Fraud Isn't Free Act established; corrective action plans, enrollment freezes, agency budget reductions, and employee dismissal required when fraud is committed against a program administered by the state; and other fraud prevention provisions established.

The Fraud Isn't Free Act (HF3395) is a proposed Minnesota law aimed at combating fraud in state-administered programs. If fraud is detected, the bill mandates several actions:

- **Corrective Action Plans**: Agencies must develop plans to address the fraud, including steps to prevent future occurrences and recover misused funds.

- **Enrollment Freezes**: The affected program must halt new enrollments until corrective measures are implemented.

- **Agency Budget Reductions**: The state will reduce the agency's budget by 10% for the current biennium and 25% for the next, as a financial consequence of the fraud.

- **Employee Dismissal**: Employees responsible for the fraud must be dismissed and are barred from state employment for five years.

Additionally, the bill requires agencies to report suspected fraud within 30 days and notify law enforcement when appropriate. It also emphasizes the inclusion of fraud considerations in state budget forecasts. ([track.mn](https://track.mn/legislative_instruments/0942025-hf3395?utm_source=openai))

The bill was introduced in the Minnesota House on February 17, 2026, and has been referred to the State Government Finance and Policy Committee. ([house.mn.gov](https://www.house.mn.gov/bills/Info/HF3395/94/2025/0?utm_source=openai))

While the bill has not yet passed, it reflects ongoing efforts in Minnesota to address fraud in state programs.

Recent investigations have uncovered significant fraud in Minnesota's state-administered programs, including potential misuse of up to $9 billion in federal funds. ([apnews.com](https://apnews.com/article/fbad68312012dc02a4060852474f72ee?utm_source=openai)) This context underscores the importance of legislative measures like HF3395 to enhance accountability and prevent future fraud.

The bill has received mixed reactions. Supporters argue that it is a necessary step to hold agencies accountable and deter fraudulent activities. Opponents, including some labor representatives, have expressed concerns about the potential impact on employees and the adequacy of existing oversight mechanisms. ([house.mn.gov](https://www.house.mn.gov/SessionDaily/Story/18929?utm_source=openai))

In summary, the Fraud Isn't Free Act seeks to strengthen Minnesota's response to fraud in state programs by implementing strict corrective measures and financial penalties.

The Fraud Isn't Free Act (HF3395) has been highlighted in media coverage as a proactive legislative response to significant fraud issues in Minnesota's state-administered programs. The bill's introduction comes amid reports of extensive misuse of federal funds, including potential fraud involving up to $9 billion in federal funding allocated to 14 state-administered programs since 2018. ([apnews.com](https://apnews.com/article/fbad68312012dc02a4060852474f72ee?utm_source=openai)) This context has led to positive media reception, with the bill being viewed as a necessary step to enhance accountability and prevent future fraud.

Despite the bill's proactive approach, some media coverage has raised concerns about its potential impact on employees and the adequacy of existing oversight mechanisms. Critics argue that the bill's provisions, such as mandatory employee dismissal and budget reductions, may be too punitive and could have unintended consequences. These concerns have been highlighted in discussions about the bill's potential effects on state employees and the broader implications for state programs. ([house.mn.gov](https://www.house.mn.gov/SessionDaily/Story/18929?utm_source=openai))