$325M Autism Program Scams Uncovered

A Minnesota state agency ignored fraud complaints for years, hiding behind a 30-year-old “mistake” in its own rulebook that it could have corrected at any time—all while a $325 million autism program ballooned with kickback schemes targeting vulnerable children.

Story Snapshot

Minnesota Department of Human Services closed three kickback complaints without investigation, falsely claiming it lacked legal authority to act
A 30-year-old definitional error in agency rules enabled bureaucrats to dodge fraud investigations while the autism program exploded from $38 million to $325 million
Legislative audit exposed the agency possessed authority all along and could have fixed the “error” unilaterally through routine rulemaking
House Republicans accuse Walz Administration of prioritizing spending over accountability as fraud schemes plagued state Medicaid programs

Bureaucratic Shell Game Exposed

The Office of the Legislative Auditor released a damning report on March 18, 2026, revealing the Minnesota Department of Human Services systematically refused to investigate credible kickback allegations in a rapidly expanding autism services program. Between 2017 and 2024, DHS’s Office of Inspector General closed three separate complaints alleging kickbacks in the Early Intensive Developmental and Behavioral Intervention program, claiming it lacked authority to investigate kickbacks alone. The OLA’s investigation determined this excuse was false—DHS possessed legal authority under a 1997 state statute to sanction providers for violations of federal anti-kickback laws.

Thirty Years of Convenient Incompetence

The audit uncovered a bureaucratic scandal that defies belief: DHS administrative rules contained an error in the definition of “fraud” dating back to 1995 that cited the wrong federal statute. This definitional mistake created ambiguity about DHS’s authority to investigate kickbacks. Rather than correct this error through routine rulemaking—a process entirely within the agency’s control—DHS let it persist for three decades. OLA officials alerted DHS to this 30-year-old error in July 2025, yet the agency had failed to address it despite having unilateral authority to do so at any time since 1995.

Program Explosion While Watchdogs Slept

The consequences of this bureaucratic negligence are staggering. The EIDBI program provides Medicaid-funded services for children with autism spectrum disorder, a population among the most vulnerable in our communities. While DHS refused to investigate fraud complaints, the program experienced explosive growth from 1,400 recipients costing $38 million in 2020 to more than 5,600 recipients costing $325 million in 2024. This seven-fold cost increase occurred precisely during the period when kickback complaints went uninvestigated, allowing fraudsters to exploit families desperate for services and taxpayers footing an ever-growing bill.

Kickback Schemes Target Vulnerable Families

Kickback schemes in autism services represent particularly cynical fraud. Providers offer financial incentives to families to enroll their children in services, creating perverse motivations that prioritize enrollment over appropriate diagnosis and treatment quality. These schemes don’t just waste taxpayer dollars—they potentially harm children who may receive unnecessary services or miss out on appropriate interventions. The audit notes kickbacks are “a fixture in some of the fraud schemes plaguing state programs,” yet DHS chose bureaucratic caution over protecting vulnerable children and honest providers competing against fraudulent competitors.

The Legislature finally took action in 2025, passing new law explicitly making kickbacks a crime and authorizing DHS to investigate and sanction providers for kickback allegations alone. This legislative fix shouldn’t have been necessary—DHS already possessed authority through existing statutes. House GOP leaders characterized the situation as a “pattern of prioritizing spending taxpayer dollars over accountability,” noting the Walz Administration hid behind false claims of lacking authority for years while credible allegations piled up uninvestigated.

Political Accountability Arrives

DHS Commissioner Shireen Gandhi issued a carefully worded response emphasizing the department’s commitment to fraud prevention and partnership with oversight bodies, conspicuously avoiding any acknowledgment of the agency’s failure to use existing authority. The commissioner’s statement rings hollow given the audit’s findings that DHS possessed legal tools it simply chose not to use. With six individuals charged in December 2025 in connection with fraud schemes involving the autism program, Minnesota’s Medicaid programs face heightened scrutiny. This audit reveals the deeper problem isn’t just individual fraudsters—it’s state agencies that enable fraud through bureaucratic inaction disguised as legal caution.