Auditors say DHS could have used existing authority to address alleged EIDBI kickbacks; rule fix or statute suggested

A Legislative Auditor special review presented to the State Agency Oversight Committee concluded that Minnesota’s Department of Human Services had options to address allegations of kickbacks in the Early Intensive Developmental and Behavioral Intervention (EIDBI) program but did not always use them.

"We concluded that most of the decisions we reviewed to close complaints were reasonable," Deputy Legislative Auditor Catherine Tyson said, while noting exceptions involving three complaints that alleged kickbacks alone. Tyson said OLA found DHS staff believed the department lacked authority to investigate kickback allegations prior to 2025 and that, in OLA’s view, DHS could have relied on existing authority tied to federal exclusion grounds or corrected a longstanding mis-citation in an administrative rule.

The LA review found that state law since 1997 has allowed DHS to impose sanctions for reasons that would warrant Medicare exclusion, including conduct described in the federal anti‑kickback statute. OLA also said a rule definition of fraud contained an incorrect federal citation that obscured DHS’s authority to treat kickbacks as sanctionable fraud, and that correcting that citation — or the Legislature clarifying the law — would remove ambiguity about DHS’s ability to withhold or reduce payments while investigating credible kickback allegations.

Commissioner Shireen Gunn told the committee DHS supports clarity on the authority to act and said rulemaking to fix the definition is possible but that a statutory change would be faster. Several legislators said they had introduced bills addressing the issue since the review’s release.

The LA recommended DHS amend its administrative rules to explicitly include kickbacks in the fraud definition used for sanctions, or that the Legislature act if DHS does not pursue a rule change. Committee members pressed DHS on why it had believed it lacked authority previously and asked for prompt steps to ensure the department can suspend payments when credible allegations of kickbacks exist.

The committee discussed pending bills and encouraged DHS to pursue both rule and statutory fixes to ensure investigators and program staff have clear authority to protect public funds and suspend payments when warranted.

The review also noted that criminalization of kickbacks at the state level occurred in 2025 and that bills in both chambers seek to address statutory clarity and enforcement tools.