Minnesota SF4612: New Medicaid Fraud Felony Law for Child Care

Most Minnesota child care owners don't realize that a provision buried deep in SF4612—the state's omnibus health and human services supplemental appropriations bill—creates serious new criminal exposure for their businesses when they bill Medicaid.

Here's what changed: Minnesota is replacing an old, single-sentence misdemeanor statute (§609.466, now repealed) with a comprehensive felony law. The new statute, effective August 1, 2026, applies to crimes committed on or after that date.

What the New Law Says

The new felony statute (Article 7, Section 3, codified as §609.467, Subdivision 1, on page 124 of the bill) covers anyone who knowingly presents false or misleading information to obtain Medicaid payment. The penalties are substantial:

• Up to 10 years imprisonment and up to $100,000 in fines for losses under $35,000
• Up to 20 years imprisonment and up to $500,000 in fines for losses between $35,000 and $220,000
• Up to 30 years imprisonment and up to $1,000,000 in fines for losses exceeding $220,000

This applies to child care providers, home care agencies, clinics, pharmacies, durable medical equipment suppliers, and any other business billing Medicaid.

What Triggers the Law

The statute covers not just intentional fraud, but also:

• Billing errors and documentation failures
• Employing or contracting with individuals who are excluded from federal Medicaid or Medicare programs
• Submitting claims that don't match services actually provided

The key word is "knowingly"—but in practice, regulators and prosecutors may interpret this broadly, and the burden falls on the provider to prove they didn't know about a problem.

Why This Matters Now

Child care providers who accept Medicaid reimbursement should understand that starting August 1, 2026, billing mistakes that might have been treated as civil violations or minor misdemeanors can now result in felony charges, lengthy prison sentences, and million-dollar fines. This changes the risk calculus for compliance.

Even unintentional errors—a misfiled form, a staff member with a disqualifying background you didn't catch, a billing code mistake—could theoretically trigger investigation. While prosecutors have discretion, the law creates the legal framework for serious consequences.

What Providers Should Do

Child care owners billing Medicaid should review their billing practices, staff screening procedures, and documentation systems before August 1, 2026. Consider consulting with an accountant or attorney familiar with Medicaid compliance to identify gaps. Keep meticulous records. Verify that all employees and contractors are eligible to work in Medicaid-funded programs.

This is not a reason to stop accepting Medicaid—but it is a reason to take compliance seriously and systematically.

Source: SF4612, Article 7, Section 3 (§609.467, Subdivision 1), page 124. Effective August 1, 2026, for crimes committed on or after that date.