Minnesota House Republicans propose fraud prevention measures

Seeking to curb fraud in government programs, Minnesota House Republicans unveiled a plan Tuesday to establish a new Office of Inspector General, track whether agencies are implementing audit recommendations and require state employees to report suspected fraud to law enforcement and legislators.

The GOP proposals come as the FBI investigates fraudulent Medicaid claims in Minnesota’s autism program and after the nonprofit Feeding Our Future and other organizations stole $250 million during the pandemic from a federally funded meals program for children. The two cases have amplified concerns about fraud in state-run programs, prompting Gov. Tim Walz to propose his own fraud prevention measures.

“What we’ve seen in the last number of years under the Walz administration has been rampant waste, fraud and abuse,” said state Rep. Jim Nash, R-Waconia, during a news conference at the State Capitol on Tuesday. “I welcome the fact that the governor has acknowledged this, but as legislators, we have to take our own due diligence and our own steps.”

Earlier this month, Walz called for the state to impose tougher criminal penalties for Medicaid fraud, give agencies more authority to shut off payments to suspected fraudsters and use artificial intelligence to detect payment anomalies.

House Republicans held their news conference and several committee hearings on Tuesday while Democrats continued to boycott the opening weeks of the legislative session. The House DFL and GOP caucuses are locked in a power struggle over who should control the chamber; Republicans hold a 67-66 advantage until a special election is held to fill a likely blue Roseville-area seat.

Asked about the GOP’s fraud proposals Tuesday, House DFL Leader Melissa Hortman said she hadn’t seen them.

Two of the House GOP proposals could garner bipartisan support, at least in the Senate. Sen. Heather Gustafson, DFL-Vadnais Heights, has also proposed establishing an independent Office of Inspector General.

The House GOP’s proposal would consolidate existing inspector general offices housed within state agencies into a unified, independent office that investigates fraud. The office would be required to maintain a fraud reporting hotline and have the authority to order agencies to stop payments to suspected fraudsters.

“We need to have an independent inspector general,” said Rep. Patti Anderson, R-Dellwood, who’s sponsoring the bill.

Nash is sponsoring a bill that would require Minnesota’s nonpartisan Office of the Legislative Auditor (OLA) to track whether state agencies have implemented its audit recommendations and report the findings to the Legislature. In the Senate, Sen. Judy Seeberger, DFL-Afton, has signed onto the bill.

The auditor’s report would help legislators “determine how serious these departments are about preventing waste, fraud and abuse,” Nash said.

Legislative Auditor Judy Randall told the Minnesota Star Tribune last year that she’s noticed state agencies becoming less receptive to audits critical of their work: “I have seen increasing rejection of our findings and recommendations. Or denial or dismissiveness or excuses.”

Minnesota Management and Budget issued a report last week saying “state agencies have fully or partially resolved 96% of OLA recommendations tracked over the past two years.” State Budget Commissioner Erin Campbell said in a statement that the report shows “state agencies’ diligence in making recommended changes to their operating procedures.”

But Nash was skeptical of the report’s findings: “Don’t believe everything that you read coming out of state government about itself,” he said, adding that the independent OLA is the best entity to listen to.

“If you ask your kids, ‘Hey, have you done your homework?’ What is the answer always going to be? ‘Oh, absolutely,’ ” Nash said. “And then you go and you double check and it turns out that they may not have done all their homework.”

Asked about the Minnesota Management and Budget report last week, Randall said she hadn’t yet seen it, and that “the OLA has not confirmed the accuracy of the implementation status reported by MMB.”

“As we do every year, OLA is in the process of compiling updates of previous reports, which includes an attempt at confirming whether some of the recommendations have been implemented,” Randall said. “We plan to have that completed in the next few weeks.”

House Republicans also want to impose stricter reporting requirements on state employees. A bill from Rep. Ben Davis, R-Merrifield, would require state employees who suspect fraud in a program administered by their agency to immediately alert law enforcement and the legislative committee leaders who oversee the agency’s operating budget.

Davis’ bill would also require agencies to make annual unannounced monitoring visits to organizations that receive more than $250,000 in state grants. A state employee who knowingly violates that requirement would be guilty of a misdemeanor, Davis said.

“It establishes criminal penalties for neglecting said responsibilities,” he said.

Briana Bierschbach of the Minnesota Star Tribune contributed to this story.