How fraudsters have gamed Minnesota’s Medicaid program for millions

Attorney General Keith Ellison during a legislative hearing.

ST. PAUL, Minn. – (Minnesota Reformer) – How fraudsters have gamed Minnesota’s Medicaid program for millions

Some Twin Cities health providers — chiropractors, acupuncturists, physical therapists, dermatologists and dentists — found a curious pipeline of customers in recent years: Faribault residents.

Prosecutors say that for years, interpreters and drivers recruited hundreds of residents from the city about 60 miles south of the metro to specialty clinics in the Twin Cities as part of a huge Medicaid fraud case.

Not all of the claimed trips were even real: some were what prosecutors call phantom claims, meaning made up — the interpreter and transportation claims had no corresponding provider claim.

Investigators interviewed people who said they’d never been to the mental health clinic called Mercy Wellness Services, for example, even though over 250 claims associated with provider, interpreter and transportation services had been scheduled for just one woman, according to court documents.

For several years, Attorney General Keith Ellison’s Medicaid fraud unit has been working on a case it dubbed PITSTOP-66, named for the providers, interpreters and transportation companies involved in the scheme based in Faribault, which is in Rice County, where the county code for court cases is 66. It’s one of several PIT Stop cases that entail similar schemes to defraud Medicaid.

Even as state government has faced a raft of fraud in public programs — from the sprawling Feeding Our Future case to a new federal investigation into the state’s autism program — the attorney general’s office has quietly been prosecuting the largest fraud case in the history of its Medicaid fraud unit.

When it comes to Medicaid fraud, Minnesota has already earned a dubious distinction from the federal government: A three-year review by the U.S. Department of Health and Human Services Office of Inspector General released in 2022 said Minnesota’s Medicaid Fraud Control Unit had the most fraud convictions among similarly sized operations in other states.

“They do great work to protect the resources that are supposed to go to folks with limited incomes and resources,” said Brian Evans, a spokesman for the attorney general’s office. Ellison was not available for an interview.

The federal report noted that transportation, personal care assistance, medical supply and interpretation programs were at high risk for fraud.

Which is borne out in the PIT Stop cases. In the Faribault case, hundreds of Somali Americans were unwitting victims: Prosecutors say fraudsters used people’s identities without their knowledge to submit claims for doctor appointments, along with interpreters and transportation services.

Their identities were used to bill Medicaid for appointments throughout the metro area — almost always 50 to 60 miles from the victims’ homes, even though Faribault clinics often offered the same services.

Why 60 miles? UCare, the primary insurance company paying for specialty services through Minnesota’s managed care program, allowed its members to travel up to 60 miles for a medical service without pre-authorization. Victims were steered to clinics just under the 60-mile limit, so drivers could maximize their reimbursement.

Investigators found over 1,100 UCare members were being driven to clinics in the cities.

Faribault had more than 10 times as many transportation claims as three cities of similar size and distance from the cities: Cambridge, Red Wing and Hutchinson. UCare paid out 16 times more to Faribault residents than to those three comparable cities combined.

So far, 14 people have pleaded guilty in PIT Stop cases — including chiropractors, mental health therapists, interpreters, and drivers — with additional charges expected against owners and employees of other clinics and health care companies.

The Medicaid fraud unit overall charged 102 people with fraud that cost over $50,000 between October 2018 and June 2024; 94 of them were convicted. Of those convicted, nine were sentenced to prison, 55 were sentenced to jail time, and 30 received no jail or prison time.

The Medicaid fraud control unit gets 75% of its funding from the feds, and 25% from the state. The office is asking lawmakers for nine more people to be added to the unit; there are about 30 on staff now.

The case that spawned PIT stop

Investigators came across a case that spawned the PIT Stop case northwest of the cities.

St. Cloud marriage and family therapist Jonathan Newcomb began seeing patients in group therapy for post-traumatic stress disorder. Many didn’t speak English and required interpreters and transportation.

The owner of the St. Cloud clinic where Newcomb first worked told investigators Newcomb had numerous performance problems — including falling asleep during sessions — but said his clientele rapidly grew after Newcomb began working with two Somali American interpreters in 2013, according to court documents.

The two interpreters promised to recruit clients if Newcomb opened a new office in Anoka, which is about 60 miles from St. Cloud. The two worked as interpreters at his Anoka clinic, and later, another Minneapolis satellite clinic that was not approved by the state.

Drivers brought clients to his office in groups, but would bill them individually (for higher reimbursement) and bill for services not provided, defrauding Medicaid of over $1 million from 2014 through 2018, according to prosecutors.

Employees and clients told investigators they didn’t get any therapy, or far less than what was billed. Some said therapy sessions were run by an unlicensed employee and largely involved “standing around and drinking tea” or coloring. Some clients said they were paid bimonthly kickbacks of up to $450.

In 2020, Newcomb and 15 others were charged with stealing from Medicaid for nearly five years. Fourteen of them pleaded guilty, including Newcomb, who pleaded guilty in 2021 and was sentenced to 78 months in prison.

But the scam didn’t end there.

Faribault fraud

In Faribault, a town of about 24,000 with a large Somali American population, a similar scheme sprouted up and became PITSTOP-66 to investigators.

Here’s how it worked: Interpreters would approach medical providers — often independent clinics struggling to build a client base — and say they knew people who needed physical therapy, for example, even though interpreters aren’t allowed to steer Medicaid recipients to certain providers.

Then they would steer patients to the providers — booking drivers for the 60-mile trip to the metro area, sometimes bypassing similar local clinics along the way.

Then they would bill Medicaid for services the people either didn’t receive or that were ineligible for reimbursement. The providers would look the other way, and not scrutinize interpreter and transportation logs.

Prosecutors say interpreters generated their own business — against UCare policy — and the interpreter agencies functioned more like billing entities with little oversight.

AAA-Z Friendly Languages owner Ahmed Nur told investigators freelance interpreters recruited clientele, generated business, and were key to his business model. Prosecutors say A-Z generated over $488,000 in phantom interpreter claims.

Nur has not yet been charged in this case, but he faces racketeering and theft-related charges in connection with a $9 million scheme at a home care agency he owned.

While some individual interpreters have been charged in the case, none of the interpretation company owners or managers have been charged so far — all of them appear to still be billing through UCare.

Banned by UCare, she continued booking rides

Prosecutors say a 42-year-old Minneapolis woman orchestrated the “vast criminal enterprise” based in Faribault.

Nasro Aden Takhal was charged in May with using the identities of 356 people to fraudulently scheduled provider, transportation and interpreter services. Of those, 344 were Somali Americans. She scheduled services for 188 of them after being banned by UCare.

Takhal worked as an independent contractor for interpreter agencies until she was banned by UCare in August 2019 from providing or billing services. Just three months later, the owner of Uptown Healing Clinic in the Twin Cities contacted UCare to report that Takhal was the primary interpreter setting up appointments for UCare members from Faribault, but they weren’t showing up for appointments or showed up at different times than scheduled, court documents say.

The clinic owner told investigators he would sign a couple of weeks’ worth of interpreter logs at a time.

UCare found over 6,000 bookings made from January 2017 through October 2020 from several phone numbers associated with Takhal. Investigators say Takhal alone recruited over 300 residents to various metro clinics, using a fake name to call UCare’s ride scheduling service.

UCare paid specialty clinic providers over $302,000 for services that were illegally scheduled by Takhal, prosecutors say.

In one example, investigators found nearly $90,000 in fake interpreting claims and over $200,000 in fake rides to the Chinese Acupuncture and Herb Center’s metro locations.

Acupuncturists said owner Xiaoyan Hu pressured them to sign fraudulent interpreter logs to “keep the interpreters happy,” and that she would get upset if they refused. Hu is charged with over $1.6 million in fraud and aiding and abetting another $60,000 in interpreter fraud.

Investigators say Takhal booked rides to the acupuncture center for Faribault residents, generating over 1,800 provider claims.

Hu pleaded guilty to several counts and was sentenced on Wednesday to 180 days in the Hennepin County Workhouse, plus a five-year suspended prison sentence.

At the Twin Cities-based chiropractic practice Lakes Holistic Care, owner Christopher Patterson told investigators he allowed interpreters like Takhal to recruit Faribault residents to his clinic to generate business.

He told investigators that interpreters like Takhal would give him and his staff blank interpreter logs to sign — sometimes stacks of them.

At one point, state investigators erected a “pole camera” to surveil Lakes Psychological in 2019, and found interpreters claiming to have provided services on days the clinic was closed.

Patterson pleaded guilty to his involvement in the fraud and was ordered to do 50 hours of community service. If he completes three years of supervised probation, the one remaining charge will be dismissed.

Takhal told investigators she continued to schedule rides for people after she was banned “out of generosity.” When a state investigator interviewed her, and began playing audio clips of her scheduling rides through UCare, she ended the interview after hearing the third clip.