(The Center Square) – Minnesota is increasing penalties for Medicaid fraud as state and federal officials continue prosecuting cases involving millions of dollars allegedly stolen from taxpayer-funded programs.
The Minnesota Sentencing Guidelines Commission recently approved a higher classification for a new Medicaid fraud offense created under a recently passed law, moving theft of more than $1 million from Severity Level 7 to Severity Level 8.
The change means offenders convicted of stealing more than $1 million from Medicaid will face a presumptive commitment to prison, regardless of their criminal history. A first-time offender convicted of a Severity Level 8 crime, which includes crimes like criminal vehicular homicide, faces a presumptive 48-month prison sentence.
These changes came after Attorney General Keith Ellison urged the commission in July to increase the severity levels. Ellison applauded the commission's decision, which was released last week.
“I am pleased that the state of Minnesota is now treating the theft of money from Medicaid with the severity it deserves,” Ellison said. “Medicaid fraud robs Minnesota taxpayers, and it steals money meant to provide healthcare to our low-income neighbors.”
The change comes as Minnesota continues to deal with the fallout from dozens of high-profile fraud investigations—both on the state and federal level.
Just last week, four men pleaded guilty to defrauding Minnesota’s Medicaid-funded Housing Stabilization Services program of about $2.2 million. Prosecutors said the defendants submitted thousands of fraudulent claims and enrolled about 350 people for services that were never provided.
The HSS program was shut down after investigations revealed systemic fraud that allegedly siphoned millions of dollars from the Medicaid-funded program.
“Medicaid fraud is a serious offense with real consequences,” said U.S. Attorney for the District of Minnesota Daniel N. Rosen. “These defendants stole funds intended to support vulnerable Minnesotans who rely on housing and recovery services. Their guilty pleas underscore my office’s commitment to holding accountable those who exploit public programs.”
This is just one example of many out of Minnesota, which ultimately led to the federal government freezing more than $200 million in Medicaid funds to Minnesota last week.
“They violated the social contract that makes this country strong and makes our democracy function,” said U.S. Health and Human Services Secretary Robert F. Kennedy Jr. at a news conference in July.
The Minnesota Department of Human Services has released a website pushing back against federal claims about fraud in the state, which is estimated to total between $9 and $20 billion.
“The federal government’s mischaracterization and misrepresentation of Minnesota’s good faith efforts to fight fraud and improve our systems, makes it difficult to trust that our federal partners are really trying to help us better our systems, rather than penalize Minnesotans,” MDHS said on that website. “Medicaid is a foundation for our entire health care delivery system, and major funding losses threaten to destabilize care for all Minnesotans.”
The state’s new Medicaid fraud offenses are part of the Medical Assistance Protection Act, which was a bipartisan law championed by Ellison in the spring. It took effect Aug. 1.
Before the law passed, Minnesota treated all Medicaid fraud above $35,000 the same in regards to criminal penalties. That meant someone who stole $35,001 faced the same penalty structure as someone who stole several million dollars. The new law created new tiers for Medicaid fraud involving more than $100,000 and more than $1 million.
The law also expanded the Attorney General’s Office’s ability to investigate fraud by adding 18 positions to its Medicaid Fraud Control Unit, increasing staffing from 32 to 50 employees. The additional positions include 11 investigators, three attorneys and four support staff.
Ellison’s office said the expansion was needed as the unit has seen nearly triple the number of fraud referrals compared with previous years.
Currently, the unit receives 75% of its funding—$5 million—from the U.S. Department of Health and Human Services. The other 25% is funded by the state.
The law also expanded the state’s fraud statutes, adding Medicaid fraud to Minnesota’s racketeering law, extending the statute of limitations for certain cases and allowing the Attorney General’s Office to subpoena financial records during criminal Medicaid fraud investigations.
Ellison said these were all important steps to addressing fraud in the state.
“It’s a disgraceful crime, which is why I spent over a year working to pass my bipartisan bill increasing criminal penalties for Medicaid fraud and giving my team more tools and resources to crack down on fraudsters,” Ellison said. “I’m grateful to the Sentencing Guidelines Commission for their decision, and to Senator Johnson Stewart and Representative Norris for their partnership in passing this important legislation.”
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