WASHINGTON – Vice President JD Vance wasted no time after he was appointed to lead a “war on fraud” by President Donald Trump during Tuesday’s State of the Union address to the nation.
Yes, the first target of the new campaign is Minnesota, no surprise since Trump accused the state of $19 billion in fraud, without evidence, in his address.
Vance and Mehmet Oz, administrator for the Centers for Medicare & Medicaid Services (CMS), made a surprise announcement that the Trump administration was holding back nearly $260 million in Medicaid money each quarter until Minnesota submits “a comprehensive action plan” detailing how it would combat fraud.
Oz visited Minnesota in January, calling the trip a “fact-finding mission,” after Nick Shirley, a conservative activist, disseminated a video that alleged Somali-run day care centers were bilking the government.
But the Trump administration’s new initiative is much broader.
“(Minnesota) is not the only state that’s floundering,” Oz said at a Wednesday news conference with Vance. “Minnesota is not alone, although it is the first to receive this action.”
Related: Trump blasts ‘fraud’ in Minnesota in State of the Union address focused on the economy and immigration
So, the withholding of Medicaid money to other states is expected, likely those that are led by Democrats, like California, and have also been asked to submit information related to Medicaid fraud.
But a surprise is Oz’s announcement that the administration is also targeting Medicare fraud. While Medicaid, known as Medical Assistance, provides health care coverage for the poor, Medicare is the government health plan for seniors 65 and older.
Unlike Medicaid, whose costs are shared between the federal government and the state, the cost of Medicare is paid by a trust fund held by the federal government. And Medicare fraud is rampant.
A favorite scam is when fraudsters, using stolen Medicare policy numbers, set up fake medical supply companies and bill Medicare for everything from catheters to medical beds that are never delivered to any patient.
So, Oz has placed a six-month moratorium on payments to new medical equipment companies, including those that provide prosthetics, orthotics and medical supplies. He also said CMS would make use of AI to combat fraudulent billings.
To date, the federal government has been losing the war on medical fraud as scammers find new ways to defraud. A major weapon used by the federal government to combat fraud is the False Claims Act, which imposes significant penalties on individuals or entities that knowingly submit false claims for payment. The act allows whistleblowers to file qui tam lawsuits on behalf of the government, rewarding them – if successful – with up to 30% of the recovered funds.
As far as the “deferred” Medicaid payments to Minnesota, Gov. Tim Walz at a Thursday news conference called the Trump administration’s demands “a ransom note.”
He also said the withholding of money “is a targeted retribution against a state the president doesn’t like.”
“If there is fraud, we need evidence so we can stop payments to bad actors,” Walz said.
Minnesota has already spent the Medicaid money that has been withheld. The $260 million is what the state should have received in reimbursements to cover the federal government’s share of the program for the last quarter of 2025.
Oz said Minnesota’s rainy-day fund could handle any potential lapse in payments, “so we are very confident that people will not be hurt in Minnesota.”
But this is not the first time CMS has threatened to cut off Minnesota’s Medicaid money.
CMS warned the state in January that it would withhold up to $2 billion in Medicaid funds, but Minnesota has appealed that decision.
“This is a new threat,” state Medicaid Director John Connolly said. “Our concern is that this could go on for many quarters, which would be catastrophic.”
Republicans in Congress are eager to help Trump in his efforts to portray Minnesota as a fraud-drenched state and have established their own investigations.
The most prominent is led by Rep. James Comer, R-Ky., the head of the House Investigation and Government Reform Committee, which has demanded Walz and Attorney General Keith Ellision testify before his panel on Wednesday.
“They requested I go there and I will go there,” said Walz. “It gives me the opportunity to talk about what we’ve done.”
Walz also questioned why Comer’s committee is not investigating the “aggressive tactics” of the federal immigration agents who killed Renee Good and Alex Pretti in Minneapolis.
“Where is the investigation into the deaths of these two Minnesotans?” he asked.
Blue states want their tariff money back
Since the Supreme Court ruled that President Donald Trump overstepped his authority in imposing certain steep tariffs on a number of nations, Democrats have come up with a new campaign, asking the Trump administration for the money back.
The Supreme Court’s decision did not mandate a return of the money collected by the U.S. Treasury from those unauthorized tariffs, which total more than $130 billion. The tariffs are paid by the nation’s importers, who usually pass the cost along to consumers.
At a press conference with other state financial officials Thursday, Minnesota State Auditor Julie Blaha said she generally agreed with estimates that the tariffs have cost the average consumer more than $1,700.
Related: What Republican legislators are up to in St. Paul
But she said she did not have “a hard number” of the tariffs’ cost on businesses and individuals in Minnesota because of the confusion and lack of transparency about the imposition and collection of those import levies.
“I am deeply concerned as the auditor I can’t confidently say” how much the tariffs have cost Minnesota, Blaha said.
So, it’s unclear if Minnesota is going to join a growing list of states who want a refund.
Maryland State Comptroller Brooke Lierman has come up with a figure – $4 billion – that she said “unlawfully collected” tariffs have cost her state’s consumers and businesses.
“We demand transparency and restitution,” Lierman said.
Meanwhile, New York Gov. Kathy Hochul on Tuesday called on the Trump administration to issue $13.5 billion in tariff refunds to residents of her state. California and Illinois have also demanded refunds.
Trump is likely to ignore those demands.
But he may not be able to ignore a court order.
More than 1,000 American companies have filed lawsuits seeking a return of the money they paid in tariffs.
ICYMI:
▪️ We wrote about the candidates in the 1st District congressional race: incumbent Rep. Brad Finstad, a Republican who has served since 2022, and challenger Jake Johnson, a Democrat who appears to be gaining some traction.
▪️ Shadi Bushra reviewed a plan in the Legislature to expand the type of nonprofits that can write eviction-blocking letters to landlords to assure them that struggling tenants will pay their rent.
▪️ We also covered President Donald Trump’s State of the Union address, which included more criticism of Minnesota for alleged fraud. The president pointed the finger at the Somali community, saying members have committed $19 billion of fraud.
▪️ Speaking of fraud claims, Matt Blake previewed his Capitol Conversations newsletter with a primer on fraud probes in Minnesota, including wildly exaggerated estimates of how much money has allegedly been stolen (see above) and more plausible ones.
▪️ And Brian Arola and Ellen Schmidt visited St. Cloud, where they talked with Somali Americans who were caught up in ICE’s immigration enforcement and worry about its long-term impact on their community.
This and that
A reader commented on a story about the 1st District congressional race, in which Republican Rep. Brad Finstad is seeking reelection.
“What exactly has Finstad and House Republicans done that benefits the district?” the reader wrote. “One can create a long list of harmful actions they have taken against rural America. Destroyed markets for American agriculture, instituted tariffs that are a tax on the middle class, taken away immigrant workforce that are filling essential jobs are just a few examples.”
Please keep your comments, and any questions, coming. I’ll try my best to respond. Please contact me at aradelat@minnpost.com.
