DOJ Announces Minnesota Health Care Fraud Takedown; Signals Intensified Medicaid Enforcement Nationwide

On May 21, the Department of Justice (“DOJ”) announced a first-of-its kind Minnesota Health Care Fraud Takedown charging 15 defendants, including owners of childcare centers and various Medicaid providers, for alleged schemes involving over $90 million in intended loss. The takedown includes the district’s two largest Medicaid fraud cases to date and other first-of-their-kind charges involving Minnesota Medicaid programs. Senior DOJ and agency leaders emphasized a data-driven, whole-of-government push to “supercharge” health care fraud enforcement and protect vulnerable beneficiaries, describing the action as “just the tip of the iceberg.” The DOJ usually conducts a national healthcare fraud takedown each summer, but a Medicaid-only state enforcement action like this is unprecedented. This news is a significant development demonstrating the federal crackdown on Medicaid.

The effort involved DOJ’s Fraud Division, the U.S. Attorney’s Office for the District of Minnesota, FBI, IRS, HHS-OIG, Homeland Security Investigations, and the U.S. Postal Inspection Service, supported by DOJ’s Data Fusion Center analytics. The announcement coincided with news of DOJ funding 15 additional Trial Attorneys to combat Medicaid fraud nationally and an expansion of the Midwest Health Care Fraud Strike Force to include the District of Minnesota.

Alleged Schemes and Allegations

The charges announced as part of the “takedown” involved defendants alleged to be defrauding the following Medicaid programs in Minnesota:  

• Early Intensive Developmental and Behavioral Intervention (EIDBI) Program – In what DOJ has billed as “the largest Medicaid autism fraud charged by the Department,” two defendants were charged with a scheme to defraud the EIDBI program in connection with a $46.6 million scheme involving kickbacks to parents, false autism diagnoses, and billing for services not provided.
• Integrated Community Supports (ICS) Program – One defendant was charged with a $1.4 million scheme billing for services not provided to vulnerable recipients in the ICS program, including one individual found deceased a day after being billed for services he did not receive. According to the release, the ICS program is designed to provide services to allow people to live more independently and keep them from residing in a more restrictive setting.
• Individualized Home Supports (IHS) Program – The IHS program seeks to assist adults with disabilities live independently in their ow homes. Two defendants allegedly ran a scheme exceeding $22 million by acquiring more than 20 residences, concealing ownership interests contrary to Medicaid rules, and billing for services not rendered or provided as represented. The defendants allegedly used the proceeds on spending for luxury items like cars and jewelry.
• Housing Stabilization Services (HSS) Program – Eight defendants were charged in an approximately $15.7 million scheme to defraud the HSS program, which is designed to help people with substance use disorders and mental illness maintain housing. Some of the defendants allegedly traveled from Pennsylvania to participate in “fraud tourism,” exploiting low entry barriers and minimal records requirements. Earlier this year, DOJ announced similar charges in Minnesota against other “fraud tourists” from Pennsylvania.
• Child Care Programs – Two defendants were charged with defrauding the state-funded Great Start Compensation Support Payment Program (about $425,000) and the federally funded Child Care Assistance Program (about $4.6 million).

Focus on Autism Services

The Minnesota takedown signals an effort to increase the pace and scope of enforcement actions targeting alleged fraud in the autism space, particularly involving Applied Behavior Analysis (ABA) services. Given the flexibility in how ABA services are delivered, these services may present opportunities for fraudulent billing.  Consequently, state and federal agencies are heavily scrutinizing ABA services that are billed to Medicaid.

In September of 2025, DOJ charged Asha Farhan Hassan of Minnesota in connection with an alleged $14 million scheme also targeted at the EIDBI Program. DOJ alleged that Hassan allegedly created and enrolled Smart Therapy LLC as an EIDBI provider and then billed Medicaid for autism/ABA-related services that were inflated or not provided, sometimes using fraudulent approvals and employing unqualified behavioral technicians. Similar to the most recent indictment, DOJ also alleged that the scheme involved paying kickback to parents to recruit children with autism, and false diagnosis for autism.

In March 2023, the Massachusetts Attorney General’s Office announced two civil resolutions with ABA providers in Massachusetts totaling over $2.5 million. These cases also involved the use of unqualified providers and billing for services not rendered. 

Combating Medicaid Fraud Nationwide

Efforts to combat Medicaid fraud have taken on a nationwide dimension this year. In February, CMS announced that it had frozen $260 million in Medicaid funding to Minnesota based on alleged fraudulent claims. Minnesota then sued, but in April CMS announced an additional $91 million deferral of Medicaid funds.

A similar development occurred in California earlier in May, when CMS deferred $1.3 billion in funding over concerns about the integrity of the state’s Medicaid program. According to CMS, this was the largest funding deferral the agency has ever issued.

In late April, CMS Administrator Dr. Oz sent letters to all 50 states announcing a nationwide requirement for all state to submit plans to tackle Medicaid fraud focusing on verifying the legitimacy of Medicaid providers in “high risk areas.” Dr. Oz sent similar letters to the leaders of each state’s Medicaid Fraud Control Units (MFCU) seeking details about each unit’s strategy and proposed improvements policing Medicaid. On May 13, Vice President Vance publicly warned the MFCUs that the federal government will “turn off the money funding these units” if they are not aggressively pursuing Medicaid fraud.

Taken together, these developments signal that Medicaid fraud enforcement will remain a significant priority for DOJ and this administration, with ABA therapy and other Medicaid program providers likely to face heightened scrutiny. As federal agencies continue to devote additional personnel, data-analytics, and interagency coordination to this area, providers should expect a growing number of civil and criminal enforcement actions targeting alleged false claim and improper billing practices.

For more information about this and other enforcement trends, please contact Jay McCormack at (617) 357-3776 and jmccormack@verrill-law.com or Annabel Rodriguez at (617) 357-3747 and arodriguez@verrill-law.com.  Jay McCormack is a partner in Verrill’s White Collar Defense & Government Enforcement and Health Care & Life Sciences practices. He is a former federal prosecutor who specialized in fraud and previously served as the Acting US Attorney for the District of New Hampshire. Annabel Rodriguez is an associate in Verrill’s White Collar Defense & Government Enforcement and Health Care & Life Sciences practices.