Legislative Update: Fraud in the Month of March
With less than a month left in the legislative session, time’s running short to take action on fraud in Minnesota. It’s the most pressing issue facing our state, having a profound impact on the direction of our communities and the state our children and the next generation will grow up in. This update outlines where things stand after March and what still needs to be done.
Federal Pressure and DHS Leadership
March opened with another dispute between Minnesota and the federal government, this time over Medicaid funding. On March 2, Attorney General Keith Ellison filed suit to challenge the withholding of roughly $243 million in Medicaid payments tied to fraud concerns in certain high-risk programs. Later in the month, the Centers for Medicare & Medicaid Services approved Minnesota’s revised corrective action plan for improving fraud detection, prevention, and recovery in Medicaid. The original plan submitted at the end of 2025 had been rejected. By March 31, however, the funding dispute still had not been resolved. (1)(2)(3)
March 2 also brought a major leadership marker at the Department of Human Services. Gov. Tim Walz made Shireen Gandhi’s appointment as DHS commissioner permanent after she had served in an acting role during one of the agency’s most scrutinized periods in recent memory. Gandhi said the state had documented at least $300 million in fraud, a figure that stood in notable contrast to the much larger estimate former First Assistant U.S. Attorney Joe Thompson had publicly described. (5)(6)
Federal oversight continued on March 4, when Gov. Walz and Attorney General Ellison appeared before the U.S. House Oversight Committee. Members focused on whistleblower concerns, leadership decisions, and the timeline of when state officials became aware of specific fraud issues. Chairman James Comer said the committee had heard from more than thirty whistleblowers. (7)
That federal attention did not end there. On March 27, Vice President JD Vance convened the first meeting of a new federal anti-fraud task force, again pointing to Minnesota as a leading example in the administration’s broader fraud messaging. (4)
Criminal Proceedings
Feeding Our Future remained the most visible fraud case in the state, but it was not the only case advancing in March.
On March 3, Abdinajib Hassan Yussuf, head of Star Autism Center in St. Cloud, pleaded guilty to wire fraud in a scheme involving more than $6 million in fraudulent Medicaid claims in the state’s autism-services program. Two days later, Abdulkarim Farah was sentenced to 57 months in prison for his role in the juror-bribery scheme tied to the first Feeding Our Future trial. On March 26, federal prosecutors also announced that Philip Nelson Green of Crookston had been indicted for filing false tax returns and refund claims exceeding $500,000. (8)(9)(10)
Feeding Our Future itself continued to move in more incremental but still important ways. On March 18, the next trial was set for April after one defendant rejected a plea agreement. On March 20, five additional defendants pleaded guilty in a branch of the case involving roughly $14.6 million in stolen child-nutrition funds. On March 21, Aimee Bock’s sentencing was set for May 21. On March 30, Abdul Abubakar Ali was sentenced to one year and one day in prison. (11)(12)(13)(14)
March also produced a reminder that the problem is not confined to courtrooms. A March 20 KARE 11 investigation reported that the New American Development Center, which had billed about $7.8 million in meal reimbursements and had been ordered to repay roughly $1.1 million, later still received another $1 million from the state. It was a reminder that even after serious concerns surface, weak screening, weak information-sharing, and outdated technology can still allow state money to keep flowing. (15)
The EIDBI Review
One of the month’s most significant non-court developments came on March 17, when the Office of the Legislative Auditor released its special review of alleged kickbacks in the Early Intensive Developmental and Behavioral Intervention autism-services program. The auditor rejected DHS’s position that it lacked authority before 2025 to act on kickback complaints unless those complaints also qualified as fraud, theft, abuse, or error. OLA found that DHS had long possessed that authority, identified a rules error dating to 1995, and noted that current rule language may still hinder payment suspensions during credible investigations. The review examined three specific kickback complaints and added another example of how outdated rules, interpretive ambiguity, and delayed action can weaken oversight even when legal tools already exist. (16)
Rep. Mary Franson responded with legislation to explicitly classify illegal remuneration, or kickbacks, as a credible allegation of fraud, allow payment suspensions during investigations, and codify kickbacks within the definition of fraud. The proposal quickly entered the legislative conversation around how Minnesota defines fraud and when payments can be paused. (17)
At the Capitol
March delivered the most substantial fraud-related legislative activity of the session so far.
Two measures sponsored by House Human Services Co-Chair Joe Schomacker passed the House floor. One would give legislators access to the full initial Optum fraud-vulnerability review while limiting broader dissemination. Another would formally repeal Housing Stabilization Services after DHS had already terminated the benefit due to fraud concerns. (18)
More broadly, the legislative discussion in March centered on a few major themes. One was earlier intervention, including stronger prepayment review and broader authority to sanction problematic providers in medical-assistance programs. Another was greater visibility, especially better access to fraud findings and stronger cross-agency information sharing so bad actors cannot move between programs unnoticed. A third was systems modernization, as lawmakers increasingly grappled with whether fragmented and outdated state systems are capable of supporting real-time oversight. A fourth was institutional design, particularly whether Minnesota should create a statewide inspector general with genuine independence or one more closely tied to the governor’s office. The inspector general debate progressed in March but remained unresolved, and it is still one of the biggest points of disagreement at the Capitol. (19)(20)(21)
Legislative Action to Combat Fraud
Alongside ongoing investigations, the Legislature has begun taking steps to address fraud in state programs. Several proposals have already passed the House, with more still under consideration as the session enters its final weeks.
Important Measures Passed
- HF 4425 – Extends the statute of limitations for theft involving public dollars, giving investigators more time to pursue complex fraud cases.
- HF 3378 – Gives legislators access to the full unredacted Optum report, improving transparency and oversight of high-risk Medicaid programs.
- HF 3379 – Repeals Housing Stabilization Services following significant fraud concerns.
Important Proposals Still Moving
With roughly 25 days remaining in session, additional reforms continue to move forward:
- HF 3578 – Strengthens accountability for executive branch oversight failures.
- HF 4104 – Site visit for grant recipients over a certain dollar amount required.
- HF 4950 – Ensures individuals who profit from fraud are held financially accountable.
- HF 1338 / SF 856 – Establish an independent Office of Inspector General with authority to investigate fraud across all state programs, improve data access across agencies, and strengthen oversight. The Senate has passed its version, but the House has not yet reached agreement.
- HF 3395 – Requires budget cuts, a corrective action plan, staff dismissal, and a freeze on new enrollment when a state agency withholds payment to a program participant suspected of committing fraud, or a law enforcement agency refers for prosecution a case of suspected fraud committed against a state program.
In the fight against fraud this session, Democrats have shown a concerning pattern. When it comes to bills that would actually strengthen oversight and stop taxpayer dollars from ending up in the hands of criminals, they have repeatedly voted no. Instead, they’ve backed proposals with softer language, fewer requirements, and very little impact.
Just this week on the House floor, we offered an amendment that would require site visits for organizations receiving tens of thousands of dollars or more in government grants. Very straightforward and very basic. We need to make sure the money is being used appropriately. Democrats blocked it.
Again, this is basic oversight. And it’s clearly needed. We already have too many examples of agencies suspecting fraudulent activity but never showing up, never asking questions, and never even verifying whether the operation exists.
That’s the bigger picture coming out of March. Fraud in Minnesota is not going away anytime soon, and the work ahead is substantial. While both parties have gone on record claiming we must address fraud, many of the most meaningful reforms have yet to be enacted. We’re still dealing with ongoing federal-state tension, leadership decisions at DHS that rightfully remain under scrutiny, and a steady stream of criminal cases moving through the system. At the Capitol, the debate is now centered on harder structural questions. Who gets information, and when? When can payments actually be stopped? How do agencies share data? How do we modernize systems that clearly aren’t working? And how independent should a statewide watchdog be? Should they be appointed by the Governor, as proposed, or should they exist as a truly independent office?
The consequences of the path we choose here will be significant. Fraud takes resources away from people who need them, puts pressure on taxpayers, and makes it harder for honest providers and frontline workers to do their jobs the right way.
And above all, it makes life more expensive for every single Minnesotan.
Oversight only works if people are willing to act on what they’re seeing. That includes service recipients, frontline workers, providers, neighbors, local officials, and taxpayers who notice when something doesn’t add up. If you see something, speak up.
A party that takes fraud seriously doesn’t block basic oversight. And fixing this problem is going to take more than words.
Don’t hesitate to reach out with any questions or thoughts about the direction we’re heading, both at the Capitol and across the state.
Have a great weekend,
Bidal
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