ST. PAUL — Sen. Heather Gustafson remembers how she first approached her Republican colleagues in the Senate about the issue of fraud in Minnesota.
“‘I promise on this issue, we can work together. You can trust me. I’m not … trying to score points or use you for clout … I really do just want to work with you,” she’d say.
Gustafson said the Senate ended up forming a bipartisan group that would meet every Tuesday. “We’d put our egos aside,” she said, sit in a room and try to solve the fraud problem.
Sen. Heather Gustafson
Contributed / Minnesota Legislature
In May, the chamber passed a bipartisan bill to create a statewide Office of Inspector General with 60 yays and seven nays. It came up short in the House, whose leaders at the time cited cost concerns. Gustafson, the Democrat from Vadnais Heights who co-authored the OIG bill with Sen. Michael Kruen, R-Blaine, said she also heard concerns about a lack of time to vet the bill properly.
Other fraud prevention measures passed the Legislature, not just the Senate, including the ability for the state to halt payments for programs suspected of fraud and increased protections for whistleblowers — that effort from Gov. Tim Walz and the Department of Human Services (DHS) started ramping up in July.
The issue has, historically, been bipartisan. But divisions have come to the surface in recent weeks,
between federal prosecutors and the state,
as well as between
state representatives and state agencies.
Gustafson said it feels “most definitely” that the partisanship of fraud has increased as of late.
“It feels very much like an almost impossible task, to sit down with people and talk about solutions,” Gustafson said. “It feels like sometimes they’re not in that headspace, and it’s more about, ‘I’m going to get my talking points out there, and then the other side is going to get their talking points out there.’”
Gustafson said there’s an “angle, agenda” that aligns with “whatever fraud story is being highlighted.”
“I say all that with the full understanding and respect for the situation,” she said. “We have a fraud problem that is unmistakable, but I think that we have reached a point where I would really love it if people could just set aside some of the political stuff and start to focus on solutions.”
Sen. Heather Gustafson, DFL-Vadnais Heights, discusses her bill to create a statewide Office of Inspector General on the Senate floor on Thursday, May 8, 2025.
Mary Murphy / Forum News Service
‘Unmistakable’ problem in spotlight
Other states have seen fraud on a similar scale to Minnesota’s current estimates — though the full scope is almost impossible to know right now, as prosecutions are ongoing.
On June 30, the U.S. Department of Justice charged 15 people in New York with
$10.6 billion
in health care fraud under “Operation Gold Rush.” Minnesota’s Feeding Our Future scheme amounted to $250 million lost, according to federal prosecutors.
California had a pandemic-era fraud scheme worth
$150 million,
and Illinois had a scheme that amounted to nearly
$300 million.
The new Office of Inspector General Coordinating Council was created by Walz in September, and tasks state agencies to get together to discuss best and uniform practices for combating fraud.
At a Monday, Dec. 22, news conference, DHS Inspector General James Clark said the federal government loses about $500 billion of fraud — not just Medicaid fraud — a year.
Steven Schier
Contributed / Carlton College
Steven Schier, emeritus Congdon Professor of Political Science at Carleton College in Northfield, said one reason Minnesota’s fraud problem is getting so much attention is that Walz ran for vice president and is one of the “most conspicuous figures in the national Democratic Party.”
“That helps to explain how national media would be very interested in this story,” Schier said. “If a more obscure Democratic governor were presiding over this, it would not get the same degree of national media attention.”
Gustafson said she thinks the increase in partisanship has been caused by a lot of things — but said the spotlight on the state is “uncomfortable” for a lot of people.
“If you are born and raised Minnesotan like myself, I want to be in the news for good things,” Gustafson said. “I don’t want to be in the news for bad things. But this caught on because it is something that we need to deal with.”
Schier said it doesn’t surprise him that “everyone’s running for cover” as the national spotlight falls on the state. He said he’s never seen anything like it, and that it’s a “tremendous embarrassment.”
“I think everybody’s surprised by the scale of the problem. It’s been growing over the last two years and, you know, it’s really broken through into the national media in a big way. And that is, I think, caused a lot of people in Minnesota, including a lot of office holders and governmental officials, to sort of get slapped in the face about it.”
First Assistant U.S. Attorney Joseph H. Thompson announces new Minnesota fraud charges on Thursday, Dec. 18, 2025, at the U.S. Attorney’s Office for the District of Minnesota in Minneapolis.
Mary Murphy / Forum News Service
On Dec. 18, the U.S. Attorney’s Office suggested that, based on investigations so far, Medicaid fraud in Minnesota
could reach $9 billion.
The next day, Walz and DHS said they
don’t have the evidence
to suggest fraud could reach $9 billion.
“To extrapolate what that number is for sensationalism or to make statements about it, it doesn’t really help us,” Walz said on Dec. 19. “It doesn’t get us to where we need. I just need their help to prosecute this.”
Schier said, “It’s hard for me to know if that’s a reasonable speculation, because there’s so much evidence we don’t know about.”
“So is it an exaggeration? Maybe. Am I certain it’s an exaggeration? No,” he said. “I mean, I have no way of knowing. I also think it’s unlikely a prosecutor is going to throw numbers like that out of the blue sky.”
Gov. Tim Walz discusses fraud estimates from the U.S. Attorney’s Office at the Capitol on Friday, Dec. 19, 2025.
Mary Murphy / Forum News Service
Walz
has said
that while he’s grateful for the federal government’s prosecution, he doesn’t think the federal prosecutors are highlighting enough that
“we’re partners in this,”
pointing out how the state has been halting payments for providers throughout the summer, fall and winter and subsequently turning cases over to federal prosecutors.
Walz and DHS officials welcomed evidence of $9 billion from the U.S. Attorney’s Office. DHS Inspector General Clark said that he has previously asked for such evidence but hasn’t received it.
But Walz then went on to suggest that Republicans don’t have a genuine interest in solving the fraud problem.
“Nobody in the Legislature on the Republican side is interested in solving this,” Walz said. “My God, it would be the worst thing in the world for them if this is solved like we’re doing it here early this year, because then what are they going to run on?”
Schier said he thinks the governor is trying to “shift blame.”
“The GOP definitely wants to expose fraud wherever it is,” Schier said. “And of course, they do claim that they want to end it. And frankly, any politician is going to say they want to end it, because fraud is not that popular a topic with most voters.
“So, I think it’s blame shifting. I think everybody wants to end the fraud. Everybody’s serious about it. And I think the real question is, why did this happen? And at such magnitude.”
Walz is not the first Democrat to claim Republicans don’t have an interest in solving the issue.
Democrats on the Republican-led House Fraud Prevention and State Agency Oversight Policy Committee on Dec. 17 called out Chair Rep. Kristin Robbins, R-Maple Grove, saying she wasn’t sharing with DHS and Democrats
information she was receiving from the committee’s fraud tipline.
Robbins is one of several Republicans who are running for governor.
Rep. Emma Greenman, DFL-Minneapolis, alleged “the incentive structure” for Robbins and “others who are running against the governor” is not to solve fraud, but “it is to highlight and run on it.”
House Fraud Prevention and State Agency Oversight Policy Committee Chair Rep. Kristin Robbins, R-Maple Grove (right), discusses potential fraud in assisted living and adult day services on Wednesday, Dec. 17, 2025, at the state Capitol in St. Paul.
Mary Murphy / Forum News Service
Robbins said she hasn’t shared whistleblower information because there is a lack of trust.
“To date, we have not (shared information) because there is no trust, as you might understand,” Robbins said to Democrats on the committee. “This fraud has been perpetuated on your watch, and the whistleblowers who reach out to us within the department are terrified, and they feel that they’ve been retaliated against already.”
Robbins said she gives credible information to the U.S. Attorney’s Office, the FBI or the Office of the Legislative Auditor, but not to Democrats, the Department of Human Services, or the state Attorney General’s Office.
Gustafson echoed Greenman’s and Walz’s concerns about a lack of interest in solving the problem across the aisle.
“I’m glad that we’re highlighting the problems we need to solve, but I’m really interested in solving them, and that’s where I seem to find a lack of motivation. They love to point it out. Not so much love to solve it,” Gustafson
But Robbins asserts it’s Democrats who haven’t done enough.
“They did nothing, to be clear, until our committee was formed, and we started having monthly hearings last session, and then we kept the committee going, and I reached out to the federal CMS last summer, I believe it was early July, and asked them to help us do a full audit of Minnesota DHS, because we weren’t getting the answers that we wanted, or any answers honestly,” Robbins said.
Schier said he thinks the scale of the fraud has destroyed trust between government officials.
“That explains why Robbins will not give to the DFL (the) whistleblower information,” Schier said. “It’s her belief that the DFL ignored that in the past and will try and cover it up or not be aggressive in pursuing it.
“Democrats, on the other hand, accuse her of bad faith and partisan motives in refusing to share that information.”
Greenman said if Robbins wants to “talk about trust,” she should start by sharing that kind of information with all parties.
Schier said that while he expects the U.S. Attorney’s Office to be “accused of partisan motives,” he doesn’t think the current U.S. attorneys have a “very conspicuous background in partisan politics.”
“And also keep in mind that the previous U.S. attorney, who was a Democratic appointee, was aggressive in pursuing this,” Schier said.
“It’s hard because it’s a trust issue, you have to convince people on the other side of the aisle, and everybody’s sort of got, like, their guard up, and everybody puts on their red and blue jerseys, and it takes a while to break that down,” Gustafson said.
Speaker of the House Lisa Demuth, R-Cold Spring, discusses the budget deal reached Thursday, May 15, 2025, at the state Capitol in St. Paul, with Gov. Tim Walz beside her.
Mary Murphy / Forum News Service
Three people at the head of combating fraud are running for governor — Walz; Speaker of the House Lisa Demuth, R-Cold Spring, and Robbins, who chairs the fraud committee.
Gustafson said she’s worried about how partisan goals could work against the state effectively rooting out fraud. But she said she still thinks it’s possible.
“It is going to take leadership,” Gustafson said. “It’s going to take leadership from the speaker of the House. She’s going to have to put aside her campaign and actually work on solutions with Democrats, because she oversees the tied House. And so that is going to take a level of leadership that I hope she has, but we’ll see. And then it’s also going to take real work on the side of the executive office, working with the Legislature, which unfortunately, hasn’t always happened.”
Asked about calls for Walz to resign, or whether he should stay in the campaign for 2026, Gustafson had no comment.
“I think the future of Tim Walz, his political career, will be determined by his own party,” Schier said. “If they stand by him, he will be the candidate in November of 2026. If there is internal division and concern about whether he should continue, either in office or as a 2026 candidate, then he’s got serious problems, but Republicans calling for him to resign is not going to determine his electoral or governing fate.”
Schier added he thinks a resignation from Walz would not be “a good look” and would “lead to suspicions of culpability or guilt.”
‘Minnesotans counting on us’
Department of Human Services Inspector General James Clark discusses the scope of Minnesota’s fraud on Friday, Dec. 19, 2025.
Mary Murphy / Forum News Service
At an unrelated news conference on Dec. 22, Clark, the DHS inspector general, said the “system will work best, and really can only work, if everyone partners together and we keep politics out of it.”
“I think the partisan divide impedes a strong and consensual governmental response that would eliminate or greatly reduce fraud,” Schier said. “But I think we have to expect a big partisan divide over this really historically unprecedented issue, because the state has been very polarized between the two political parties for several years now, particularly at the activist level.”
Gustafson said that while fraud is getting a lot of attention, “there’s still Minnesotans counting on us to do the work.”
“And so that’s really what we have to remember, is the whole point of the office that we hold is to get this stuff done, solve problems, listen to people, work on solutions,” Gustafson said.
