Minnesota Medicaid Scandal Uncovered: $400M in Fraud Exposed

They found something rotten in Minneapolis: Dr. Mehmet Oz and HHS Deputy Secretary Jim O’Neill say they discovered a former linen factory converted into what looked like a beehive of sham social-service providers — roughly 400 businesses billing Medicaid to the tune of about $380–$400 million. This isn’t a rumor passed around on talk radio; Oz described the spot himself and said it represented millions siphoned from hardworking taxpayers.

The scene turned ugly when the federal team went to inspect — cars honking, people giving the finger, and officials saying they were chased off the property while trying to do their jobs. That’s the kind of intimidation that should alarm every American: federal investigators trying to protect children and taxpayer dollars and being met with hostility instead of cooperation.

Because of findings like these, CMS under Dr. Oz has taken the unprecedented step of threatening to withhold roughly $515 million per quarter — more than $2 billion a year — from Minnesota until the state shows real, enforceable fixes to stop fraud and protect beneficiaries. Minnesota’s Department of Human Services is appealing, predictably calling the move “political,” but the federal government is right to demand accountability when program growth and provider payments explode without corresponding increases in need.

Understand how this scam works: programs intended to help vulnerable kids and families were allegedly gamed from the inside — an autism program budgeted at a few million a year ballooned into the hundreds of millions, housing stabilization services were abused, and fraudsters are accused of using stolen funds to buy luxury goods and real estate. Those are the kinds of abuses taxpayers can’t afford and our most vulnerable citizens don’t deserve.

Make no mistake: this is political theater for some, but it’s substance for Americans who pay the bills. Governor Walz and Minnesota Democrats spent years handwringing about identity politics while too many in the state’s welfare machinery apparently looked the other way; federal intervention became necessary because the state’s measures did not meet the strict, enforceable standards CMS is demanding. If you defend lawlessness in the name of politics, you’re defending theft from seniors, kids, and working families.

There’s risk to honest recipients if funding truly freezes, and that’s why this fight has to be surgical: prosecute the crooks, protect the patients, and restore payments only when the state locks down its programs with audits, revalidations, and real penalties. Conservatives should demand both compassion for legitimate beneficiaries and ruthless enforcement against the scammers who exploit the system.

This is a test of governing competence and moral clarity. Support Dr. Oz and Jim O’Neill when they push to return integrity to Medicaid; demand that every dollar be traceable, every provider verified, and every official who looked the other way be held accountable. America’s safety net is sacred, but it’s not a slush fund for fraud — and patriots everywhere should stand up and say so.

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Keith Jacobs

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