99 patients impacted after state freezes payments for 25-year care firm
A Minnesota home care provider closed in June after state officials halted Medicaid reimbursements based on fraud allegations, even though two law enforcement units declined to investigate the case.
By Charles Reed ·
Avalon Home Care ceased operations in June after the Minnesota Department of Human Services stopped paying the company for four months. Owner Jonathon Hansen says the freeze forced the closure of a business that had operated in Anoka for 25 years. The shutdown resulted in the loss of 160 jobs and disrupted care for 99 patients.
DHS suspended payments in April, citing a credible allegation of fraud. Hansen stated that the agency never specified the exact nature of those allegations. He argued the company was caught in a bureaucratic loop because the payment hold continued without a clear explanation or an active criminal investigation.
Court filings show that two state agencies declined requests to investigate the company. The Minnesota Attorney General’s Medicaid Fraud Control Unit turned down referrals from DHS in June and again in September. The unit said DHS provided limited new information in both instances. The Bureau of Criminal Apprehension forwarded a July referral to the Medicaid Fraud Control Unit with an offer to assist if the case was opened, but the agency never requested that help.
Hansen sued the state, claiming the payment hold lacked justification. A Ramsey County judge denied his request to force DHS to release the funds. The judge wrote that DHS’s obligation to pay was not clear and indisputable. The ruling noted that the court remained concerned because the payment withholding appeared based on referrals that had not gained traction with law enforcement.
Hansen plans to appeal the decision. He has spent $200,000 in legal fees to determine why the payments were stopped. He questioned the logic of partnering with a state agency that can withhold payment without providing a specific reason.
The Attorney General’s office confirmed the Medicaid Fraud Control Unit received and declined several referrals regarding Avalon. A spokesperson said a decision to decline an investigation does not prove a provider did nothing wrong. The office noted that the standard of proof for criminal fraud charges is much higher than what is necessary for DHS to take administrative action for waste or abuse.
DHS did not directly answer questions about Avalon Home Care on Friday. A spokesperson stated that DHS is acting aggressively to detect and prevent fraud. The agency will shut off money to providers when credible allegations arise. DHS said the status of investigations and payment holds is protected from disclosure under state law, with limited exceptions.
