State says it can't say whether autism centers are still operating after FBI raid

Days after the FBI raided two Minnesota autism centers as part of a wider investigation into the industry, state officials say they can't disclose whether the centers are still operating.

The FBI raided Minneapolis and St. Cloud autism centers Thursday as part of an investigation into Medicaid fraud in Minnesota's autism program that a search warrant application said revealed "substantial evidence" of millions of dollars in fraudulent claims. No criminal charges have been filed.

Federal officials are investigating the Early Intensive Developmental and Behavioral Intervention (EIDBI) health care program that's funded by the state and federal government and serves people under 21 with autism spectrum disorder.

On Thursday, the FBI searched the Smart Therapy Center in Minneapolis and the Star Autism Center in St. Cloud. Minnesota Department of Human Services (DHS) spokeswoman Sarah Berg said the agency can't say whether government dollars are still flowing to the centers, citing that, under state law, "stop payments" are not public because they are classified as a part of the investigative process.

If DHS determines a therapy provider is responsible for fraud, waste or abuse of the Medicaid program, it can take administrative actions, such as issuing fines. And if DHS finds credible allegations of fraud during an investigation, the provider's payments are withheld until the investigation is complete.

Berg said DHS has been investigating Smart Therapy Center and Star Autism Center for months, and due to concerns about the integrity of EIDBI autism services, the agency stepped up its oversight over the last few months and is visiting all providers in the program.

"We are digging further into cases where we note concerns and will conduct formal investigations if and where needed," Berg said in an email.

Minnesota doesn't license autism centers, so there's little regulatory oversight and DHS can't track caseload size or staffing ratios. DHS plans to propose licensing standards to state lawmakers for the program in the upcoming legislative session. Berg said details about the proposed licensing standards will be public after Gov. Tim Walz releases his budget.

Doors locked at autism centers searched last week

The autism center on Nicollet Avenue where Smart Therapy had been providing autism services a few months ago was dark Monday afternoon. A sign that had been on the front door was gone, the door was locked and a call buzzer didn't work. Another person who works in the office building said the autism center moved out about a month ago.

A few blocks away, Smart Therapy's business office, which was searched by the FBI Thursday, had its door locked Monday but the business sign was still on the door to the building. The lights were on in the office, and furniture and business signs were visible inside.

As a reporter was taking photos of the property, a woman entered from the street and said: "You already wrote something; is that not enough?" She slammed and locked the door to the building before entering another office across the hallway from Smart Therapy. The woman said she did not work for Smart Therapy but was trying to "protect" her neighbor and told the reporter to leave.

Asha Hassan, who is listed as Smart Therapy's manager in state business filings, did not return a phone call seeking comment.

In St. Cloud, the Star Autism Center office is on the fourth floor of a building connected to Midtown Square Mall. The small, windowless office was locked Tuesday and no one answered the phone number posted on the door, which belonged to Abdinajib Hassan Yussuf, the organizer listed in the company's original 2020 business filing. Last week, Yussuf denied to a reporter any fraudulent billings.

State business filings also list Star Autism's address inside the mall even though the mall map lists that suite as a now-shuttered events business. Multiple store owners and receptionists at offices in the mall, who asked to not be identified, told a reporter they were unaware of any autism services at the mall or the adjacent building.

Rising number of claims, payments

In a search warrant application, investigators said they came across autism fraud while investigating the $250 million Feeding Our Future case, which has charged 70 people with defrauding a federal child nutrition program.

Investigators say at least a dozen of the Feeding Our Future defendants "owned, received money from, or were associated with autism centers that received state money for EIDBI services."

Medicaid claims have soared since the autism program started in 2017 — at a pace similar to the child nutrition program's growth beginning in 2020.

According to DHS, Minnesota companies made 15,720 claims in 2017, billing Medicaid $1.7 million, of which $1.3 million was paid. Those numbers have since exploded, growing nearly 23,000% from 2017 to 2023, when over 1 million claims were filed and nearly $400 million billed, but only about half of that was paid out. This year is on pace to post similar numbers to last year.

In an affidavit, FBI Special Agent Kurt Beulke wrote that the investigation "has found substantial evidence that many of these companies have been submitting fraudulent claims for EIDBI services that were not actually provided or that were not covered by the EIDBI program."

Smart Therapy Center received about $13.8 million in Medicaid reimbursements for the autism program between 2020 and 2024, and Star Autism has received more than $6 million since it began operating in 2020, according to the search warrant.

State records show Smart Therapy also got money from the meal program at the heart of the Feeding Our Future case. Smart Therapy claimed it served more than 199,400 meals and snacks in 2020 and 2021, sponsored by Feeding Our Future — the nonprofit that oversaw meal distribution sites — for which it was reimbursed over $465,000. It was also reimbursed over $85,000 in 2019 after billing the state for nearly 41,000 meals and snacks under the sponsorship of Partners in Nutrition, another nonprofit embroiled in the meal fraud case.

Sen. Mark Koran, R-North Branch, said the rapid rise in payments for autism services is troubling and "the exact MO" seems to be used to defraud multiple Medicaid programs.

"Frankly, I don't think the governor and his administration want to be seen prosecuting this community, who is highly engaged in the theft of these services," he said.

Last week, Walz called for tougher Medicaid fraud penalties amid the federal investigation of autism centers.

Jenny Berg and Louis Krauss of the Minnesota Star Tribune contributed to this story.