legitimately work for the company an providers who were also outside of the United States at the time the services were purportedly rendered.

Like Smart Therapy, Beulke wrote, Star Autism Center also submitted improbably large Medicaid claims for EIDBI services purportedly provided to certain clients. Star Autism meanwhile billed Medicaid for claims for services that took place during the same periods in which clients were attending school or otherwise unavailable for therapy.

Nearly 300 agencies doing early intervention work are enrolled in Minnesota Health Care Programs. Minnesota doesn’t license autism centers, so there’s very little regulatory oversight and the state Department of Human Services can’t track caseload size or staffing ratios.

Last year, the Legislature directed DHS to study whether to begin licensing autism centers. The Minnesota autism program has quickly grown since it was launched in mid-2015, particularly since Minnesotans started using the benefit in earnest in 2018. The number of providers — who diagnose and treat people with autism spectrum disorder — has increased from 41 providers in 2018 to 328 last year. The amount paid to providers during that time has skyrocketed from about $6 million to nearly $192 million, according to the Department of Human Services, which administers Minnesota’s Medicaid health insurance program for low-income people and people with disabilities.

As of September, DHS was investigating 29 individuals or agencies providing early intervention services. The agency said it had withheld payments to seven providers since 2018 due to credible fraud allegations and forwarded five cases to the attorney general’s Medicaid Fraud Control Unit. DHS’s Office of Inspector General has withheld payments to seven providers since 2018. Another 10 investigations were closed over the past five years, including an investigation into Sharmarke Issa that was closed in June 2023 and resulted in the provider being “terminated” from receiving Medicaid payments, the Star Tribune reported in September. Issa, the former board chair of the Minneapolis Public Housing Authority, pleaded guilty to a federal wire fraud charge in September in connection with the Feeding Our Future case.

This is a developing story. Stay tuned to startribune.com for updates.