Tools proposed to fight fraud in state’s Child Care Assistance Program

Fraud in child care assistance programs can take many forms, including kickbacks, bribes and payments to child care centers for services never performed.

Those and other problems were identified in the Office of the Legislative Auditor’s recent report into fraud in the Child Care Assistance Program managed by the Department of Human Services. The program provides state assistance to low-income families seeking help to cover day care costs.

Sponsored by Rep. Dave Pinto (DFL-St. Paul), HF2319 would make many changes in how the department can investigate fraud in the program, including making many common types of fraud felonies, punishable by up to 15 years in prison or a fine of up to $15,000, or both.

The proposed changes would “help us tighten up our ability to prosecute these schemes when we see them,” said Chuck Johnson, DHS deputy commissioner for operations.

The House Judiciary Finance and Civil Law Division approved the bill Wednesday and referred it to the House Ways and Means Committee. There is no Senate companion.

The bill would also make changes in how the department could share data it gathers during fraud investigations with other state agencies, including law enforcement agencies conducting their own fraud investigations.

Increased protections for whistleblowers who make good faith reports of fraud are also included, including granting them anonymity. The bill would also require child care providers participating in the assistance program to maintain “accurate and legible daily attendance records” as a condition of receiving payments through the program.

Rep. Marion O'Neill (R-Maple Lake) is concerned the felony penalty for committing fraud in the child care program was not multi-level and graduated, but was the same “for the smallest infraction to the most egregious.”

Pinto acknowledged that was a good point and that he would look into making changes to the penalty portions going forward.

The auditor’s investigation into the department’s child care program was prompted by a television report claiming that about $100 million was being stolen from the program and used to fund terrorist activities overseas.

The investigation did not substantiate those claims, but noted fraud in the program likely exceeds $6 million.