Beyond the state of the economy and the cost of housing, it’s unclear the degree to which a notable uptick in statewide housing evictions can be linked to a drop in state funding for social service providers amid sweeping allegations of Medicaid-backed financial fraud.

Some housing coordinators and assistance programs backed by state dollars have found themselves audited repeatedly, if not cut off from state funding, as the state cracks down on eye-popping social service frauds.

Before the program’s inaugural year, the Minnesota Department of Human Services predicted its Housing Stabilization Services for the disabled would cost about $2.6 million annually. Instead, the initiative paid out more than $21 million in claims in 2021, a figure that quickly ballooned to $104 million in 2024.

The U.S. Attorney’s Office for Minnesota recently charged Anthony Waddell Jefferson, 37, and Lester Brown, 53, both of Pennsylvania, with repeatedly flying to Minneapolis to file $3.5 million in HSS claims without providing promised services. Those are just two of the latest among a growing number of federal defendants linked to housing-related frauds tied to Medicaid services.

The HSS program, a medical assistance initiative that helped people with disabilities and mental illness find and maintain housing, was shut down entirely on Oct. 31. On top of that, DHS has partially frozen payments to its Integrated Community Supports program, which funds in-home services for the disabled.

Suzy Fischer, 45, was enrolled in both programs for the last four years, allowing her to live at the Donegan, a downtown St. Paul apartment complex where she paid $400 toward a total rent bill of about $1,700.

“I had been on lists, waiting for housing help for so long,” said Fischer, who grew up in St. Paul and said she suffers from a type of complex post-traumatic stress disorder. “I love it. It’s a great place. I got so lucky.”

That housing assistance recently ended, leaving her at a loss for what to do next. She worries the state is over-correcting, eliminating funding for worthy providers and vulnerable tenants in the name of preventing benefits abuse.

Fischer, whose partner died seven years ago, walks dogs and provides in-home pet care, but it’s not enough to make up for the loss of housing aid, which was administered through Maple Grove-based American Home Health Care.

A spokesperson for DHS said in an email Friday they could confirm they are withholding payment for the provider, but “to protect the integrity of our investigations, DHS cannot provide any specific information about the basis for a payment withhold.”

Unable to access state reimbursement, American Home Health Care has put all of its services on hold.

“The state had no plan for what to do with all the people who would be affected by that,” said Christianna Finnern, an attorney with Minneapolis-based Winthrop & Weinstine, which is representing American Home Health Care in efforts to regain its state backing.

“We are evaluating what options there are,” Finnern said. “DHS has no plan for what to do with all these people who are losing housing and services. It’s really putting people who need these services in a very, very difficult position. It’s really tragic.”

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