Majority Leader Murphy Applauds Walz’s “Decisive Actions” to Combat Fraud with Third‑Party Audit

SAINT PAUL, Minn. — Senate Majority Leader Erin Murphy (DFL‑St. Paul) issued a statement of strong support on October 29 following Governor Tim Walz’s announcement of expanded measures to prevent fraud in state programs, including a third-party audit of Medicaid services deemed high-risk.

Under a newly awarded one-year, $2.3 million contract, the Department of Human Services (DHS) will partner with Optum to conduct pre-payment audits. The audits will pause flagged payments for up to 90 days for further review and focus on 14 Medicaid services identified as particularly vulnerable, including Housing Stabilization Services (HSS), Early Intensive Developmental and Behavioral Intervention (EIDBI), and Nonemergency Medical Transportation (NEMT).

“Governor Walz’s decisive actions today to further crack down on fraud show he is not just talking about fraud — he is acting to stop it before it happens,” Murphy said. “Fraud schemes are more sophisticated and organized than ever, and the third-party audit announced today will provide enhanced tools for Minnesota to tackle fraud.”

Murphy also highlighted ongoing efforts within DHS and the legislature, emphasizing the importance of structural oversight reforms.

“New leadership at the Department of Human Services, using policy tools created by legislative Democrats, is uncovering and stopping fraud,” she said. “The continued leadership of Senator Heather Gustafson to establish an independent Office of Inspector General will strengthen the work to prevent, detect, and halt theft in programs serving vulnerable Minnesotans.”

Senator Gustafson (DFL‑Vadnais Heights) has championed legislation to create a statewide, independent Office of Inspector General with authority to audit, investigate, and issue public reports on state agencies and programs. The legislation passed the Senate in May but is awaiting House approval.

Context: Fraud Challenges and DHS Response

The new measures come amid heightened scrutiny of state programs, particularly HSS, which faced allegations of widespread billing fraud. Earlier this year, DHS paused payments to more than 100 providers amid federal investigations. Other programs under review include autism-related services and NEMT.

In September, Governor Walz issued an executive order directing state agencies to strengthen fraud detection, authorize pre-payment reviews for high-risk providers, and establish a Statewide Inspector General Coordinating Council led by the Bureau of Criminal Apprehension. The order also installed Shireen Gandhi as temporary DHS commissioner and James Clark as DHS Inspector General, signaling a renewed focus on program integrity.

Political and Legislative Considerations

While the audit and leadership changes have received bipartisan attention, the proposed independent Office of Inspector General has faced scrutiny regarding appointment authority and its operational independence. Critics have raised concerns about balancing oversight with agency collaboration.

Federal attention has also intensified, with members of Minnesota’s congressional delegation calling for additional investigations into Medicaid program fraud. Observers point to rapid program expansion and historically limited oversight capacity as contributing factors to the state’s vulnerability.

Looking Ahead

The success of these reforms will depend on the effectiveness of the Optum audit, coordination among oversight entities, legislative follow-through, and transparent reporting of outcomes. Murphy’s endorsement underscores the Senate DFL’s support for proactive measures to protect taxpayer dollars while ensuring critical services reach Minnesotans in need.

“These steps are not just about catching fraud — they are about preventing it and restoring public trust,” Murphy said.

MinneapoliMedia