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FBI agents Thursday morning searched the offices of two Minnesota autism treatment centers as part of a major investigation into alleged Medicaid fraud.

A search warrant application unsealed by a federal judge Thursday alleges that Smart Therapy in Minneapolis received nearly $14 million in reimbursement from Medicaid between 2020 and last month. Star Autism Center in St. Cloud — which opened in August 2020 — received $6 million. Investigators say the clinics made fraudulent Medicaid claims for services that they never provided, and claimed to pay employees who had little or no training or purported to work unusual schedules.

The latest allegations appear to have connections to a major child nutrition program fraud case that first became public in early 2022 and led to charges against 70 people. Authorities say at least a dozen defendants charged in the 

 case also owned or received money from autism clinics and other health care companies. Smart Therapy signed up to be a meal site under the auspices of Feeding Our Future, a now-defunct Twin Cities nonprofit that’s at the center of an alleged $250 million scheme to defraud federal child nutrition programs during the pandemic.  

As in the food-fraud investigation, an exponential growth in autism-therapy claims drew federal scrutiny to the autism clinics. 

A spike in autism centers across Minnesota led to an FBI investigation

A decade ago, the Centers for Medicare and Medicaid Services began requiring Medicaid and children's health plans to cover Applied Behavior Analysis therapy for kids with autism spectrum disorder. In Minnesota, that care is delivered through the Early Intensive Developmental and Behavioral Intervention program, or EIDBI. It’s for Minnesotans under 21 who are eligible for Medical Assistance, MinnesotaCare, or similar programs.

In 2017, reimbursement claims in Minnesota totaled only $1.7 million. But they took off in 2019 — reaching nearly $55 million. By 2023, the claims hit a peak of nearly $400 million, though Medicaid paid out about half of that.

The FBI says that around 2019 “dozens and dozens” of autism clinics purporting to provide EIDBI services sprung up across Minnesota and many enrolled immediately to receive taxpayer reimbursement. 

Warrant: Children ‘did not appear to be autistic’

A former Smart Therapy employee identified in the warrant as Individual A worked as a behavioral technician from 2021 to 2023 and said that they got no training. The person told investigators that most employees were 18- or 19-year-old relatives of the owners who had no formal education beyond high school and no certification. Individual A said the owners hired relatives because they wouldn’t question what was going on.

Some staffers tried to work on therapy “goals” with clients but many stayed on their phones all day. Clients were dropped off at 9 a.m. and picked up in the evening by drivers who also billed Medicaid.

According to the warrant, “Individual A said that many of the kids receiving EIDBI services at Smart Therapy did not appear to be autistic,” but many had developmental delays. The employee said that they believed that Smart Therapy’s owners paid parents of clients to bring in their kids there and “observed parents picking up white envelopes from Smart Therapy’s autism center.”

In some cases, the company submitted bills to Medicaid on behalf of providers who weren’t actually working there, or who were traveling overseas. The company allegedly submitted an invoice for $193,000 for services provided by a worker who was only there for a short time and who had claimed unemployment benefits in 2021. 

Star Autism Center allegedly also filed improbable claims to Medicaid.

The warrant noted that one apparently fraudulent claim said that Star Autism Center’s owner provided treatment nine hours a day for 185 days straight from July through December of 2021. The company twice billed Medicaid for 21.5 hours of EIDBI services that the owner, who’s identified in the warrant only by his initials, provided on a single day. Investigators also allege that another staff member at Star Autism Center submitted bills for “23 hours’ worth of in-home or office services for six different clients” on a single day in November 2022.

MPR News left messages Thursday for the owners of Smart Therapy Center and Star Autism Center and did not immediately hear back.

The Minnesota Department of Human Services investigated Star Autism Center in 2022 and referred the case to the state attorney general’s office. 

A spokesperson for Minnesota Attorney General Keith Ellison said the office “is working closely with the FBI and the Department of Health and Human Services’ Office of Inspector General,” but otherwise cannot comment on the status of ongoing investigations.

In a separate statement to MPR News, Minnesota Human Services Commissioner Jodi Harpstead said “DHS has open investigations into these providers. We work closely with our state and federal law enforcement partners in oversight of these and other Medicaid programs. DHS continues to gather and evaluate new information. 

“Because of concerns about the integrity of autism services, we have stepped up our oversight and are conducting thorough audits of the program. DHS is in the process of visiting every single site that participates in this program. We are digging further into cases where we note concerns and will conduct formal investigations if and where needed.”

Investigators say Smart Therapy signed up to be a meal site under the auspices of Feeding Our Future. In December 2020, the owner allegedly submitted meal reimbursement requests for 300 kids per day, seven days a week for that month. 

Smart Therapy also allegedly worked with S&S Catering, a company implicated in the sprawling fraud case. S&S’s owner, Qamar Ahmed Hassan, pleaded guilty in 2023.

Investigators say Smart Therapy received $465,000 in federal child nutrition program money in 2020 and 2021.

Federal prosecutors have not filed charges in the autism center investigation.

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FBI agents Thursday morning searched the offices of two autism treatment centers as part of a major investigation into alleged Medicaid fraud. 

FBI agents raid autism treatment centers in Minneapolis, St. Cloud

a sign reads smart therapy center on glass door

FBI agents raid autism treatment centers in Minneapolis, St. Cloud

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