| 1 | 1 | | 1.1 A bill for an act |
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| 2 | 2 | | 1.2 relating to state government; withholding payments to program participants under |
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| 3 | 3 | | 1.3 certain circumstances; proposing coding for new law in Minnesota Statutes, chapter |
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| 4 | 4 | | 1.4 15. |
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| 5 | 5 | | 1.5BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: |
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| 6 | 6 | | 1.6 Section 1. [15.013] PROGRAM PAYMENTS WITHHELD; FRAUD. |
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| 7 | 7 | | 1.7 Subdivision 1.Definitions.(a) For purposes of this section, the following terms have |
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| 8 | 8 | | 1.8the meanings given. |
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| 9 | 9 | | 1.9 (b) "Credible allegation of fraud" means an allegation of fraud that has been verified by |
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| 10 | 10 | | 1.10the head of a state agency from any source, including but not limited to fraud complaints; |
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| 11 | 11 | | 1.11patterns identified through audits, civil cases, law enforcement investigations, or |
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| 12 | 12 | | 1.12investigations by other state or federal agencies; and court filings and other legal documents, |
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| 13 | 13 | | 1.13including but not limited to police reports, complaints, indictments, information, affidavits, |
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| 14 | 14 | | 1.14declarations, and search warrants. |
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| 15 | 15 | | 1.15 (c) "Fraud" means an intentional or deliberate act to deprive another of property or |
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| 16 | 16 | | 1.16money or to acquire property or money by deception or other unfair means. Fraud includes |
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| 17 | 17 | | 1.17intentionally submitting false information to a federal, state, or local government entity for |
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| 18 | 18 | | 1.18the purpose of obtaining a greater compensation or benefit than that to which the person is |
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| 19 | 19 | | 1.19legally entitled. Fraud also includes acts which constitute a crime against any program, or |
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| 20 | 20 | | 1.20the attempts or plans to commit those crimes, including but not limited to theft in violation |
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| 21 | 21 | | 1.21of section 609.52; perjury in violation of section 609.48; and aggravated forgery and forgery |
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| 22 | 22 | | 1.22in violation of sections 609.625 and 609.63, and substantially similar federal laws. |
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| 23 | 23 | | 1.23 (d) "Individual" means a natural person. |
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| 24 | 24 | | 1Section 1. |
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| 25 | 25 | | REVISOR EB/HL 25-0040702/27/25 |
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| 26 | 26 | | State of Minnesota |
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| 27 | 27 | | This Document can be made available |
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| 28 | 28 | | in alternative formats upon request |
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| 29 | 29 | | HOUSE OF REPRESENTATIVES |
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| 30 | 30 | | H. F. No. 2370 |
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| 31 | 31 | | NINETY-FOURTH SESSION |
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| 32 | 32 | | Authored by Klevorn; Norris; Anderson, P. E.; Nadeau; Greenman and others03/17/2025 |
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| 33 | 33 | | The bill was read for the first time and referred to the Committee on State Government Finance and Policy 2.1 (e) "Program" means any program funded by a state or federal agency that involves the |
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| 34 | 34 | | 2.2transfer or disbursement of public funds or other public resources. |
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| 35 | 35 | | 2.3 (f) "Program participant" means any entity or individual that receives, disburses, or has |
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| 36 | 36 | | 2.4custody of funds or other resources transferred or disbursed under a program. |
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| 37 | 37 | | 2.5 (g) "State agency" means any department or agency of the state as defined in sections |
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| 38 | 38 | | 2.615.01 and 15.012. |
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| 39 | 39 | | 2.7 Subd. 2.Withholding of payments.(a) Except as otherwise authorized and to the extent |
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| 40 | 40 | | 2.8permitted by federal law, the head of any state agency may withhold payments to a program |
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| 41 | 41 | | 2.9participant in any program administered by that agency if the agency head determines there |
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| 42 | 42 | | 2.10is a credible allegation of fraud under investigation and the program participant is a subject |
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| 43 | 43 | | 2.11of the investigation. |
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| 44 | 44 | | 2.12 (b) Notwithstanding subdivision 3, the state agency head must send notice of the |
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| 45 | 45 | | 2.13withholding of payments to the program participant within five days of taking such action. |
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| 46 | 46 | | 2.14The notice must: |
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| 47 | 47 | | 2.15 (1) state that payments are being withheld in accordance with this section; |
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| 48 | 48 | | 2.16 (2) state the reasons for withholding payments, but need not disclose specific information |
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| 49 | 49 | | 2.17concerning an ongoing investigation; |
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| 50 | 50 | | 2.18 (3) state that the withholding is for a temporary period and cite the circumstances under |
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| 51 | 51 | | 2.19which withholding shall be terminated; and |
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| 52 | 52 | | 2.20 (4) inform the program participant of the right to submit written evidence for |
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| 53 | 53 | | 2.21consideration by the state agency head. |
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| 54 | 54 | | 2.22 (c) The withholding of payments shall not continue after the state agency head determines |
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| 55 | 55 | | 2.23there is insufficient evidence of fraud by the program participant, or after legal proceedings |
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| 56 | 56 | | 2.24relating to the alleged fraud are completed, unless the state agency head is authorized by |
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| 57 | 57 | | 2.25law to take additional action against the program participant and complies with all |
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| 58 | 58 | | 2.26requirements in law to take such action. |
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| 59 | 59 | | 2.27 (d) The withholding of payments is a temporary action and is not subject to appeal under |
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| 60 | 60 | | 2.28chapter 14. |
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| 61 | 61 | | 2.29 Subd. 3.Data classification and access.(a) During the payment withholding period |
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| 62 | 62 | | 2.30under this section, all data relating to a credible allegation of fraud and withholding of |
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| 63 | 63 | | 2.31payments under this section are classified as: (1) confidential data on individuals pursuant |
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| 64 | 64 | | 2.32to section 13.02, subdivision 3; or (2) protected nonpublic data pursuant to section 13.02, |
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| 65 | 65 | | 2Section 1. |
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| 66 | 66 | | REVISOR EB/HL 25-0040702/27/25 3.1subdivision 13, in the case of data not on individuals. The agency head may disclose that |
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| 67 | 67 | | 3.2payments are being withheld from a program participant if the agency head determines that |
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| 68 | 68 | | 3.3doing so will not compromise an ongoing investigation. |
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| 69 | 69 | | 3.4 (b) Except for the identity of a complainant, after a determination has been made under |
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| 70 | 70 | | 3.5subdivision 2, paragraph (c), that withholding of payments shall not continue, all data relating |
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| 71 | 71 | | 3.6to a credible allegation of fraud and withholding of payments under this section becomes |
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| 72 | 72 | | 3.7public unless classified otherwise under state or federal law. The identity of a complainant |
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| 73 | 73 | | 3.8is private. |
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| 74 | 74 | | 3.9 (c) Any state agency may disclose any data classified as confidential or protected |
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| 75 | 75 | | 3.10nonpublic under this section to any federal, state, or local government agency, or any law |
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| 76 | 76 | | 3.11enforcement agency, if the state agency determines that access will help prevent fraud |
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| 77 | 77 | | 3.12against public programs or aid the law enforcement process. |
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| 78 | 78 | | 3Section 1. |
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| 79 | 79 | | REVISOR EB/HL 25-0040702/27/25 |
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