Minnesota House passes a bill creating a new Office of Inspector General to combat fraud

The new Inspector General's office will have broad power, serving as an independent watchdog, conducting fraud investigations, recommending changes to laws, seeking court orders to freeze funds as needed, and having fraud reporting tools online. It could even make arrests.

"Members, the bill before you today is a better, stronger bill than when it left the other body," Rep. Matt Norris (DFL-Blaine) said. "It ensures the OIG will be ready to do the critical work that Minnesotans expect it to do on day one, and it will help send a clear message that the days of defrauding Minnesota's public programs is over."

The Senate approved the bill last year. The vote was nearly unanimous at 127 to 5.

While it was created in response to Medicaid fraud, the unit will also investigate allegations of mismanagement in other state services. There have been prominent investigations, and prosecutions, involving child services, senior care, autism support, and the massive Feeding Our Future case.

It took nearly a year of negotiations to get through the equally divided House, and it comes as the federal government has put a bullseye on Minnesota as well.

Last week, the Trump administration notified Minnesota that it's deferring an additional $91 million in Medicaid funding, due to fresh concerns about vulnerabilities to fraud in state-run but federally funded social service program.

"What I have heard over and over again from Minnesotans is they're fed up with the fraud," said state Rep. Harry Niska (R-Ramsey) on the floor. "And they don't trust the governor, his administration, to clean it up for a very, very good reason."

The office will be operational by Sept. 1, 2027, would oversee current agency-based inspectors general, and investigate credible allegations of fraud or misuse in state-administered programs.

“This is a powerful office meant to address a critical concern: fraud against our public programs. Fraud in any form is unacceptable, and we should have zero tolerance for it here in Minnesota,” said Norris. “This bill will help send a clear message that the days of defrauding Minnesota’s public programs is over.”

The governor would appoint the inspector general to a five-year term. But, that person would also be subject to a three-fifths supermajority confirmation by the Senate. An eight-member joint House-Senate commission would recommend candidates.

A price tag of $7.29 million in Fiscal Year 2027 is anticipated before a combined $23.01 million would be needed in the 2028-29 biennium.

“Protecting, preventing $9 billion of fraud pays for 750 years of this office,” Niska added. “So it costs money, but that’s a cost well worth it to the hardworking taxpayers of Minnesota who have been stolen from for years and years and years.”

In addition to investigating fraud in state programs, 10 specific inspector general duties are prescribed in the bill, including:

• establishing standards and best practices concerning the operation, investigations, and fraud prevention processes of agency inspectors general;
• alerting relevant state agencies when there is a credible allegation of fraud or misuse;
• facilitating information sharing between agencies and coordinating investigations involving multiple agencies;
• investigating a private entity or local unit of government administering a state program, or any private recipient of state funds or services, to ensure proper use of state funds;
• issuing public reports detailing completed investigations and corrective actions; and
• maintaining a list that includes each program and individual for which the inspector general has obtained a court order or made a recommendation to freeze or cease payment.