Lawmakers press DHS on fraud controls; agency seeks more authority and technology funding

A bipartisan group of senators on Jan. 23 pressed the Minnesota Department of Human Services about fraud, program integrity and the staffing and authority of the office that investigates suspected misuse of public benefits.

Senator Jason Gruenhagen asked DHS officials about documented fraud and whether the department uses modern analytic tools to detect improper payments. Gruenhagen cited figures he said had been circulated to members and said some sources estimate fraud in the hundreds of millions or more. “Do you have some type of mechanism to deal with fraud?” Gruenhagen asked.

Elise Bailey said DHS uses available data analytics and program integrity staff but acknowledged the department has not had the resources to develop the “dynamic” automated systems used in some private‑sector fraud detection. “We don't have that kind of dynamic system right now because we haven't had the resources,” Bailey said, and added the governor’s budget seeks resources to expand analytic capacity and modernize systems.

Multiple senators asked for stronger, clearer investigative authority and for an independent, well‑resourced inspector general's office. Senator Curran said prior whistleblower accounts and high‑profile provider fraud cases show a pattern and asked DHS what would be done differently to ensure sustained accountability rather than “a shuffle in the chairs.” Bailey said the governor’s proposal would give DHS more legal authority to withhold payments when fraud is suspected, licensing changes for certain unlicensed services and funding for improved analytics.

On inspector general staffing, senators said the position was unfilled in prior periods and pressed DHS for the current FTE counts and organization. Bailey said she did not have exact FTE counts at the hearing but committed to provide them. Separately, Jennifer Summerfield of the newly formed Department of Children, Youth and Families told the committee DCYF expects to hire an inspector general in the coming weeks and intends a knowledge‑transfer period with DHS before that official takes a DCYF post.

Why it matters: Committee members argued that fraud diverts limited resources from needy Minnesotans, and they asked DHS to show how investments in technology and authority would pay for themselves. DHS said the governor’s budget includes proposals to expand program‑integrity tools and legal authority but that the department would return with more detail.

What lawmakers asked for: senators requested DHS return with more precise staffing numbers for program‑integrity work, details on proposed payment‑withhold authority, cost‑benefit estimates for proposed technology investments and follow‑up on eligibility procedures for noncitizens and how federal matching rules apply.

DHS response: DHS officials said they would provide additional staffing and eligibility details and said they are exploring partnerships and analytics approaches to detect suspicious claims earlier.