Peggy Flanagan

Minnesota Lt. Gov. Peggy Flanagan. (Forum News Service file photo)

ST. PAUL — Minnesota Lt. Gov. Peggy Flanagan criticized the state Department of Human Services on Wednesday for not meaningfully consulting two Native American tribes that the agency allegedly overpaid $25.3 million.

The DHS allegedly overpaid the White Earth Nation and the Leech Lake Band of Ojibwe for substance abuse treatment covered under Medicaid. The agency paid the tribes for medication that patients took at home, but at a higher rate, as if they were treated in a clinic.

Both tribes have produced email correspondence in which DHS officials appeared to tell them to bill at the higher rate for take-home medicine. Even so, state officials say they are legally obligated to take back the federal funds, even if DHS was at fault.

Flanagan, who is a member of White Earth Nation, said in a statement that the situation is “unacceptable.”

“Our administration strongly values our government-to-government relationship with tribes. I am deeply disappointed that DHS did not live up to its promise of meaningful consultation in this situation,” Flanagan said.

Democratic Gov. Tim Walz signed an executive order in April that strengthened the state’s partnership with tribes and ordered government agencies to meaningfully consult them on any issues.

Flanagan urged state lawmakers to change the law that holds tribal governments financially responsible for overpayments, even if they are not at fault.

“Our administration will remain in close communication with the tribes as we work together to figure out the best path forward. We must get to a solution thoughtfully and quickly without putting our community members at risk,” Flanagan said.

During a Senate hearing Tuesday, tribal leaders said they should not be forced to repay the millions in funding. They warned the financial hit could have dire effects on their tribes.

“The impacts will be far-reaching, including loss of jobs, loss of housing, increased mental health needs, increased security and safety concerns, increased health concerns and increased child welfare involvement,” said Danielle Stevens, interim quality assurance coordinator for White Earth.

In an interview Wednesday, Leech Lake government relations attorney Lenny Fineday said it would be “catastrophic” for the tribe to pay back the roughly $13 million in excess funding it received over the past five years.

The tribe has already cut back on some of its opioid treatment services since the billing issue was corrected in May, he said. If Leech Lake had to pay back the $13 million, Fineday said the tribe would have to end its opiate treatment program and potentially some other services.

“Even if we had to pay it back in five years, we’d be looking at completely cutting off services and laying off employees and stopping programs that are servicing the most vulnerable in our tribal community,” he said, adding that Leech Lake may file an administrative appeal or even a lawsuit, which would be an “option of last resort.”

Acting DHS Commissioner Pam Wheelock said Tuesday that taxpayers could be on the hook for the overpayments if the tribes are not required to pay the money back. The DHS would recommend a repayment plan to the governor and the Legislature, she said, which would likely involve an ask for state funding.

Reach Regional Managing Editor Suzanne Rook at 507-333-3134. Follow her on Twitter @rooksuzy

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