As Fraud Probes Grow, Citizens Face Eviction and Lost Medical Stability

Featured: Minnesota Lawns September 26, 2024 © NorthStar Editorial

Disabled Minnesotans Abandoned Amid Social Services Fraud Crisis

A new KARE 11 Investigates report highlights a deepening crisis affecting Minnesotans with disabilities as the state’s response to widespread fraud in publicly funded health insurance programs has left caregivers out of work, bills unpaid, and vulnerable people without support.

Caregivers Disappear, Assistance Stalls

According to KARE 11’s reporting, as federal and state agencies investigate fraud within Medicaid-linked health insurance programs, many healthcare companies who provide essential support services have stopped receiving payments. In some cases, direct support healthcare providers disappeared from the households they were supporting when payments were paused or halted, leaving those disabled persons enrolled in Medicaid insurance programs without mandatory medical treatment needed to avoid injury and hospitalization.

Program Designed for Support, Now Under Scrutiny

The crisis stems from investigations into health insurance programs intended to provide medical treatment, supplies and care to Minnesotans with disabilities and other needs. One of the largest of these is the Housing Stabilization Services (HSS) program, shell companies — who claimed to assist Medicaid insured and eligible Minnesotans secure housing with in-home medical supports. Investigators found that the program, which was originally budgeted at only a few million dollars annually, ballooned to over $100 million in payments — a sign to prosecutors and state auditors that fraud was occurring at scale.

It appears that the disabled Minnesotans who this fraud impacts directly were not contacted by prosecutors and state auditors.

State authorities responded by suspending funds and, in some cases, terminating healthcare companies under investigation, but there has been no coordinated transition plan for the thousands of disabled Minnesotans who legitimately relied on publicly funded health insurance through Medicaid to pay for this therapeutic residency and daily medical treatment. Advocates warned that a “stop-payment-first” approach risked forcing individuals into homelessness and other harms; in some cases, clients have reported eviction notices after medical treatments were cut off. Which begs the question, whose tracking the effects which fraud has on eligible publicly funded insurance holders.

Billions and Broader Fraud Context

This crisis is unfolding amid a broader wave of fraud investigations in Minnesota’s social services system. Prosecutors and federal agencies are probing alleged misuse of billions in public funds across multiple programs, including child nutrition, housing, autism therapy, and disability supports.

In some of the largest cases:

DHS contracted providers billed for medical treatment never actually provided — an act of maltreatment under Minnesota's state laws which Bearing Witness has been reporting on an ongoing basis since 2007. All state agencies and legal aides have declined to conduct investigation in the case of every report made.

DHS contracted providers Used false documentation — an act of maltreatment under Minnesota's state laws which Bearing Witness has been reporting on an ongoing basis since 2003. All state agencies and legal aides have declined to conduct investigation in the case of every report made.

DHS contracted providers submitted medical treatment claims for individuals who did not receive the claimed assistance — an act of maltreatment under Minnesota's state laws which Bearing Witness has been reporting on an ongoing basis since 2015. All state agencies and legal aides have declined to conduct investigation in the case of every report made.

In particular, the Integrated Community Supports (ICS) program — similar to HSS — has been singled out as especially vulnerable. Federal investigators reported that what was meant to cost $2.6 million annually grew to over $104 million by 2024, with internal records indicating that some medical providers billed for medical services that were never delivered.

Impact on Families and Individuals

While the record does not directly address the following outcomes, the documented failures in access to medical care and legal protection contribute to broader conditions that correlate with those disparities.

You must be a qualifying provider (contracted), program, caregiver, or facility to submit claims for DHS public medical insurance holders. This means it is the obligation of employment of DHS’s paid workforce to screen and monitor these activities.

Ensuring that this workforce operates in compliance is the obligation of employment of the paid DHS commissioner, deputy commissioner, and the Appeals and Regulation department workforce.

Evidently, DHS employees and administrators dropped the ball. While fraud did occur, we see that DHS administrators, the employed workforce, and contracted companies, providers, and vendors continued to receive payments and payroll, maintain their employment, contracts and reputations—until external probes were conduct at which point only the contracted companies and providers were held accountable as if they could succeed without a Minnesota Department of Human Services operating in non-compliance.

The Minnesota Department of Human Services industry is at-risk, vulnerable and impoverished citizens whom often cannot afford out-of-pocket legal defense, as is legal aid's. When we look at this rampant fraud and non-compliance, we're able to better understand how the State of Minnesota’s health disparities—and its high mortality rates, homelessness rates, incarceration rates, unemployment rates, transportation gaps, education gaps, homeownership gaps, and wealth gaps—are created and maintained.

When certain individuals are selected and protected—continuing to receive income despite failing to meet their employment obligations, and even engaging in criminal conduct—while others who have followed the rules, complied with requirements, and remained law-abiding are cut off from basic necessities, a profound injustice occurs.

Those cut off are often people attempting to recover from short-term crises or to remain stabilized while living with disability. Instead, they are subjected to severe and sometimes deadly stress, further victimized by crime. When that crime is identified, DHS regulatory failures—specifically the failure to verify information supplied by contracted programs, vendors, staff, and administrators—prevent meaningful remedy.

Existing laws, including those addressing abuse, neglect, and maltreatment of vulnerable adults, are not used to make victims whole. Employment regulations are not enforced to remove internal bad actors. Media reporting rarely names those responsible and seldom centers the victims.

As a result, victims are left bearing the consequences of new crimes layered on top of earlier harms: the denial of medical care, the destruction that follows, and the ongoing reality of illness or disability.

Then those people can be nothing other than sick and broke—as if illness itself were a death sentence, and those slow, ongoing deaths must be lived out in the custody of DHS, like a plantation. Sick and poor people cannot remain alive without public funding: medical assistance programs, hospital systems that provide food and shelter, foster care systems that provide food and shelter, and prisons that provide food and shelter. All of these are DHS- and state-funded realities.

Therefore, a critical question must be asked: to whom are these realities most beneficial? Only when that entity is identified and investigations are directed there can fraud in the State of Minnesota even begin to be addressed. Anything short of that is spectacle—targeting selected, unprotected individuals associated with fraud while leaving the criminal, fraudulent, non-compliant workforce which both creates and empowers outside actors intact.

For Minnesotans with disabilities, this shift has concrete consequences. As a result of the Jensen v. Minnesota Department of Human Services class action settlement, which followed the Just Plain Wrong report, medical treatment for individuals with severe disabilities was largely moved out of state-operated facilities, assisted living and nursing homes and into these so-called “community setting” all-in-one publicly funded Medicaid health insurance programs.

When these programs are shut down, citizens who require care equivalent to that provided in assisted living facilities, nursing homes, or institutional settings are left with nowhere to turn for daily medical treatment. Shutting a program down without an alternative is the equivalent of evicting from a nursing home, assisted living or unsafe discharge by a hospital or clinic.

What Minnesota is particularly adept at is using language to obscure facts and confuse public perception in order to grant itself more protection, privacy, and authority over healthcare than it should have under American law—despite the fact that participants receive medical treatment through taxpayer funding.

Medical treatment and prescriptions are expensive in the United States. Very few citizens can afford to pay for necessary care out of pocket. However, because funding for these individuals is routed through DHS and they are labeled “disabled,” DHS inserts inappropriate social services frameworks and language into what is fundamentally healthcare. By doing so, the matter is made to appear as though it falls under DHS social services jurisdiction, and therefore DHS control and responsibility, rather than administrative records and compliance accountability.

This structure provides DHS with an expanded degree of access to and control over funding—funding that the record shows is being stolen and permitted to be stolen by others. Under the regulation of these programs, it is within DHS’s scope to complete entry assessments, provide structural information to recipients, offer recommendations when requested, meticulously document and maintain records, and conduct periodic check-ins with recipients to verify that contracted providers actually delivered the services billed.

The privileged structure of the system performs everything except these required acts because they're not being restricted or held accountable.

The employment body is intentionally taught to regard insurance recipients as social services caseloads so that senior administrators can maintain access to the funding. Social services and insurance are different things. Ideally, what should come out of the Minnesota Fraud Scandal of 2024–2026 is that all waivered services should be separated from DHS social services to a department that only manages waiver caseloads, with a major focus on processing the paperwork and some new rules for workforce accountability. It should be viewed more like triage, with assigned case managers a recipient can reach out to for answers, and that will reach out to them to verify care has been received when provider billing comes in and they’re doing well. Nothing more

Citizens rely on publicly funded medical insurance for daily medical treatment and support, including care coordination, placement into medical residential settings, access to medical equipment, ongoing treatment, and support staff. When payments are suspended under the pretext of fraud investigations, the funding intended to humanely sustain these citizens does not disappear—it remains concentrated in the control of noncompliant actors: internal administrators, collaborating external fraudsters, and a neglectful state apparatus. Through both intentional conduct and negligence, the state benefits from the instability it creates, while those dependent on care absorb the consequences.

Government Response and Oversight Challenges

State leaders and federal partners have stated that they are working to root out fraud, but clearly are doing no such thing by failing to hold the noncompliant DHS economy accountable for the individual acts committed by each participant that allowed this fraud to occur.

Furthermore, the deliberate exclusion of program recipients—the actual victims of these acts—from investigations and resolution planning functions as the primary motivator for internal DHS fraud actors. Minnesota culture demonstrates that it assigns no value to disabled citizens, as evidenced by its failure to include or protect them. As a result of this reality, DHS-appointing governors, commissioners, the workforce operating under their direction, and statewide enforcement agencies show no investment in operating state programs lawfully or in enforcing compliance when violations are reported because they know by history that if they're caught they'll face no accountability.

It is impossible to stop a crime when there are no criminals, consequences, or victims identified for taxpayers to see.

To add insult to injury, while victims of DHS-related fraud are losing their homes, belongings, and healthcare—and being pushed into homelessness—noncompliant DHS administrators, the employed workforce, the enforcement body and lawmakers remain healthy, housed, and comfortable while deciding how to allocate medical insurance funds that were provided by tax-payers solely to meet these citizens’ medical needs.

It is unacceptable—and a continued incentive for both internal and external fraud—that the state is choosing to redesign programs with stricter oversight rather than remove the noncompliant workforce that failed to follow established regulations, regulations that do in fact make fraud largely impossible. This approach signals that Minnesota workers, leadership, and courts operate above the law, because there is no meaningful accountability where its its own workforce operating in criminality.

The reality is that the state’s noncompliance at METO led to the Jensen V. Department of Human Services class action lawsuit settlement agreement, following the "Just Plain Wrong" report, that required the creation of Medicaid programs intended to protect citizens from abuse, neglect, inadequate healthcare, lack of shelter, and denial of basic necessities as early as 2008.

As we approach a twenty-year milestone, take a hard look at the media and at Minnesota culture. Nothing has changed except location since METO. That is the real problem. It was true then, and it is true now: the only problem is governmental and institutional noncompliance and a refusal to enforce accountability.

Lawmakers have called for more transparency and improved data sharing between agencies to ensure vulnerable residents are not left without support. This statement is offensive, given that lawmakers continue to allow DHS to remain self-regulating.

Victims of the types of fraud described are systematically prohibited from submitting first-person abuse reports or from accessing what is documented when reports are created. Instead, they are required to call the DHS MAARC phone number, where DHS retains full control over what is recorded, omitted, or classified.

This is functionally equivalent to calling a bank robber in the middle of a robbery to report that he is committing a robbery. And it is set up that way intentionally, to shield DHS from reports of abuse and fraud entering auditable records because of perpetual past history of abuse and fraud and its unrepentant commitment to stop nothing.

If not for the election of President Donald Trump and the DOGE initiative associated with Elon Musk—which prompted Minnesota’s GOP to create a public reporting link—the public would not be aware that fraud in Minnesota existed at all.

Critics argue that the lack of a coordinated plan for continuity of care has left disability services lagging and, in some cases, actively blocking critical care rather than protecting recipients. This is all Minnesota’s disabled citizens have ever known—it is Minnesota Nice. The longevity and scope is nothing short of Racketeering.

Notes on Sources

KARE 11 Investigates detailed how caregivers and clients were impacted as payments halted amid fraud probes.
Public reporting confirms the suspension of payments and ensuing gaps in care for people with disabilities.
Broader fraud context from national reporting shows programs meant to aid vulnerable populations ballooned in cost and were exploited by fraudulent providers.
Termination and suspension of HSS providers and the absence of transition plans contributed to housing instability.

References

KARE 11 Investigates. (n.d.). Disabled Minnesotans abandoned amid social services fraud crisis. KARE 11.
https://www.kare11.com/article/news/investigations/kare-11-investigates-disabled-minnesotans-abandoned-amid-social-services-fraud-crisis/89-2e6e7a3c-2403-4984-b464-78236641c1ec

Fox 9 Staff. (n.d.). Housing Stabilization Services program terminated amid fraud concerns. FOX 9 Minneapolis–St. Paul.
https://www.fox9.com/news/housing-stabilization-services-terminated-fraud-aug-1-2025

Minnesota House of Representatives. (n.d.). Legislative updates on fraud prevention and oversight in human services.
https://www.house.mn.gov/members/Profile/News/15504/51212

Minneapolis Media. (n.d.). State fraud crackdown leaves disabled Minnesotans facing eviction.
https://minneapolimedia.town.news/g/coon-rapids-mn/n/350533/state-fraud-crackdown-leaves-dozens-disabled-minnesotans-facing-eviction

Wikipedia contributors. (n.d.). 2020s Minnesota fraud scandals. In Wikipedia.
https://en.wikipedia.org/wiki/2020s_Minnesota_fraud_scandals