Governor’s anti‑fraud package: probe consolidation at BCA, new theft statute, DHS and MNIT data tools, and expanded grants debarment authority

Minnesota officials outlined the governor’s proposed anti‑fraud package to the Senate Committee on State and Local Government, describing coordinated changes across agencies meant to detect, investigate and penalize fraud against state programs.

Erin Campbell, commissioner of Minnesota Management and Budget, said the package rests on three categories: stronger investigative and enforcement authority, better detection and oversight, and increased criminal penalties. "Fraud against these public programs is unacceptable. It is not a victimless crime and it harms the same people we're trying to help with these services," she told the committee.

Bureau of Criminal Apprehension: consolidation and capacity Drew Evans, superintendent of the Bureau of Criminal Apprehension, said an administrative reorganization has combined the Commerce Fraud Bureau’s investigators with BCA criminal investigators to form a single Financial Crimes and Fraud section. The reorganization groups insurance fraud, wage theft, auto theft and state‑program fraud investigators under a unified structure to reduce duplication and improve coordination. Evans said the BCA is requesting one forensic accountant to support complex financial record reviews and funding for two contracted assistant attorneys general to support prosecutions and provide feedback to agencies after investigations.

New theft of public funds statute and penalties Evans and other presenters described a proposal to create a standalone theft of public funds statute intended to clarify what constitutes theft of state program dollars and to simplify the investigative process. The draft would also increase penalties, including a 20% increase to the top dollar categories as presented to the committee.

Department of Human Services program integrity proposals Shereen Gandhi, temporary commissioner at the Department of Human Services, described current DHS program integrity work and specific proposals to expand authority and speed interventions. Gandhi said DHS’s Office of Inspector General oversees roughly 390,000 care providers and that over the last five years OIG conducted about 4,000 investigations, stopped payments to more than 800 providers, referred over 400 cases to law enforcement, and recovered an average of more than $18 million annually — yielding an estimated return on investment of $1.89 for every dollar spent.

DHS proposals included: adding program integrity staff; expanding data‑sharing authority so agencies can act earlier on suspicious activity rather than wait for exclusion or disqualification decisions elsewhere; broadening immediate suspension authority to include controlling individuals and charges of fraud or theft against any state or federal agency; allowing disqualification of people under active investigation from management or billing roles; establishing provisional licensure for EIDBI (early intensive developmental and behavioral interventions) providers and increasing revalidation visits; and aligning time‑based billing statutes for substance use disorder services with federal and state guidance. Gandhi also described a proposal to contract for prepayment reviews of selected claims as an additional prepayment control.

Technology and prospective detection Terek Tombs, commissioner of Minnesota IT Services (MNIT) and the state chief information officer, outlined a proposed pilot to use artificial intelligence and machine‑learning tools to analyze Medicaid provider claims and flag anomalies prospectively. Tombs said the pilot would enrich and prioritize suspicious activity for human review rather than replace agency judgment, and that the administration views AI as a way to move detection from retrospective audits to earlier, preventive identification of risk.

Education and grants management components Willie Jett, education commissioner, described MDE proposals to strengthen the Department of Education’s Office of Inspector General with added investigators, legal counsel for charter school and nutrition oversight, and software to track cases and support financial analysis. Stacy Christiansen, deputy commissioner at the Department of Administration, summarized a proposal to expand the definition of grantee so the Office of Grants Management can suspend or debar not only current grantees but potential grantees with prior debarment‑worthy conduct. Christiansen said nonprofit and philanthropy groups supported that clarification and the administration also recommends making grantee reporting mandatory for state employees.

Office of Grants Management follow up and pre‑award risk assessment The Department of Administration reviewed the Office of Grants Management’s recent work implementing a pre‑award risk assessment for grants over $25,000 effective Jan. 15, 2024; OGM has rolled out checklists, templates and training and is piloting an enterprise grants management study to assess whether a single grants management system is feasible.

No formal law or vote resulted from the hearing. Officials said the package combines executive orders, proposed budget investments and statutory changes that would require legislative action to implement; committee members asked questions about penalties, procedural safeguards, data sharing, timing, and federal reimbursement to states for certain investigatory costs.

Ending: Agency leaders said they would work with committee members to refine statutory language, implementation timelines and cost projections as the legislature considers the administration’s anti‑fraud proposals.