SF 4267

Introduction - 94th Legislature (2025 - 2026)

Posted on 03/24/2026 10:43 a.m.

A bill for an act
relating to human services; clarifying commissioner authority to impose sanctions
against individuals or entities that receive payments from medical assistance or
provide goods or services for which payment is made from medical assistance;
recodifying medical assistance sanctions and monetary recovery provisions;
amending Minnesota Statutes 2024, sections 245.095, by adding a subdivision;
256B.064, subdivisions 1b, 1c, 1d, 2, 3, 4, 5, by adding subdivisions; Minnesota
Statutes 2025 Supplement, section 15.013, by adding a subdivision.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2025 Supplement, section 15.013, is amended by adding a
subdivision to read:

new text begin Subd. 7. new text end

new text begin Exemption. new text end

new text begin Nothing in this section modifies, supersedes, limits, or expands
the authority of the commissioner of human services to impose sanctions under section
256B.064.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 2.

Minnesota Statutes 2024, section 245.095, is amended by adding a subdivision to
read:

new text begin Subd. 7. new text end

new text begin Exemption. new text end

new text begin Nothing in this section modifies, supersedes, limits, or expands
the commissioner's authority to impose sanctions under section 256B.064.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 3.

Minnesota Statutes 2024, section 256B.064, subdivision 1b, is amended to read:

Subd. 1b.

Sanctions available.

new text begin (a) new text end The commissioner may impose the following sanctions
for the conduct described in subdivision 1a: deleted text begin suspension or withholding of payments to an
individual or entity and suspending or terminating participation in the program, or imposition
of a fine under subdivision 2, paragraph (g).
deleted text end

new text begin (1) suspending payments to an individual or entity;
new text end

new text begin (2) withholding payments to an individual or entity;
new text end

new text begin (3) suspending participation in the program;
new text end

new text begin (4) terminating participation in the program; or
new text end

new text begin (5) imposing a fine under subdivision 2a.
new text end

new text begin (b) new text end When imposing sanctions under this deleted text begin section deleted text end new text begin subdivision new text end , the commissioner deleted text begin shall deleted text end new text begin
must new text end consider the nature, chronicity, or severity of the conduct and the effect of the conduct
on the health and safety of persons served by the individual or entity.

new text begin (c) new text end The commissioner deleted text begin shall deleted text end new text begin must new text end suspend an individual's or entity's participation in the
program for a minimum of five years if the individual or entity is convicted of a crime,
received a stay of adjudication, or entered a court-ordered diversion program for an offense
related to a provision of a health service under medical assistance, including a federally
approved waiver, or health care fraud.

new text begin (d) new text end Regardless of imposition of sanctions, the commissioner may make a referral to the
appropriate state licensing board.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 4.

Minnesota Statutes 2024, section 256B.064, subdivision 1c, is amended to read:

Subd. 1c.

Grounds for and methods of monetary recovery.

(a) The commissioner
may obtain monetary recovery from an individual or entity that has been improperly paid
by the department either as a result of conduct described in subdivision 1a or as a result of
an error by the individual or entity submitting the claim or by the department, regardless of
whether the error was intentional. Patterns need not be proven as a precondition to monetary
recovery of erroneous or false claims, duplicate claims, claims for services not medically
necessary, or claims based on false statements.

(b) The commissioner may obtain monetary recovery using methods including but not
limited to the following: assessing and recovering money improperly paid and debiting from
future payments any money improperly paid. The commissioner deleted text begin shall deleted text end new text begin must new text end charge interest
on money to be recovered if the recovery is to be made by installment payments or debits,
except when the monetary recovery is of an overpayment that resulted from a department
error. The interest charged deleted text begin shall deleted text end new text begin must new text end be the rate established by the commissioner of revenue
under section 270C.40.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 5.

Minnesota Statutes 2024, section 256B.064, subdivision 1d, is amended to read:

Subd. 1d.

Investigative costs.

new text begin (a) new text end The commissioner may seek recovery of investigative
costs from any individual or entity that willfully submits a claim for reimbursement for
services that the individual or entity knows, or reasonably should have known, is a false
representation and that results in the payment of public funds for which the individual or
entity is ineligible.

new text begin (b) new text end Billing errors that result in unintentional overcharges deleted text begin shall deleted text end new text begin are new text end not deleted text begin be deleted text end grounds for
investigative cost recoupment.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 6.

Minnesota Statutes 2024, section 256B.064, subdivision 2, is amended to read:

Subd. 2.

Imposition of monetary recovery and sanctions new text begin ; generally new text end .

(a) The
commissioner deleted text begin shall deleted text end new text begin must new text end determine any monetary amounts to be recovered and sanctions
to be imposed upon an individual or entity under this section. Except as provided in
deleted text begin paragraphs (b) and (d), neither deleted text end new text begin subdivisions 2b to 2d, the commissioner must not obtain new text end a
monetary recovery deleted text begin nor deleted text end new text begin or impose new text end a sanction deleted text begin will be imposed by the commissioner deleted text end without
prior notice and an opportunity for a hearing, according to chapter 14, on the commissioner's
proposed action deleted text begin , provided that the commissioner may suspend or reduce payment to an
individual or entity, except a nursing home or convalescent care facility, after notice and
prior to the hearing if in the commissioner's opinion that action is necessary to protect the
public welfare and the interests of the program deleted text end .

deleted text begin (b) Except when the commissioner finds good cause not to suspend payments under
Code of Federal Regulations, title 42, section 455.23(e) or (f), the commissioner shall
withhold or reduce payments to an individual or entity without providing advance notice
of such withholding or reduction if either of the following occurs:
deleted text end

deleted text begin (1) the individual or entity is convicted of a crime involving the conduct described in
subdivision 1a; or
deleted text end

deleted text begin (2) the commissioner determines there is a credible allegation of fraud for which an
investigation is pending under the program. Allegations are considered credible when they
have an indicium of reliability and the state agency has reviewed all allegations, facts, and
evidence carefully and acts judiciously on a case-by-case basis. A credible allegation of
fraud is an allegation which has been verified by the state, from any source, including but
not limited to:
deleted text end

deleted text begin (i) fraud hotline complaints;
deleted text end

deleted text begin (ii) claims data mining; and
deleted text end

deleted text begin (iii) patterns identified through provider audits, civil false claims cases, and law
enforcement investigations.
deleted text end

deleted text begin (c) The commissioner must send notice of the withholding or reduction of payments
under paragraph (b) within five days of taking such action unless requested in writing by a
law enforcement agency to temporarily withhold the notice. The notice must:
deleted text end

deleted text begin (1) state that payments are being withheld according to paragraph (b);
deleted text end

deleted text begin (2) set forth the general allegations as to the nature of the withholding action, but need
not disclose any specific information concerning an ongoing investigation;
deleted text end

deleted text begin (3) except in the case of a conviction for conduct described in subdivision 1a, state that
the withholding is for a temporary period and cite the circumstances under which withholding
will be terminated;
deleted text end

deleted text begin (4) identify the types of claims to which the withholding applies; and
deleted text end

deleted text begin (5) inform the individual or entity of the right to submit written evidence for consideration
by the commissioner.
deleted text end

deleted text begin (d) The withholding or reduction of payments will not continue after the commissioner
determines there is insufficient evidence of fraud by the individual or entity, or after legal
proceedings relating to the alleged fraud are completed, unless the commissioner has sent
notice of intention to impose monetary recovery or sanctions under paragraph (a). Upon
conviction for a crime related to the provision, management, or administration of a health
service under medical assistance, a payment held pursuant to this section by the commissioner
or a managed care organization that contracts with the commissioner under section 256B.035
is forfeited to the commissioner or managed care organization, regardless of the amount
charged in the criminal complaint or the amount of criminal restitution ordered.
deleted text end

deleted text begin (e) The commissioner shall suspend or terminate an individual's or entity's participation
in the program without providing advance notice and an opportunity for a hearing when the
suspension or termination is required because of the individual's or entity's exclusion from
participation in Medicare. Within five days of taking such action, the commissioner must
send notice of the suspension or termination. The notice must:
deleted text end

deleted text begin (1) state that suspension or termination is the result of the individual's or entity's exclusion
from Medicare;
deleted text end

deleted text begin (2) identify the effective date of the suspension or termination; and
deleted text end

deleted text begin (3) inform the individual or entity of the need to be reinstated to Medicare before
reapplying for participation in the program.
deleted text end

deleted text begin (f) deleted text end new text begin (b) new text end Upon receipt of a notice under paragraph (a) new text begin or subdivision 2c or 2d new text end that a
monetary recovery or sanction is to be imposed, an individual or entity may request a
contested case, as defined in section 14.02, subdivision 3, by filing with the commissioner
a written request of appeal. The appeal request must be received by the commissioner no
later than 30 days after the date the notification of monetary recovery or sanction was mailed
to the individual or entity. The appeal request must specify:

(1) each disputed item, the reason for the dispute, and an estimate of the dollar amount
involved for each disputed item;

(2) the computation that the individual or entity believes is correct;

(3) the authority in statute or rule upon which the individual or entity relies for each
disputed item;

(4) the name and address of the person or entity with whom contacts may be made
regarding the appeal; and

(5) other information required by the commissioner.

deleted text begin (g) The commissioner may order an individual or entity to forfeit a fine for failure to
fully document services according to standards in this chapter and Minnesota Rules, chapter
deleted text end deleted text begin 9505 deleted text end deleted text begin . The commissioner may assess fines if specific required components of documentation
are missing. The fine for incomplete documentation shall equal 20 percent of the amount
paid on the claims for reimbursement submitted by the individual or entity, or up to $5,000,
whichever is less. If the commissioner determines that an individual or entity repeatedly
violated this chapter, chapter deleted text end deleted text begin 254B deleted text end deleted text begin or deleted text end deleted text begin 245G deleted text end deleted text begin , or Minnesota Rules, chapter deleted text end deleted text begin 9505 deleted text end deleted text begin , related to
the provision of services to program recipients and the submission of claims for payment,
the commissioner may order an individual or entity to forfeit a fine based on the nature,
severity, and chronicity of the violations, in an amount of up to $5,000 or 20 percent of the
value of the claims, whichever is greater.
deleted text end

deleted text begin (h) The individual or entity shall pay the fine assessed on or before the payment date
specified. If the individual or entity fails to pay the fine, the commissioner may withhold
or reduce payments and recover the amount of the fine. A timely appeal shall stay payment
of the fine until the commissioner issues a final order.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 7.

Minnesota Statutes 2024, section 256B.064, is amended by adding a subdivision
to read:

new text begin Subd. 2a. new text end

new text begin Imposition of fines. new text end

new text begin (a) The commissioner may order an individual or entity
to forfeit a fine for failure to fully document services according to standards in this chapter
and Minnesota Rules, chapter 9505. The commissioner may assess fines if specific required
components of documentation are missing. The fine for incomplete documentation equals
20 percent of the amount paid on the claims for reimbursement submitted by the individual
or entity or up to $5,000, whichever is less. If the commissioner determines that an individual
or entity repeatedly violated this chapter, chapter 245G or 254B, or Minnesota Rules, chapter
9505, related to the provision of services to program recipients and the submission of claims
for payment, the commissioner may order an individual or entity to forfeit a fine based on
the nature, severity, and chronicity of the violations in an amount of up to $5,000 or 20
percent of the value of the claims, whichever is greater.
new text end

new text begin (b) The individual or entity must pay the fine assessed on or before the payment date
specified by the commissioner. If the individual or entity fails to pay the fine, the
commissioner may withhold or reduce payments and recover the amount of the fine. A
timely appeal stays payment of the fine until the commissioner issues a final order.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 8.

Minnesota Statutes 2024, section 256B.064, is amended by adding a subdivision
to read:

new text begin Subd. 2b. new text end

new text begin Mandatory suspension or termination after exclusion from participation
in Medicare. new text end

new text begin (a) The commissioner must suspend or terminate an individual's or entity's
participation in the program without providing advance notice and an opportunity for a
hearing when the suspension or termination is required because of the individual's or entity's
exclusion from participation in Medicare.
new text end

new text begin (b) Within five days of taking an action under paragraph (a), the commissioner must
send notice of the suspension or termination to the individual or entity. The notice must:
new text end

new text begin (1) state that suspension or termination is the result of the individual's or entity's exclusion
from Medicare;
new text end

new text begin (2) identify the effective date of the suspension or termination; and
new text end

new text begin (3) inform the individual or entity of the need to be reinstated to Medicare before
reapplying for participation in the program.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 9.

Minnesota Statutes 2024, section 256B.064, is amended by adding a subdivision
to read:

new text begin Subd. 2c. new text end

new text begin Imposition of withholding or reduction of payments before a hearing. new text end

new text begin (a)
Except as provided in paragraph (b), the commissioner may withhold or reduce payment
to an individual or entity after notice but before a hearing if, in the commissioner's opinion,
withholding or reducing payment is necessary to protect the public welfare and the interests
of the program.
new text end

new text begin (b) The commissioner must not withhold or reduce payments to a nursing home or
convalescent care facility before a hearing.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 10.

Minnesota Statutes 2024, section 256B.064, is amended by adding a subdivision
to read:

new text begin Subd. 2d. new text end

new text begin Imposition of withholding or reduction of payments without prior
notice. new text end

new text begin (a) Except when the commissioner finds good cause not to suspend payments under
Code of Federal Regulations, title 42, section 455.23(e) or (f), the commissioner must
withhold or reduce payments to an individual or entity without providing advance notice
of the withholding or reduction if either of the following occurs:
new text end

new text begin (1) the individual or entity is convicted of a crime involving the conduct described in
subdivision 1a; or
new text end

new text begin (2) the commissioner determines there is a credible allegation of fraud for which an
investigation is pending under the program. Allegations are considered credible when the
allegations have an indicium of reliability and the state agency has reviewed all allegations,
facts, and evidence carefully and acts judiciously on a case-by-case basis. A credible
allegation of fraud is an allegation that has been verified by the state from any source,
including but not limited to:
new text end

new text begin (i) fraud hotline complaints;
new text end

new text begin (ii) claims data mining; and
new text end

new text begin (iii) patterns identified through provider audits, civil false claims cases, and law
enforcement investigations.
new text end

new text begin (b) The commissioner must send notice of the withholding or reduction of payments
under paragraph (a) within five days of withholding or reducing payment unless requested
in writing by a law enforcement agency to temporarily withhold the notice. The notice must:
new text end

new text begin (1) state that payments are being withheld according to paragraph (a);
new text end

new text begin (2) set forth the general allegations as to the nature of the withholding action but need
not disclose any specific information concerning an ongoing investigation;
new text end

new text begin (3) except in the case of a conviction for conduct described in subdivision 1a, state that
the withholding is for a temporary period and cite the circumstances under which withholding
will be terminated;
new text end

new text begin (4) identify the types of claims to which the withholding applies; and
new text end

new text begin (5) inform the individual or entity of the right to submit written evidence for consideration
by the commissioner.
new text end

new text begin (c) The commissioner must cease the withholding or reduction of payments under this
subdivision after the commissioner determines there is insufficient evidence of fraud by the
individual or entity or after legal proceedings relating to the alleged fraud are completed,
unless the commissioner has sent notice of intention to impose monetary recovery or
sanctions.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 11.

Minnesota Statutes 2024, section 256B.064, is amended by adding a subdivision
to read:

new text begin Subd. 2e. new text end

new text begin Forfeiture of withheld payments upon criminal conviction. new text end

new text begin Upon conviction
for a crime related to the provision, management, or administration of a health service under
medical assistance, a payment held pursuant to this section by the commissioner or a managed
care organization that contracts with the commissioner under section 256B.035 is forfeited
to the commissioner or managed care organization, regardless of the amount charged in the
criminal complaint or the amount of criminal restitution ordered.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 12.

Minnesota Statutes 2024, section 256B.064, subdivision 3, is amended to read:

Subd. 3.

Mandates on prohibited payments.

(a) The commissioner deleted text begin shall deleted text end new text begin must new text end maintain
and publish a list of each excluded individual and entity that was convicted of a crime related
to the provision, management, or administration of a medical assistance health service, or
suspended or terminated under subdivision deleted text begin 2 deleted text end new text begin 2b new text end . Medical assistance payments cannot be
made by an individual or entity for items or services furnished either directly or indirectly
by an excluded individual or entity, or at the direction of excluded individuals or entities.

(b) The entity must check the exclusion list on a monthly basis and document the date
and time the exclusion list was checked and the name and title of the person who checked
the exclusion list. The entity must immediately terminate payments to an individual or entity
on the exclusion list.

(c) An entity's requirement to check the exclusion list and to terminate payments to
individuals or entities on the exclusion list applies to each individual or entity on the
exclusion list, even if the named individual or entity is not responsible for direct patient
care or direct submission of a claim to medical assistance.

(d) An entity that pays medical assistance program funds to an individual or entity on
the exclusion list must refund any payment related to either items or services rendered by
an individual or entity on the exclusion list from the date the individual or entity is first paid
or the date the individual or entity is placed on the exclusion list, whichever is later, and an
entity may be subject to:

(1) sanctions under deleted text begin subdivision 2 deleted text end new text begin this section new text end ;

(2) a civil monetary penalty of up to $25,000 for each determination by the department
that the vendor employed or contracted with an individual or entity on the exclusion list;
and

(3) other fines or penalties allowed by law.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 13.

Minnesota Statutes 2024, section 256B.064, subdivision 4, is amended to read:

Subd. 4.

Notice.

(a) The department deleted text begin shall deleted text end new text begin must new text end serve the notice required under deleted text begin subdivision deleted text end new text begin
subdivisions new text end 2 new text begin and 2d new text end using a signature-verified confirmed delivery method to the address
submitted to the department by the individual or entity. Service is complete upon mailing.

(b) The department deleted text begin shall deleted text end new text begin must new text end give notice in writing to a recipient placed in the Minnesota
restricted recipient program under section 256B.0646 and Minnesota Rules, part 9505.2200.
The department deleted text begin shall deleted text end new text begin must new text end send the notice by first class mail to the recipient's current address
on file with the department. A recipient placed in the Minnesota restricted recipient program
may contest the placement by submitting a written request for a hearing to the department
within 90 days of the notice being mailed.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 14.

Minnesota Statutes 2024, section 256B.064, subdivision 5, is amended to read:

Subd. 5.

Immunity; good faith reporters.

(a) A person who makes a good faith report
is immune from any civil or criminal liability that might otherwise arise from reporting or
participating in the investigation. Nothing in this subdivision affects an individual's or
entity's responsibility for an overpayment established under this subdivision.

(b) A person employed by a lead investigative agency who is conducting or supervising
an investigation or enforcing the law according to the applicable law or rule is immune from
any civil or criminal liability that might otherwise arise from the person's actions, if the
person is acting in good faith and exercising due care.

(c) For purposes of this subdivision, "person" includes a natural person or any form of
a business or legal entity.

(d) After an investigation is complete, the reporter's name must be kept confidential.
The subject of the report may compel disclosure of the reporter's name only with the consent
of the reporter or upon a written finding by a district court that the report was false and there
is evidence that the report was made in bad faith. This subdivision does not alter disclosure
responsibilities or obligations under the Rules of Criminal Procedure, except that when the
identity of the reporter is relevant to a criminal prosecution the district court deleted text begin shall deleted text end new text begin must new text end
conduct an in-camera review before determining whether to order disclosure of the reporter's
identity.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 15.

Minnesota Statutes 2024, section 256B.064, is amended by adding a subdivision
to read:

new text begin Subd. 6. new text end

new text begin Application. new text end

new text begin This section supersedes any inconsistent or contrary provision of
law.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end