A shadow hangs over Minnesota, a story of staggering financial abuse hidden in plain sight. Billions of dollars – funds intended for the care of vulnerable children – have vanished amidst a surge of questionable billing and shockingly lax oversight, a crisis that has dramatically unfolded during the tenure of Governor Tim Walz.
The scale of the alleged fraud is almost incomprehensible. In 2017, Medicaid reimbursements for the state’s Early Intensive Developmental and Behavioral Intervention (EIDBI) program totaled a modest $1.7 million. By late 2024, that figure had exploded to nearly $229 million, with cumulative spending approaching $700 million – a 30,000 percent increase in less than a decade. While increased diagnoses and access are cited as explanations, the sheer velocity of this growth sparked immediate alarm.
The unraveling began with FBI raids on multiple autism centers, investigations triggered by a pattern of suspicious activity. These investigations quickly intersected with the already unfolding “Feeding Our Future” scandal, a separate case involving the fraudulent diversion of federal child nutrition funds, with disturbing connections emerging between the two.
Prosecutors allege a deeply troubling scheme: parents were offered cash kickbacks – ranging from $300 to $1,500 per month – to enroll their children in centers like Smart Therapy LLC and Star Autism Center. In return, these centers allegedly billed Medicaid for extensive, one-on-one therapy, often exceeding 40 hours per week.
But the therapy, in many cases, simply didn’t happen. Or, it was provided by unqualified individuals – even 18-year-old relatives with no training in autism care. Authorities uncovered widespread billing for “ghost” services, phantom therapy sessions, and implausibly high numbers of hours claimed for care never rendered.
Asha Farhan Hassan, owner of Smart Therapy, pleaded guilty to a $14 million fraud, admitting to employing unqualified staff and systematically billing for services not provided. A subsequent state-commissioned report by Optum revealed that a staggering 90% of claims reviewed were flagged as problematic, including those from companies lacking even basic contact information.
Adding to the outrage, Minnesota previously operated with remarkably minimal requirements for autism centers. No specific state license was needed; enrollment as a Medicaid provider was sufficient. Level III providers – those directly interacting with children – required only a high school diploma, basic online training, and employment by an enrolled agency.
Oversight was supposed to be maintained by Qualified Supervising Professionals, but investigations revealed that supervision often existed only on paper. Level III workers were frequently left unsupervised with children, and relatives were allegedly billing Medicaid for time spent providing little to no actual therapeutic intervention.
Following the Feeding Our Future scandal, the Department of Human Services identified 14 Medicaid service categories as “high risk.” Yet, six of those programs still lack licensing requirements, a loophole critics argue facilitated the ongoing fraud. Crucially, prior to being designated “high risk,” the state was legally prohibited from conducting unannounced inspections of the roughly 500 autism centers operating statewide.
While Governor Walz has not been directly implicated, the question remains: how could such widespread and rapidly escalating fraud occur under his administration without detection? The initial exposure of this massive scheme wasn’t the result of official investigations, but rather the relentless work of independent content creator Nick Shirley, whose uncovering of daycare fraud brought the larger crisis into the light.
Now, with licensing finally mandated, compliance has been slow. As of late, only a handful of the over 500 previously unlicensed centers have submitted applications, raising concerns about the state’s ability to effectively rein in the abuse and protect vulnerable children.
