Bill

HF 3621

Fraud; payments to program participants withheld under certain circumstances.

2025-2026 Regular Session Introduced by Amanda Hemmingsen-Jaeger and 3 co-sponsors

HF 3621 allows state agencies to temporarily withhold payments to program participants when there is a credible allegation of fraud, with due process and data protections.

Referred to State and Local Government

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Bill Summary · HF 3621

Summary of HF 3621 (Minnesota, 2025-2026)

Purpose and intent

HF 3621 proposes to formalize and broaden the ability of state agencies to withhold payments to program participants when there is credible information or allegations of fraud related to public programs. The bill creates a new framework for temporary withholding, clarifies procedures, data classifications, and access, and sets reporting and sunset provisions. The central aim is to prevent fraud and protect public funds while providing due process opportunities for affected participants.

Key provisions and changes

Definition framework (new Subdivision 1):
- Expands and clarifies terms used in the program payments context: fraud, program, program participant, state agency, etc.
- Defines “credible allegation of fraud” as allegations verified by a state agency head from multiple sources.
Withholding of payments (new Subdivision 2):
- State agency heads may withhold payments to a program participant when there is a credible allegation of fraud under investigation related to any program administered by that agency, or when another agency head reports such a credible allegation.
- Notice of withholding must be sent within five days, including:
- that payments are being withheld,
- general reasons (not detailing ongoing investigations),
- duration and termination conditions,
- right to submit written evidence for consideration,
- right to administrative reconsideration or court relief.
- Rights of affected persons to continued notice of their eligibility for other funds and a contact point.
- Administrative reconsideration process available; decision reviewed within a stated timeframe.
- Withholding ends if there is insufficient evidence or legal proceedings conclude, unless further authorized by law.
- Withholding under this section is not subject to Chapter 14 appeals (no standard contested case review under chapter 14).
- This section does not supersede other withholding authorities already in law.
Data classification and access (new Subdivision 3):
- Data relating to credible fraud allegations during withholding are classified as confidential or protected nonpublic data.
- After a determination that withholding will not continue, data generally becomes public unless otherwise restricted; complainant identity remains private.
- Agencies may disclose such data to other governmental or law enforcement bodies to aid fraud prevention or enforcement.
Court orders and sunset (existing framework retained with new language):
- The bill includes authority for temporary court-ordered withholdings under certain conditions (existing references appear in the prior version and are retained/modified in the new structure).
- Sunset: The prior version included a sunset; the new structure sets forth ongoing provisions with updated definitions and processes (explicit sunset language appears in the prior version, not clearly retained in the excerpt; the new text sets the process as a continuing statutory framework).
Reporting (Subdiv. 5):
- Agencies that withhold payments must report by a set date (originally March 1, 2026) on the number of participants, reasons, dollar amounts, program identification, fund source, and outcomes of challenges.
- A compiled report to legislative chairs and ranking members by March 15, 2026.
Sunset and transitional notes (Subdiv. 6 in original text):
- The initial version had a sunset; the final text replaces portions with a structured framework for ongoing use, subject to constitutional and other statutory limitations.

Who is affected

State agencies administering public programs that involve transfers or disbursements of funds.
Program participants (entities or individuals) who receive, disburse, or handle funds under these programs.
Related vendors, providers, or associated entities when payments are withheld.
Complainants and data subjects, given changes to data classification and disclosure.

Procedural and timeline aspects

Withholding duration: up to a temporary period deemed appropriate under investigation; specifics defined by agency head.
Notice timeline: withholding notice within five days (new framework) or 24 hours in some versions; in HF 3621 it emphasizes timely notice and opportunities to respond.
Appeals: withholding is not subject to Chapter 14 appeals; administrative reconsideration available for affected providers/entities.
Data handling: confidential/protected data during withholding; post-determination data generally becomes public unless law restricts.
Reporting: annualized/one-time reporting requirement to the commissioner and legislators with specific data points.