DOJ Can Withhold Medicaid From Minnesota Over $9 Billion Fraud

Gregg Jarrett told a national audience that federal law gives the U.S. government the clear ability to withhold Medicaid funds from Minnesota if state leaders fail to stop widespread fraud. He pointed to regulatory authority and recent enforcement moves from the federal government as the lever Washington can use to force accountability. The debate centers on how aggressive the feds should be when local officials are perceived as tolerating or ignoring massive abuse of public benefits.

Fox News legal analyst Gregg Jarrett laid out a blunt case on Fox Business that the law is on the side of federal action. He described a sprawling fraud problem in Minnesota that reaches multiple Medicaid programs and argued the federal government can condition or defer payments until the state fixes its oversight. That argument lands with political weight because it frames federal intervention not as punishment but as a demand for competent administration of taxpayer dollars.

Jarrett tied the issue to recent national attention on fraud, noting the Trump administration has pushed harder on large-scale schemes. He highlighted how new federal enforcement structures and focused investigations have made it easier for Washington to identify patterns of abuse and take steps like postponing payments. In Jarrett’s telling, the question isn’t whether fraud exists but whether state leaders will do their jobs to stop it.

“[Democratic Minnesota Attorney General Keith] Ellison … doesn’t know much about the law because the U.S. government absolutely has the legal authority to withhold or defer Medicaid to states that fail to stop fraud. It’s quite simple,” Jarrett told host Elizabeth MacDonald. “It’s spelled out in the code of federal regulations authorized by Congress and Minnesota’s fraud central. As you point out, Liz, estimated $9 billion, probably a lot more, in fraud. Fourteen different Medicaid programs ripped off, half of all claims bogus or stolen, housing services, autism program, personal care assistance, you name it.”

Jarrett did not mince words about local leadership, accusing both the attorney general and the governor of insufficient action. “And there’s compelling evidence that Ellison and [Democratic Minnesota Gov.] Tim Walz, both, did a little or nothing to stop it. And when that happens, when a state refuses to enforce the law, they lose any right to federal funds,” Jarrett added. That line frames federal withholding as a constitutional and regulatory remedy, not a partisan attack.

The conversation also turned to whistleblowers and local oversight failures, with the show’s host cataloging examples of lax verification and ignored tips. “It’s shocking, the explosion in fraud and welfare services. Just the childcare services fraud, Gregg. Minnesota Democrats didn’t even verify attendance records at these childcare centers or pursue fraud tips,” MacDonald said. “Instead, they sat on and stepped on and squashed whistleblowers, raising the red flag about this. Tim Walz is accused of that.”

Jarrett responded that Health and Human Services has been reasonable in its approach, conditioning payments on corrective action rather than permanently cutting them off. “Yeah. I mean, it’s pretty appalling, isn’t it? And the evidence is overwhelming. And look, HHS [the Department of Health and Human Services] is not denying Minnesota matching funds. They’re making a contingent on state leaders doing their jobs, instituting a plan to correct the rampant fraud,” Jarrett responded. “That’s not unreasonable, Liz. Because remember, it’s the states that administer Medicaid on a day-to-day basis. That’s their responsibility.”

The federal government has already moved to tighten enforcement and freeze certain funds while investigations proceed. In recent weeks, officials announced enforcement measures that include postponing a large quarterly Medicaid payment and limiting enrollments for problematic providers nationwide. Those are the kinds of practical levers Jarrett says the law authorizes when state oversight breaks down and abuse becomes systemic.

Ellison faces of nonfeasance or complicity in the Feeding Our Future fraud scheme, and the debate over responsibility extends to how state officials handled early complaints. Reports and recordings have raised questions about whether concerns were sidelined and whether whistleblowers were discouraged from speaking up. From a Republican perspective, the case underscores a broader point: when local leaders fail to protect taxpayers, federal oversight must step in to prevent continued theft.

That stance is blunt and unapologetic: federal conditions on funds are a tool to restore integrity to benefit programs when states either refuse or fail to act. For voters and policymakers, the tougher question is where to draw the line between necessary federal enforcement and respecting state administration of programs. The Jarrett argument makes it clear where conservatives concerned about fraud stand — use the law to stop the bleeding and insist that state officials do their jobs.

https://x.com/MichaelH_MN/status/2009990723236725031/photo/2

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