A new report from the Office of the Legislative Auditor (OLA) found that the Minnesota Department of Human Services (DHS) mistakenly believed it lacked the authority to investigate kickbacks in state programs.
That report, which was published Tuesday, examined how DHS handled allegations of fraud within the Early Intensive Developmental and Behavioral Intervention (EIDBI) program, a federally-funded state program that provides services to people with autism.
In short, EIDBI reimburses outside organizations for providing services to people under the age of 21 who have been diagnosed with an autism condition. EIDBI is one of several state programs that is funded via Medical Assistance, Minnesota’s Medicaid program.
EIDBI has been at the center of Minnesota’s ongoing fraud saga. Last year, EIDBI was one of 14 state programs that were deemed “high-risk” by DHS. The U.S. Attorney’s Office has said that more than $9 billion could have been stolen from those 14 programs since 2018.
According to Tuesday’s report, the OLA reviewed how DHS handled 32 complaints against EIDBI providers that were lodged between 2017 and 2024. In 25 of those cases, DHS determined that the situation did not warrant further investigation.
In the other seven cases, DHS completed an investigation.
Regarding the seven completed investigations, the OLA said DHS “thoroughly addressed the allegations made against the providers” and took “appropriate action” which included withholding payments, starting monetary recovery, and referring cases to authorities.
What about the other 25 cases that DHS did not pursue?
For the most part, the OLA agreed with DHS’ reasons for not pursuing investigations in those cases. According to the OLA report, some of the 25 complaints were outside DHS’ authority, and others were not supported by the facts.
However, three of the 25 cases involved allegations of kickbacks — a situation where an EIDBI provider pays someone to participate in their EIDBI program so the provider can receive a higher reimbursement from the government.
Of those three cases, two were closed because providers never requested reimbursement from DHS. The third case was closed because DHS said it did not have the authority to investigate allegations only involving kickbacks and no other fraudulent activity in EIDBI.
The OLA disagreed, saying, “DHS has had the authority to investigate allegations of kickbacks in [Medicaid-funded programs] since the late 1990s.”
The OLA explained that an existing error in DHS’ administrative rules prevents the agency from investigating kickbacks. However, the OLA noted that “DHS could have acted at any time to revise its rules” and “[DHS] has permitted the error to stand since 1995.”
Additionally, Tuesday’s report said the department could have revised its administrative rules to impose sanctions on Medicaid providers suspected of engaging in kickbacks. Those sanctions could have taken the form of reduced or withheld payments.
Believing it did not have proper authority to address kickbacks, DHS had lobbied for a state law that would give it that power. That law was eventually passed in 2025, but the OLA says DHS’ authority to suspend payments during a kickback investigation is still unclear.
The OLA recommended that DHS “amend its administrative rule” and, “if DHS does not pursue an amendment, the Legislature should act to resolve this issue.”
Responding to the OLA report, DHS said it was “pleased” that the OLA found that most of the EIDBI complaints were handled appropriately. The agency also noted that it believes it currently has legal authority to suspend payments based on kickback allegations.
Regarding the authority to suspend payments, DHS said it will ask the legislature to act this session to resolve the matter or pursue an administrative rule change if the legislature does not act. The agency noted that a rule change could take “12 to 24 months.”
After the OLA report was published, GOP State Sen. Jordan Rasmusson slammed DHS.
“The Department of Human Services knew about potential kickbacks in autism services and chose to ignore this theft from taxpayers,” Rasmusson said. “Despite having legal authority to stop kickbacks, DHS knowingly allowed this service to be defrauded.”
Similarly, Republican House Speaker Lisa Demuth and GOP Floor Leader Harry Niska said the Walz administration “hid behind the false claim that they lacked authority to act” on allegations of kickbacks in the program.
“Today’s report proves that excuse was never true. We now know that they always had the authority to investigate these claims and once again chose not to act to protect tax dollars,” they said.
In recent years, EIDBI spending has increased dramatically. According to the OLA, EIDBI spending grew from $38.1 million in 2020 to $324.9 million in 2024.
Luke Sprinkel
Luke Sprinkel previously worked as a Legislative Assistant at the Minnesota House of Representatives. He grew up as a Missionary Kid (MK) living in England, Thailand, Tanzania, and the Middle East. Luke graduated from Regent University in 2018.
