Tougher penalties, AI technology at center of Gov. Tim Walz plan to combat fraud – INFORUM

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ST. PAUL — People who attempt to rip off state dollars aimed at helping children or people with disabilities would face stiffer penalties, under a multi-pronged proposal that Gov. Tim Walz rolled out on Friday ahead of a legislative session where the issue is sure to be a focus.
“Minnesotans rightly have no tolerance for misuse of taxpayer dollars. This plan directs every single state agency to work together to better prevent, detect, investigate, and punish fraud,” Walz said in announcing the proposal.
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The second-term DFL governor also took some immediate action on his own, signing an executive order to create a centralized unit within the Bureau of Criminal Apprehension to investigate suspected fraud. Investigators from the Department of Commerce will be transferred to set up the new unit.
“By combining state law enforcement resources, we will improve our ability to root out and prosecute these crimes with consistency, transparency and efficiency,” said BCA Superintendent Drew Evans.
The executive order will also add nine members to the Medicaid fraud unit under the Attorney General’s Office and grant state agencies more authority to block payments set to go out to those suspected, charged or convicted of fraud or financial crimes.
His proposal around punishing those behind the fraud or government employees guilty of taking kickbacks seeks steeper fines and prison sentences, which the governor’s office described as 20 percent more than existing laws. Penalties now vary depending on an offender’s record and the extent of the crime. His proposal calls for a new “theft of public funds” offense.
The slate of proposals follows a series of prosecutions, audits and other investigations that have uncovered tens of millions of dollars in misused grants, ineligible recipients or other problems involving state and federal dollars.
The issue is a top priority of Republicans heading into the 2025 session. And with the Walz plan, it could be a point of bipartisan agreement — or partisan fractures — as lawmakers resume on Jan. 14 under split control at the Capitol.
Republican House Leader Lisa Demuth, who is in line to be speaker when the session convenes, said her party will push to go much further given the scope of fraud uncovered so far.
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“Creating a fraud bureau overseen by the same administration that allowed over a billion dollars in fraud means today’s executive action is nothing but smoke and mirrors,” Demuth, R-Cold Spring, said in a news release issued just as Walz began speaking. “We need real change to crack down on fraud, and that starts with a process that is truly independent of the leadership that allowed fraud to run rampant over the last five years.”
He also asked lawmakers to advance a proposal to bring in additional artificial intelligence tools to place tighter controls on state spending. Minnesota IT Services would set up a pilot program to detect and flag payment anomalies for Medicaid providers through the Department of Human Services.
“As long as there have been programs aimed at helping people, there have been fraudulent actors looking to steal from those who need them most. Our job is to stay one step ahead of them. We’re coupling new tools, like AI, with old fashioned police work, to slam the door shut on theft,” Walz said in a news release.
Walz said the full package would cost about $39 million in the next two years, which will be part of his forthcoming budget proposal.
In recent weeks, lawmakers from both parties have unveiled their ideas for rooting out improper spending. Democratic lawmakers have prioritized the creation of a new watchdog over state government spending: the Office of the Inspector General.
Meanwhile, Republicans have said the Walz Administration has been slow to act to contain misspending in programs that take in state and federal money. They said he needs to follow more of the recommendations from the state Office of the Legislative Auditor when it comes to eliminating problem spending.
Democrats added additional safeguards in 2023 that require grant applicants to submit more information to unlock money. The policies also give officials extra power to hold dollars back if grant recipients fail to follow the rules. Lawmakers also directed a state agency to write a roadmap and training tools to help government grant managers spot problems sooner.
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This story was originally published on MPRNews.org
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