Demuth: House Passes Key Anti-Fraud Bill

ST. PAUL – Minnesota House Speaker Rep. Lisa Demuth, R-Cold Spring, said Republicans scored a major victory Thursday as the House passed significant anti-fraud legislation.

The bill (S.F. 856) creates an Office of the Inspector General that would operate independently with future law enforcement authority. Demuth said this is an important step toward providing more transparency and accountability in state government to help get a handle on fraud that has cost state taxpayers $9 billion or more by some estimates.

House Republicans, Demuth said, have insisted on establishing a truly independent Office of the Inspector General that has enforcement authority to address Minnesota’s rampant fraud problem. Meanwhile, Democrats sought to amend these components out of the proposal soon after the session started in mid-February, grinding progress to a halt for months on end in Minnesota’s tied House.

“From the beginning, House Republicans have been clear that this office must be truly independent, not just more lip service to Minnesota’s fraud problem without the authority to do the real work,” Demuth said. “The provisions we fought for are critical to protecting Minnesota taxpayers. It has been a long road in getting this bill through the House, but this is a good sign of progress for the taxpayers of our state.”

Demuth said the finished product closely resembles legislation which passed the Senate on a 60-7 vote last year before Democrats blocked it from passing the House. The legislation that passed the House on Thursday makes the OIG responsible for investigating state agencies, grant recipients, and contractors. It would have subpoena power and the authority to freeze or stop distribution of funds under court order. Per the bill, the OIG would be housed in the executive branch due to constitutionality concerns, and to permit the office to have law enforcement authority, Demuth said.

Federal officials have estimated that fraud within Minnesota’s social services and Medicaid programs could total $9 billion or more. This figure stems from investigations into 14 different high-risk Medicaid programs, with officials suggesting that half or more of the roughly $18 billion billed since 2018 may be fraudulent.

Upon enactment of this bill, Minnesota would join around 15-20 U.S. states that have a statewide OIG with broad oversight over executive agencies, Demuth said. The bill is now in the hands of the Senate.