Top Trump administration officials announced the arrests of four Medicaid providers at St. Cloud Police Headquarters on Friday, alleging they fraudulently billed for their services. The announcement came a day after federal and state agents raided child care centers and early autism therapy centers.
The arrests and news conference held just days before the Nov. 3 election appeared intended to draw more attention to the long-running fraud crisis in state safety net programs that has plagued Democratic-Farmer-Labor Gov. Tim Walz’s administration.
Although Republicans have sought to exploit the fraud accusations as evidence of the failures of Walz and his fellow Democrats, President Donald Trump has repeatedly undermined the message by pardoning health care executives who were convicted of Medicaid and Medicare fraud schemes.
Former clients of one of the defendants arrested Thursday, Jama Mohamod of American Home Health Care, told local media, including Reformerfor over a year, Mohamod and his organization provided poor quality services. Mohamod billed for a program called Integrated Community Supports, a public service for people with disabilities funded by Medicaid and intended to help people live more independently in apartments rather than institutions.
According to several former clients, Mohamod billed Medicaid hundreds of dollars for services that were not provided, created a threatening atmosphere and — when the state Department of Human Services began withholding payments from ICS providers over “credible allegations of fraud” last year — effectively kicked his clients out of apartments for which he was supposed to pay rent.
He also billed Medicaid for services that could not have been provided because clients were on vacation or attending funerals out of town, according to the indictment unsealed Thursday.
In total, the four defendants were charged with intending to defraud Medicaid of $41 million.
U.S. Treasury Secretary Scott Bessent, FBI Director Kash Patel, Center for Medicaid and Medicare Services Administrator Mehmet Oz and other Trump administration officials also provided a long list of federal anti-fraud initiatives as part of the administration’s “war on fraud.” In addition to the indictments, these efforts have led to significant funding uncertainty for legitimate Medicaid providers attempting to care for Minnesota’s most vulnerable populations.
Oz’s appearance Friday signaled an ongoing conflict between Minnesota and the federal government over Medicaid, which is the state-federal health program for low-income, disabled and elderly people receiving long-term care. The Trump administration threatened to cut $2 billion a year from Medicaid funding over the integrity of the program, and withheld hundreds of millions more.
At times, officials have made misleading statements about the extent of fraud in Minnesota, claiming, for example, that Minnesota’s disenrollment of Medicaid providers was a sign of widespread fraud.
In fact, the state Department of Human Services, pressed to meet a federal deadline to reexamine and revalidate most providers, disenrolled 60 percent of them in 13 Medicaid services deemed at high risk for fraud, waste and abuse.
Several providers said they were disenrolled because the state agency failed to process their revalidation or because of bureaucratic paperwork issues, not because of suspected fraud.
Yet Oz, at the press conference, cited mass unsubscription as a “degree of fraud” that “one must deliberately look the other way to allow to happen.”
Oz has already misrepresented the results of the rushed re-selection process, known as revalidation. Minnesota Department of Human Services Temporary Commissioner John Connolly, in an Oct. 2 letter, specifically asked Oz to be more specific on this front: “Providers may be disenrolled for administrative or enrollment issues that do not establish fraud, waste, or abuse. … Minnesota requests that future public communications clearly and accurately distinguish suspected or established fraud, waste, or abuse from administrative or funding actions.”
CMS deferred approximately $153 million in Medicaid claims – that is, retroactively withdrew payment for services already provided earlier this year – to providers because they had been disenrolled in the administrative revalidation process, without specifying what its concerns were about those providers.
Connolly, in the letter, requested clarification on why these suppliers would pose a fraud risk.
As the state agency struggles to get clear answers from the federal government, providers serving Minnesota’s elderly and disabled people are also complaining about a lack of clear communication from the state, particularly regarding the mass revalidation process and an abrupt two-week delay in payments over the winter.
Oz did not address the domino effects of the administration’s repeated threats to Minnesota’s Medicaid funding, instead focusing on providers who have defrauded Medicaid services such as the Closed Housing Stabilization Services program.
“This housing stabilization program, which everyone on the scene believes is worthwhile, has been shut down because of fraudsters like Sharmaine Meadows,” he said, referring to a provider convicted of a $3.6 million fraud scheme.
Walz shut down the program last year when it was proven that the program was riddled with fraudulent providers.
During the news conference, KARE 11’s Lou Raguse asked about the station’s recent reporting on a lucrative deal struck by CoreCivic, the private prison company, which sold its Appleton, Minn., facility to the federal government for hundreds of millions more than the company had hoped to get from the state.
“If the administration has declared war on waste and fraud, could you explain the $420 million overpayment for a prison in Appleton, Minnesota, when the company offered it to the state of Minnesota for $75 million?
Bessent: “Yeah, I don’t know. What we’re here to do is prosecute criminal fraud. And any question like that that deflects from that, I think it’s a waste of time.”
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