Minnesota's Department of Human Services had the legal authority to investigate Medicaid kickback allegations since the late 1990s. It chose not to use it. A new audit from the Office of the Legislative Auditor, released Tuesday, dismantles the agency's longstanding excuse that it lacked the power to pursue kickback cases on its own.
The finding lands like a brick through the window of an already crumbling edifice. The EIDBI program, which provides autism services through Medicaid, saw its budget rocket from $3 million in 2018 to nearly $400 million in 2023. Prosecutors have described kickbacks as a key component of fraud schemes uncovered in that program. And the agency tasked with oversight sat on its hands for years, claiming it couldn't act.
Now we know it could. It just didn't.
According to Fox News, the OLA report, titled "Department of Human Services Investigations of Alleged Kickbacks in the Early Intensive Developmental and Behavioral Intervention Program," identified three specific kickback allegations between 2021 and 2023 that DHS declined to investigate. The agency's rationale each time was the same: it didn't have the authority.
The auditors weren't buying it.
"We disagree with DHS's assertion that it did not have the authority to investigate allegations of kickbacks alone."
The report went further, concluding that the DHS Office of Inspector General "has long possessed the legal authority to pursue kickback cases independently." The auditors traced that authority back decades.
"Based on our analysis, DHS has had the authority to investigate allegations of kickbacks in MA since the late 1990s."
Three credible allegations. Zero investigations. Zero referrals to law enforcement. Deputy Legislative Auditor Katherine Theisen confirmed the scope of the failure, telling KARE 11 News that DHS declined to flag any of the three cases for further review.
"In the three cases that we identified in this review, they did not refer any of the three cases to law enforcement or any other investigation agency."
Not one investigated. Not one referred. Not one flagged.
The audit also uncovered what it called a "decades-old error in DHS administrative rules" that may have limited the agency's ability to suspend payments during kickback investigations. The word "may" is doing heavy lifting there. The error conveniently allowed hundreds of millions in program funds to flow without interruption while allegations piled up.
The auditors recommended that DHS amend its administrative rule defining "fraud" to clearly include kickbacks. That this wasn't already the case tells you everything about how seriously the agency treated the problem. The report also noted that if DHS fails to make the change, the legislature should intervene.
To its credit, or perhaps sensing which way the wind is blowing, DHS offered a partial concession in a letter included in the report.
"We agree with the recommendation that fraud should be defined to more clearly include kickbacks."
Agreeing to fix a definition after years of using a flawed one to justify inaction is not accountability. It's damage control.
Consider the trajectory. In 2018, the EIDBI program cost Minnesota taxpayers $3 million. By 2023, that figure had ballooned to nearly $400 million. That is not gradual growth. That is an explosion, a more than 13,000% increase in five years. And during the period of fastest growth, the agency responsible for policing fraud in the program was actively refusing to investigate credible kickback allegations.
The program was designed to serve children with autism. The fraud didn't serve those children. It served the operators gaming the system while a state agency looked the other way. In one case referenced in reporting, an autism center operator fraudulently billed millions. The details of who, where, and exactly how much remain sparse, which itself speaks to how little scrutiny this program received for how long.
Minnesota House Fraud Prevention Committee Chair Kristin Robbins, a Republican state representative who is also running for governor, issued a press release that dispensed with diplomatic niceties.
"The continued lack of accountability for the rampant fraud in this state is astounding."
Robbins went further, pointing to a pattern that extends well beyond this single program.
"DHS has been complicit in fraud because they have repeatedly failed to investigate credible allegations of fraud in multiple programs over many years. This OLA report provides the latest proof of their failure to provide proper oversight in the EIDBI (autism) program."
Robbins also noted that existing administrative rules and state law already permitted DHS to suspend payments during a kickback investigation, reinforcing the auditor's conclusion that the agency's claimed powerlessness was a fiction.
Republican state Rep. Walter Hudson framed it with characteristic bluntness on X, noting that contrary to Walz administration claims, the administration always had the legal authority to address kickback schemes. His conclusion was two sentences long and needed no elaboration.
"They simply choose not to."
Minnesota House Republicans posed the question that taxpayers deserve an answer to: "The Walz administration didn't act for years. How much did it cost Minnesotans?"
Townhall columnist Dustin Grage called for federal intervention, writing on X that "the feds need to step in immediately."
This audit does not exist in isolation. Minnesota's Medicaid fraud problems have been an open wound for years. CBS News reported that prosecutors described kickbacks as a central feature of fraud schemes in the autism services program. The details have trickled out slowly, each revelation worse than the last, each one raising the same question: where was DHS?
The answer, it turns out, is that DHS was right where it always was. It had the authority. It had the allegations. It had the legal framework. What it lacked was the will to act.
There is a pattern in progressive governance that extends far beyond Minnesota. Build a massive program. Fund it generously. Staff the oversight office. Then quietly ensure that the oversight office never actually oversees anything. When the fraud becomes too large to ignore, claim systemic failure rather than individual negligence. Promise reforms. Repeat.
The EIDBI program followed this script to the letter. The budget grew by orders of magnitude. The fraud grew with it. The watchdog agency invented a legal theory to justify its own irrelevance. And when auditors finally forced the question, the best DHS could muster was agreement that maybe fraud should include the thing that everyone already knew was fraud.
Fox News Digital reached out to Gov. Tim Walz's office for comment. Walz, who announced in January that he would not seek re-election, has not been quoted in response to the audit's findings.
His silence is its own kind of answer.