Minnesota fraud whistleblower says 'lack of guardrails was pretty shocking'

A Minnesota woman employed by the state’s Department of Human Services is speaking out against what she describes as incompetence within the department following the discovery of rampant fraud in the state’s health care system.

Faye Bernstein told the City Journal in an interview that she first began to realize the high risk of fraud at Minnesota’s DHS in 2018 and 2019 following a promotion to a lead position.

“Over the years, I had often thought that DHS is sloppy,” she said. “But 2018 and 2019 are when I saw, oh gosh, this is beyond normal. If we don’t have fraud today, we’re going to have fraud soon.”

Bernstein has been a DHS employee for two decades, working in contract management and as a compliance officer, she told the outlet. In her lead position, she said she was able to see all the contracts being worked on by those in her division and witnessed conflicts with the contracts that could be deemed risky.

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“I was aware that our contracting processes were leaving us completely open to fraud,” Bernstein said. “But to realize the lack of guardrails was pretty shocking.”

Federal prosecutors estimate that up to $9 billion was stolen through a network of fraudulent fronts posing as daycare centers, food programs and health clinics. The majority of those charged, so far, in the ongoing investigation are part of Minnesota’s Somali population.

When she tried to report the issues at the time to her deputy director, Bernstein said she was told to stop asking questions. Bernstein said she felt retaliated against after most of her duties were reassigned and was eventually “shuffled from one job to another.”

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“Even our human resources people would tell us, ‘If your supervisor tells you to do something, you must do it.’ And when you didn’t, the word ‘insubordination’ came up,” she said. “They considered it insubordinate if you resisted an unlawful direction.”

Bernstein told the outlet that she has been going through emails received beginning in 2024 from members of the public warning about the alleged fraud.

“I was really surprised at how much notification we had,” she told the outlet. “Did we really ignore all those people writing in? Members of the public had advised us of this [alleged fraud] in email after email after email.”

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The state’s DHS on Friday said that recently released federal data shows Minnesota’s Medicaid program has a significantly lower improper payment rate than the national average, with an error rate of just over 2.1%, compared with a national average of 6.1%.

State officials also noted the data was collected before Minnesota began rolling out additional measures aimed at reducing fraud risk.

“We’re committed to making Minnesota a national model for preventing fraud and catching errors,” said Shireen Gandhi, the state’s interim human services commissioner. “This review shows we have strong internal controls that we continue to improve, and we are not stopping there as we accelerate our efforts to fight fraud.”

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Bernstein, who said she has only voted Democrat, said the fraud was genuine and not partisan politics.

“This is definitely not something that the Republicans are making up,” she said. “This is real.”

Fox News Digital’s Alex Miller contributed to this report.