Minnesota moves to end housing stabilization program after reports of possible fraud
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The Minnesota Department of Human Services announced Friday that it will move to terminate a housing stabilization program recently flagged for possible fraud by federal investigators.
The agency said it had also suspended payments to 11 more providers — for a total of 77 — because of credible allegations of wrongdoing.
DHS temporary commissioner Shireen Gandhi asked the federal Centers for Medicare and Medicaid Services to end the program, citing insufficient controls to prevent bad actors from accessing funding.
Minnesota was the first state to use Medicaid funds to find more stable housing options for residents beginning in 2020. In the years since, costs have ballooned beyond expectations as some grant recipients were deemed to be misusing the money — and not helping Minnesotans secure aid for legitimate reasons. The FBI raided several businesses last month.
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Gandhi said the department’s office of the inspector general advised officials to end the program after it found unqualified providers received grant funding.
“We cannot allow one more cent of taxpayer money going out the door to providers who claim to serve Minnesotans in need of stable housing while lining their pockets for personal gain,” Gandhi said in a written statement. “We take a zero-tolerance approach to fraud and will continue to take quick action to halt payments to any provider organizations we believe have been committing fraud in our HSS program. Enough is enough.”
Gandhi said the department will reconfigure the program with input from the Minnesota Legislature. The department stopped dozens of payments over the last month after recipients were flagged for potential misuse.
“The termination of this program, while regrettable for those who need these services, is the necessary step at this time,” James Clark said, the inspector general with DHS.
Under a new law approved by the Legislature, agencies have more power and obligation to cut off payments when they credibly suspect fraud. The changes grew in part out of the Feeding Our Future nutrition aid scandal that involved more than $250 million in federal aid during COVID-19; multiple convictions and guilty pleas in that fraud scheme have been secured by federal prosecutors.
The announcement received mixed reviews on Friday.
Republican lawmakers said it was an admission of “deeply broken” program and slow efforts to root out misuse of state dollars.
“The shutdown of this program confirms what we feared all along: this fraud goes far deeper than the few raids and arrests made public so far,” said Rep. Kristin Robbins, the Republican who chairs the House Fraud Prevention and State Agency Oversight Committee.
“DHS has failed in its duty to protect taxpayers and vulnerable Minnesotans, and there must be full accountability for the mismanagement that allowed this to happen,” she continued, noting she’d push for answers in her committee.
Senate Minority Leader Mark Johnson echoed the call for consequences for those who oversaw the program.
“Instead of holding anyone accountable, they’re pulling the plug before an audit can expose just how badly they mismanaged millions in taxpayer funds,” said Johnson, an East Grand Forks Republican.
Bureau of Criminal Apprehension Superintendent Drew Evans applauded the department’s move “strengthen program integrity and prevent fraud as we work to investigate those who exploit programs meant to help vulnerable Minnesotans."
