The FBI conducted searches Thursday at two Minnesota autism treatment centers, Smart Therapy Center in Minneapolis and Star Autism in St. Cloud, as part of an ongoing Medicaid fraud investigation initially reported by the Minnesota Reformer in June. An unsealed warrant application from FBI Special Agent Kurt Beulke highlighted the dramatic increase in both the number of autism providers and program costs in recent years, stating that the investigation uncovered substantial evidence of fraudulent claims for services not rendered or not covered by Medicaid.
The warrant application detailed allegations against Smart Therapy, including the employment of unqualified, underage relatives of the owners and a witness’s assertion that many children receiving services did not appear to be autistic and that parents may have been paid to participate. Both Smart Therapy and Star Autism were accused of billing the state for services provided while their purported providers were out of the country. Star Autism also faced accusations of billing for services by providers who did not work for the company or received minimal compensation. One Smart Therapy client alone was billed over $850,000 for autism services over a three-year period, resulting in a Medicaid payment of $438,000.
A September report by the Minnesota Reformer revealed a former Smart Therapy supervisor’s repeated attempts to report alleged negligence and fraud to state officials. Since its founding in 2019, Smart Therapy rapidly became a top recipient of Medicaid funds for autism treatment, receiving $2.1 million in 2021, $2.8 million in 2022, and $2.6 million in 2023.
The explosive growth of Minnesota’s autism program is undeniable. The number of providers has increased 700% in five years, from 41 in 2018 to 328 in 2023, while Medicaid payments soared 3,000%, from roughly $6 million to nearly $192 million. While DHS Assistant Commissioner Natasha Merz previously characterized this growth as consistent with other programs, the agency has since acknowledged investigating 15 autism providers, initiating actions including withholding payments and referring cases to law enforcement. The Star Tribune later reported that DHS investigations expanded to include 29 early intervention service providers.
Following the FBI raids, DHS Commissioner Jodi Harpstead stated that the agency is conducting site visits at all autism treatment providers to further investigate concerns. The situation underscores ongoing struggles by the state government to combat fraud in safety-net programs. The case prompted swift condemnation from Minnesota Republicans, who now share power in the House and are focused on rooting out government fraud.
The federal investigation is occurring concurrently with U.S. Attorney Andy Luger’s prosecution of the Feeding Our Future scandal, a $250 million pandemic relief fraud. The two cases are interconnected, as the search warrant indicates a link between defendants charged in the Feeding Our Future case and several autism clinics. Smart Therapy itself reportedly served over 199,400 meals and snacks through Feeding Our Future in 2020 and 2021, though no one from Smart Therapy has been charged in that case. Governor Tim Walz expressed anger at the alleged fraud, demanding increased penalties for those involved.
By J. Patrick Coolican, Minnesota Reformer, December 12, 2024. Reformer reporter Madison McVan contributed.