Minnesota autism centers under investigation for fraud

NINA MOINI: Autism treatment centers, one in downtown Minneapolis and one in Saint Cloud, as part of a major investigation into Medicaid fraud. A judge just unsealed a search warrant in the case. And it links some of the defendants in the Feeding Our Future Child Nutrition fraud case to these autism centers. Joining us now with what we know about this new investigation is MPR News reporter, Matt Sepic, who's been following all of this very closely. Thank you for being here, Matt.

MATT SEPIC: Hi, there, Nina.

NINA MOINI: You just read through the 53 page search warrant application from the FBI, I understand. What is the basis for their investigation?

MATT SEPIC: Yes, I've been doing a lot of reading over here. This focuses on two autism treatment centers, Nina. One is right down the street from me in downtown Minneapolis on Nicollet Avenue. It's called Smart Therapy Center. The other one that's the subject of this investigation is called the Star Autism Center. It's in Saint Cloud.

Authorities allege that Smart Therapy received nearly $14 million in reimbursement from Medicaid between 2020 and just last month. Star, which opened back in August of 2020, received $6 million. Now, a decade ago, just for some background, Nina, the Center for Medicare and Medicaid Services began requiring Medicaid and children's health plans across the country to cover something called applied behavioral analysis therapy for kids with autism spectrum disorder.

In Minnesota, that care is delivered through a state program called the Early Intensive Developmental and Behavioral Intervention Program, or EIDBI. It's for Minnesotans under the age of 21 who are on medical assistance, Minnesota Care, or similar programs. Federal prosecutors in the FBI say these two autism centers in Minneapolis and Saint Cloud were part of a scheme to defraud the EIDBI program.

NINA MOINI: So what prompted the investigation, Matt?

MATT SEPIC: Well, there is some overlap here with the big Feeding Our Future case. While investigating the alleged $250 million scheme to defraud federal child nutrition programs, authorities noticed a similarly large spike in EIDBI related claims to Medicaid.

Now, what prompted the Feeding Our Future investigation was huge claims in reimbursement for federal child nutrition programs by the former nonprofit, Feeding Our Future, and its affiliated entities. And prosecutors say that there's a similar spike in claims for autism services to Medicaid.

Back in 2017, Nina, these totaled just $1.7 million. But they really took off in 2019, with nearly $55 million in claims. Last year, in Minnesota, the claims hit a peak of nearly $400 million. That's the amount claimed in 2023. Medicaid actually paid out about half that, or $200 million.

The feds say this exponential growth, as I said, is similar to the spike in revenue at Feeding Our Future, which is at the heart of the alleged food fraud scheme. Investigators say that around 2019, dozens and dozens of autism clinics purporting to provide EIDBI services popped up across Minnesota. And many enrolled immediately in that program.

NINA MOINI: How do investigators think that this alleged scheme operated? How did they pull that off?

MATT SEPIC: Well, they say the owners of Smart Therapy, that's the clinic here in downtown Minneapolis, made a lot of fraudulent claims to Medicaid for services that they never provided. A former employee, identified in the search warrant as Individual A, as a Behavioral Tech there from 2021 to 2023, and said they got no training. This person told investigators that most employees were just 18 or 19 years old, usually relatives of the owners, and had no formal education beyond high school and no certification to provide autism treatment to children.

Individual A said the owners hired relatives because they wouldn't ask questions about what was happening. Some staffers tried to work on so-called therapy goals with clients. But many were really just on their phones all day.

Clients got dropped off at 9:00 AM and picked up in the evening by drivers. And these drivers, the feds say, also billed Medicaid in a parallel scam. According to the warrant, quote, "Individual A said that many of the kids receiving EIDBI services at Smart Therapy did not appear to be autistic. Many did have other developmental issues, though."

The employee said that they believed Smart Therapy's owners paid parents of clients to bring their kids there and quote, "observed parents picking up white envelopes from Smart Therapy's Autism Center." In some cases, the companies submitted bills to Medicaid on behalf of providers who weren't actually working there or who were traveling at the time the therapy was purported to have taken place. The company allegedly submitted an invoice for $193,000 for services provided by a worker who was only there for a short time, and actually, claimed unemployment benefits in 2021.

NINA MOINI: And Matt, you've been covering the Feeding Our Future case very closely. Is this investigation of the autism centers related to the other case?

MATT SEPIC: Well, yeah, it is. And I mentioned that there were similar ways that these alleged scams operated. And the investigators began the investigation after seeing similar spikes in claims.

But there's a little more overlap here too. Investigators say Smart Therapy actually signed up to be a meal site under the auspices of Feeding Our Future. In December of 2020, the owner allegedly submitted meal reimbursement requests for exactly 300 kids a day for seven days a week for that month.

And after covering the Feeding Our Future trial earlier this year, and that was a big red flag, improbably round numbers and perfect attendance by kids, according to these meal reimbursement claims. The feds say Smart Therapy worked with S&S Catering.

Now, this is a company familiar to me and others who are following the Feeding Our Future case. And the S&S Catering's owner pleaded guilty in the fraud case in 2023. Investigators say Smart Therapy received almost a half a million dollars in federal Child Nutrition Program money in 2020 and 2021. That is on top of what they received from Medicaid.

NINA MOINI: What about this other business in Saint Cloud?

MATT SEPIC: Yeah, that's the one called Star Autism Center. And that allegedly operated in a similar manner. The warrant outlines, really, quite a few improbable claims that its owners allegedly made to Medicaid.

The warrant says one fraudulent claim said that an employee worked 185 days straight from July 2 to December 31 of 2021, nine hours a day. This company twice billed Medicaid for 21.5 hours of EIDBI services that this employee provided on a single day, 21.5 hours on a single day, and billed 23 hours worth of services for six different clients in a single day. As I say, improbable.

And the Minnesota Department of Human Services, the warrant mentions, investigated Star back in 2022, and referred the case to the State Attorney General's Medicaid Fraud unit.

NINA MOINI: So what's the latest, Matt? Have prosecutors filed charges?

MATT SEPIC: No, there have been no federal charges filed in this case. But I should note that these things do take time, Nina. In the Feeding Our Future case, a judge unsealed those warrants after the FBI raids nearly three years ago, back in January of 2022. It took until September of that year, nine months later, before a Grand Jury returned the first batch of indictments. So this is no doubt an active investigation.

NINA MOINI: Thanks for following it so closely for us, Matt.

MATT SEPIC: Sure.

NINA MOINI: That's MPR News reporter, Matt Sepic.