New audit exposes flawed system critics say let Minnesota fraud slip through cracks: 'Didn't act for years'

Instead, DHS officials operated under the belief that they could only investigate kickbacks if they were tied to other forms of fraud, such as billing abuse or theft, prompting a rebuke in the report.

"We disagree with DHS's assertion that it did not have the authority to investigate allegations of kickbacks alone," the report states. "Based on our analysis, DHS has had the authority to investigate allegations of kickbacks in MA since the late 1990s."

The audit found DHS declined to investigate three specific kickback allegations from 2021 to 2023 after concluding it lacked authority.

The report also identified a decades-old error in DHS administrative rules that may have limited the agency's ability to suspend payments during kickback investigations.

In one case, investigators said an autism center operator fraudulently billed millions while using tactics that included offering payments or benefits tied to enrollment, illustrating how kickbacks helped drive inflated claims and contributed to large-scale misuse of public funds intended for children with autism.

The audit recommended that DHS "should amend its administrative rule defining 'fraud' to clearly include kickbacks" and said the legislature should intervene if that doesn't take place. 

The department responded in a letter included in the report, saying, "We agree with the recommendation that fraud should be defined to more clearly include kickbacks."

In a press release, Minnesota House Fraud Prevention Committee Chair Kristin Robbins, a Republican state representative running for governor, wrote, "The continued lack of accountability for the rampant fraud in this state is astounding."

"DHS has been complicit in fraud because they have repeatedly failed to investigate credible allegations of fraud in multiple programs over many years. This OLA report provides the latest proof of their failure to provide proper oversight in the EIDBI (autism) program."

Robbins added that "if DHS had corrected an error in its administrative rules, two other decades-old state law provisions would also have permitted DHS to suspend payments during an investigation for kickbacks."

Fox News Digital reached out to Walz's office for comment.