‘Failure rewarded’

Before this week, Gandhi was serving as the temporary DHS commissioner, a stand-in for Jodi Harpstead, who resigned in February 2025 amid public scrutiny surrounding the agency’s oversight practices.

Walz, in his announcement on Monday, praised Gandhi, saying she “understands that protecting public programs and delivering high-quality care go hand in hand.”

“Over the past year, she has demonstrated steady, decisive leadership at the Minnesota Department of Human Services, strengthening program integrity, rooting out fraud, and ensuring taxpayer dollars reach the Minnesotans who rely on these services,” Walz said. “Shireen brings the experience and accountability needed to safeguard vital services while building a system Minnesotans can trust.”

In an accompanying press statement, Gandhi promised that, as commissioner, she will make Minnesota “a national model for program integrity.”

Gandhi, however, in a September 2025 interview, acknowledged that her team did not understand the complexity of the fraud scams that stole massive sums of Medicaid funds from the DHS’s housing assistance program.

“The claims coming into us looked legitimate on the face,” she said.

Records obtained by KARE 11, a local Minnesota news outlet, show that officials at the DHS actively ignored repeated warnings of fraud from concerned citizens, and even from government employees, that were submitted directly to the department.

In one case, the DHS received a tip that a sham service provider was approaching homeless people on the streets and offering cash so that they could falsely claim them as clients on the benefits form. No action was taken to address that report.

“Clients have stated that they are promised housing by this provider and are told that they will receive $50 if they get the PSN completed and generate referrals for the provider,” Hennepin County Social Services Manager Susannah King told the DHS in an April 2024 email.

Minnesota Staff Fraud Reporting Commentary, a social media account claiming to represent hundreds of state staffers, previously said Gandhi is not fit to head the DHS, alleging that she has created an environment of “distrust and demoralization.” The account further alleged that Gandhi was responsible for identifying patterns of fraud during much of the fraud scandal.

THESE ARE THE WALZ APPOINTEES WHO FAILED TO STOP RAMPANT MINNESOTA FRAUD

Prior to her role as Harpstead’s interim replacement over the past year, Gandhi served as a deputy DHS commissioner overseeing budget-related operations. Before that, as chief compliance officer, Gandhi led the creation of an agencywide oversight program in 2022 intended to improve the department’s internal controls.

In response to Gandhi’s promotion, GOP state House Floor Leader Harry Niska said the move rewards poor leadership rather than holds those allegedly complicit accountable.

“Promoting her sends the wrong message at a time when Minnesotans are demanding real accountability,” Niska said. “To this day, not a single employee or commissioner has been fired or disciplined for allowing criminals to steal billions of dollars away from the very Minnesotans these programs were meant to serve. That’s not accountability. That’s failure rewarded.”

Republican state Sen. Paul Utke, ranking minority member of the Minnesota House’s Health and Human Services committee, called Gandhi’s permanent appointment “misguided at best.”

“In fact, just weeks ago, she came to a human services committee and when asked about the fraud, stated ‘I don’t think Minnesota has a problem different than any other state in the nation,’” Utke said. “If the head of the agency cannot even acknowledge the current fraud problem, how can we expect them to implement a plan to solve it?. It’s time for the new commissioner to come to terms with the reality our state is facing.”

It was with Gandhi at the helm that the DHS launched a fact-check webpage designed to dispute the very idea that Minnesota has a fraud problem. In one fact-check, the DHS denied that “Minnesota’s fraud problem is uniquely bad,” claiming that “targeted misinformation” simply “thrust Minnesota into the spotlight.”

Walz’s office was contacted for comment.

Audit uncovers scope of autism billing schemes under DHS

Recent findings from a third-party audit analyzing more than a dozen “high-risk” programs within the DHS flagged an overwhelming majority of the reimbursement claims for autism services as potentially fraudulent.

A state committee sought answers on Monday to the report’s analysis, which found that over 90% of claims submitted by early autism intervention centers did not clearly match policies or procedures.

“That’s a stunning number,” said state Rep. Kristin Robbins, chairwoman of the Minnesota House Fraud Prevention and State Agency Oversight Committee. “And in the specifics, they talk about some very basic stuff, like some of these companies had no phone numbers. They had no website. So please tell me how those places were even allowed to bill a dime to the state?”

During questioning at the House hearing, Gandhi could not verify the 90% figure.

“A flagged claim does not necessarily indicate fraud, and it doesn’t even necessarily indicate that the service was incorrect in any way,” Gandhi testified. “So our analytics need to continue to be refined.”

Deputy DHS Commissioner John Connolly added that the agency needs to check how the auditors determined that percentage.

“Certainly 90% of claims being flagged is a huge concern for us, and we’ll have to dig into this with the vendor to further sort out the different analytics we’re going to apply so we can look more closely at the claims,” Connolly told the committee.

The audit also found that the number of autism service providers surged from just 41 to 328 between 2018 and 2023.

According to the audit, poor policy language may have driven the proliferation of autism service providers and, accordingly, cost the DHS millions in state funding. The audit’s vulnerability assessment concluded that out of the $1 billion that the DHS could have saved by following better-written policies, over half of that, $703 million, was spent on autism services alone.

Some lawmakers expressed frustration that several sections of the report were heavily redacted, making it difficult to determine the exact extent of the fraud.

“Just to your point about transparency,” Robbins said, pointing to several redacted pages. “This is the report, so everyone knows. There’s not a lot of transparency here.”

The DHS had hired Optum, a subsidiary of Minnesota-headquartered UnitedHealthcare, the country’s largest health insurer, in October 2025 to conduct the audit and assess the department’s handling of social services fraud.

THERE IS PERVASIVE FRAUD IN GOVERNMENT HEALTHCARE PROGRAMS

The report was released roughly three months into a yearlong, $2.3 million contract signed between the state and Optum.

Last year, the Wall Street Journal reported that federal prosecutors were investigating the health care giant’s Medicare Advantage billing practices. Sources told Bloomberg that the Justice Department’s criminal division was digging into UnitedHealth’s prescription management services as well as how the company reimburses its own doctors, as part of an investigation into the firm’s operations.