Avalon Home Care owner says DHS payment freeze forced Anoka business to close

ANOKA — The owner of Avalon Home Care says a state Medicaid payment suspension forced his business to close after 25 years, costing 160 people their jobs and disrupting care for 99 clients. Jonathon Hansen told KSTP that the Minnesota Department of Human Services stopped reimbursing the Anoka provider in April and that he closed the company in June.

DHS cited a credible allegation of fraud when it imposed the payment hold, according to KSTP’s November 6 report. Hansen denies wrongdoing and says the agency has not explained the specific allegations to him. He challenged the continued withholding in court, arguing that payments remained frozen for months even though law enforcement had not opened an active investigation.

Court records reviewed by KSTP included emails showing the Minnesota Attorney General’s Medicaid Fraud Control Unit declined referrals in June and September. The later correspondence indicated DHS had supplied little additional information. The Attorney General’s Office confirmed to KSTP that the unit had declined several referrals involving Avalon.

The office cautioned that declining an investigation does not establish that a provider did nothing wrong. It also said that decision does not prevent DHS from taking administrative action over waste or abuse, which does not require the same level of proof as a criminal fraud prosecution.

The Minnesota Bureau of Criminal Apprehension told KSTP it forwarded a July referral from DHS to the Medicaid Fraud Control Unit and offered assistance if that unit opened a case. The BCA said the Attorney General’s Office had not requested that assistance.

DHS declined to discuss Avalon’s specific circumstances, citing state disclosure restrictions concerning investigations, payment withholding and referrals. In its response to KSTP, the department said it is taking an aggressive approach to fraud prevention and stops payments when credible fraud allegations emerge.

A Ramsey County judge denied Hansen’s request to compel DHS to release the withheld money. According to KSTP, the judge concluded that a clear obligation to pay had not been established, while expressing concern that the withholding appeared tied to law enforcement referrals that had not advanced. The judge also questioned whether DHS was conducting its own investigation, despite the agency’s assertion that it was.

Hansen told KSTP he had spent approximately $200,000 in legal fees seeking answers and planned to appeal. The reported ruling denied his request for release of the money; it did not establish that Avalon committed fraud. The employment and client-impact figures are Hansen’s account.

Source: KSTP — Renée Cooper’s November 6, 2026, report.