Wanka told the Minnesota Star Tribune that they will rely heavily on federal law enforcement to lead the investigative efforts, while state prosecutors serve in an ancillary support role providing “some data analysis or other secondary help.”

“It’s a volume issue,” James Clark, inspector general of the Minnesota Department of Human Services, told the Minnesota Star Tribune.

Clark said it may otherwise take years to sift through the growing backlog of fraud referrals, from the time a tip comes in to when charges are actually filed against alleged fraudsters.

According to Minnesota DHS data, the state agency referred 265 cases of Medicaid fraud for criminal prosecution in 2025, more than triple the previous year’s referrals.

This year, DHS has submitted 53 referrals as of March 6, appearing to be on track for a record-breaking year.

Minnesota Legislative Auditor Judy Randall said that her office, which audits state agencies and their taxpayer-funded programming, is also swamped with reports of fraud, waste, and abuse of public funds. Over the past year, the Minnesota Office of the Legislative Auditor received 765 reports, a significant increase from the 481 reports submitted the year prior.

“The only way the state is going to get a handle on this is to prevent it from happening in the first place,” Randall told the Minnesota Star Tribune. “In the short term, I think we’re all drowning, and it’s not sustainable.”

WALZ SKIPS STATE OVERSIGHT HEARING ON FRAUD PREVENTION: ‘HE’S PROBABLY IN THE BASEMENT’

Minnesota state Rep. Kristin Robbins, the Republican chairwoman of the Minnesota House Fraud Prevention and State Agency Oversight Policy Committee, attributed the spike in tip-offs to the national spotlight on fraud and whistleblowers inspiring other witnesses to come forward.

Robbins, however, sees the Minnesota Star Tribune article spotlighting the latest logjam of fraud referrals as a thinly veiled plea from state administrators for bigger budgets.

“I think it’s a story they planted at the end of session to put pressure on the state legislature to give them more money,” Robbins said in an interview with the Washington Examiner.

The article comes as Minnesota’s legislative session is set to close on May 18. Robbins suspects that these state agencies are trying to push through funding within the next two weeks by rallying public support behind additional allocations.

But they have not earned the extra funds, Robbins said. “Unless we’re getting a return on our money, I don’t know we should put more money into it,” she said.

Bill Glahn, a policy fellow at the Minnesota-based Center of the American Experiment, similarly advocated against “rewarding the very people whose inaction created the problem.”

In a piece for the think tank on the state spending requests, Glahn observed that the pileup of fraud cases was built year after year “from looking the other way.”

Glahn said if state officials or their predecessors “had taken the issue of fraud seriously at any point in the past decade, it would not have reached this crisis state.”

DHS, the department responsible for the fraud crisis, demands more state funding

Clark, in his Minnesota Star Tribune interview, cited a lack of administrative and technological capacity for state investigators in DHS to handle all the cases themselves, claiming that they have not had a “corresponding increase” in resources to match the influx of referrals on their own without advanced fraud-detection tools.

“There’s not enough people in the world, right, to oversee $20 billion of [the state’s yearly Medicaid] spending,” Clark said. “We need to have modernized technology.”

As for addressing the delays in processing fraud claims, Clark said, “The answer is more resources. If folks want things to move faster, law enforcement definitely needs more resources, and [Minnesota DHS] needs more resources.” 

This legislative session, Gov. Tim Walz (D-MN) has proposed a multimillion-dollar plan to, in part, update DHS’s “antiquated” computer software.

Walz’s costly proposal would also place DHS, the state agency responsible for allowing Medicaid fraud to proliferate within its public assistance programs, in charge of locally administered Medicaid funds.

THESE ARE THE WALZ APPOINTEES WHO FAILED TO STOP RAMPANT MINNESOTA FRAUD

If passed, the state takeover would drastically shift oversight duties from Minnesota counties onto DHS, cutting individual jurisdictions out of the beneficiary application process completely and replacing them with a state-managed vetting system.

DHS, under Walz’s framework, would solely determine who is eligible to enroll in Medicaid, instead of the state’s 87 counties. Minnesota’s healthcare benefits are supervised by the state but delivered at the local level.

The sweeping changes would also consolidate all Medicaid billing into a fee-for-service model through which the state directly pays providers for services rendered. Minnesota contracts with insurance companies, classified as managed care organizations, to pay out the majority of Medicaid claims billed to the state’s safety net system.

Walz argued that centralizing state control of Medicaid disbursements and enrollment would “streamline” the system, supplanting the “complex, layered” patchwork of counties and private insurers with a single state-run entity.

“We think this is a way of simplification,” Walz said.

The transition project is projected to cost $72 million to implement, including $17 million in the first fiscal period and another $55 million in the following budgetary cycle.

Robbins said she would rather see significant reforms at DHS before lawmakers approve funding for any technological upgrades or payroll expansions.

The state representative recalled that DHS had shut down its Criminal Investigations Unit early into Walz’s first term. Now the agency only has the ability to cut off payments to providers and revoke licenses, while criminal investigations are referred to law enforcement.

“If they’re willing to reopen a criminal investigation unit and not just flag overpayments, I would consider it,” Robbins told the Washington Examiner.

In testimony in front of the state oversight committee last week, DHS leadership declared that they would not want to reinstate the department’s investigative arm.

“So that’s a hard no, unless they’re willing to carry out the reforms we need to make sure we’re actually getting justice and accountability,” Robbins said.

State prosecutors blame backlog on ‘small’ staff budget

Wanka, echoing Clark, said that state prosecutors cannot be expected to take on two to three times as many cases as they are used to and churn out results quickly.

He added that the Minnesota attorney general’s fraud division will have to be judicious about which claims it decides to investigate, opting to pursue cases that are more sweeping in scope, involve larger sums of theft, and were committed most recently.

“Other cases are going to fall by the wayside,” Wanka said.

The state attorney general’s office is prodding the state legislature to expand the size of its Medicaid fraud task force, insisting they have too few prosecutors, analysts, and paralegals on the payroll to properly investigate and hold fraudulent medical providers accountable.

Ellison himself has been throwing his weight behind a bill, introduced by Minnesota House Democrats, that would add 18 employees to the fraud-fighting team, bringing their ranks from 32 to 50 total staffers.

“Giving this vitally important unit more support is a no-brainer for people on either side of the aisle who are serious about fighting fraud,” Ellison said at a February press conference at the Minnesota Capitol.

HOW MINNESOTA ATTORNEY GENERAL KEITH ELLISON IS EMBROILED IN THE FEEDING OUR FUTURE SCANDAL

The fiscal cost of the bill, dubbed the Medical Assistance Protection Act, is priced at $1.23 million in additional appropriations per year. Currently, the anti-fraud unit’s annual budget is about $5 million, of which the state only pays 25%. The other 75% comes from federal government grants.

Staffing levels of Medicaid fraud control units across the country are typically proportional to the scale of a state’s Medicaid budget. Minnesota’s 32-person MFCU was previously set in accordance with the state’s Medicaid budget of $13 billion at the time. Minnesota’s Medicaid budget is now nearly $20 billion.

HF 2354 failed to advance last legislative session, and a reintroduced version of it in 2026 remains under review in the Minnesota House Ways and Means Committee.

SF 2689, its companion bill in the upper chamber, is headed to the Senate floor for consideration after the measure was amended into an appropriations package and passed by the Minnesota Senate Finance Committee on May 1.

Robbins said that Ellison’s office, the primary prosecutorial authority over Minnesota Medicaid cases, has hardly produced meaningful results in fraud prosecutions.

While he has dissolved fraudulent nonprofit organizations, many of them already not properly filing with the Minnesota secretary of state, Robbins said that when Ellison seeks their dissolution, his office seldom successfully claws back the stolen funds.

Robbins previously sent a letter to Ellison requesting evidence of his office’s work.

“You claim you’ve done all this,” Robbins said of Ellison in a phone call with the Washington Examiner. “Show me what money you’ve recovered. Show me how these cases were resolved.”

Robbins said that the Minnesota attorney general’s office, meanwhile, has long leaned on federal prosecutors to take care of major fraud cases.

“They’ve been relying on the Office of the U.S. Attorney here in Minneapolis to do the heavy lifting on these prosecutions for years,” Robbins said.

Minnesota leaders take credit for federal raids on suspected fraudsters

Ellison and Walz both claimed credit for recent federal raids on 22 care centers suspected of fraudulent billing practices.

In a press release, Ellison said his MFCU had executed some of the search warrants “in conjunction” with federal authorities. “These efforts are yet another example of my Medicaid Fraud Control Unit’s ongoing collaboration with federal law enforcement in our shared mission to hold those who defraud Minnesota’s Medicaid program accountable,” Ellison said.

Walz said the searches were only carried out thanks to referrals from state agencies.

“Today’s raids by state and federal law enforcement happened because our state agencies caught irregular behavior and reported it,” Walz posted on X. “That’s how the system is supposed to work, and our agencies will keep at it as long as there are fraudsters around to put behind bars.”

FBI Director Kash Patel called out Walz for attributing the raids to the investigative work of Minnesota agencies.

“Come again?” Patel responded in a social media statement. “This FBI and DOJ with our DHS partners drafted and executed every search warrant today. But go ahead and take credit for our work while we smoke out the fraud plaguing Minnesota under your governorship.”