Zayna Shire, et al., Appellants,

This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2018).

STATE OF MINNESOTA
IN COURT OF APPEALS
A19-0807

Zayna Shire, et al.,
Appellants,

vs.

Jodi Harpstead,
Respondent.

Filed December 30, 2019
Affirmed
Smith, Tracy M., Judge

Ramsey County District Court
File No. 62-CV-18-6048

Samuel D. Orbovich, Pari I. McGarraugh, Fredrikson & Byron, P.A., Minneapolis,
Minnesota (for appellants)

Keith Ellison, Attorney Genera l, Brandon Boese, Scott H. Ikeda, Assistant Attorneys
General, St. Paul, Minnesota (for respondent)

Considered and decided by Hooten, Pres iding Judge; Smith, Tracy M., Judge; and
Kalitowski, Judge.


 Retired judge of the Minnesota Court of A ppeals, serving by appoi ntment pursuant to
Minn. Const. art. VI, § 10.

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U N P U B L I S H E D O P I N I O N
SMITH, TRACY M., Judge
Appellants provide services to Medicaid recipients. In July 2017, the Minnesota
Department of Human Services (DHS) tem porarily suspended Medicaid payments to
appellants pending investigation of what DHS had determined to be credible allegations of
fraud. Approximately one year later, with th e investigation neither closed nor having
resulted in further legal action, appellants sued respondent, the commissioner of human
services, challenging the continuing withholding of payments. The district court dismissed
appellants’ complaint for failing to state a claim upon which relie f can be granted.
Appellants argue that (1) the district court erred by concluding that their due-process claim
failed due to lack of a protected interest in continued Medicaid participation, and (2) the
district court erred by concluding that the commissioner acted within her authority when
she applied a temporary suspension of paymen t, or payment withhold , to appellants. We
affirm.
FACTS
Appellants are two business owners a nd their corresponding business entities. 1
Appellant Zayna Shire is the owner of a ppellant Brighter Home Health Care, LLC
(Brighter Home), and appellant Abdi Ahmed is the owner of appellant Family Care

1 The complaint also seeks to bring claims on behalf of all similarly situated providers
“who are owned and operated by persons who immigrated to the United States, and whose
ethnicity, race and national origin make them members of a protected minority.” This
allegation of a class does not impact the analys is at this stage of litigation. Furthermore,
while the description of the class suggests e qual-protection concerns, the complaint does
not assert an equal-protection claim.

3
Transportation, LLC (Family Care). Both busi nesses served Medicaid recipients in the
Twin Cities area. Respondent is the current commissioner of the human services, acting in
her official capacity.2 The complaint alleges the following facts, which we take as true for
purposes of this appeal.
Brighter Home provided personal-care-assistance (PCA) services from April 2014
until July 2017. On July 21, 2017, the Office of Inspector General of DHS issued a notice
of payment withhold to Bright er Home. The notice stated th at DHS had determined that
there was a “credible allegation of fraud” a nd that DHS had information that Brighter
Home shared an owner with Immediate Care Transportation, LLC, which had “billed for
trips not supported by documentation, billed for trips that never took place, participated in
kickbacks to the riders, and billed rides with mu ltiple riders as separa te trips rather than
prorated.” DHS addressed the notice to Ahme dweli Farah, Shire’s former husband, who
owned Immediate Care Transportation and who owned 50% of Brighter Home from
January 2016 through July 2017. Shire claims that she had no ownership interests in
Immediate Care Transportation and that Farah played no meaningful role in the operations
of Brighter Home.
The notice of payment withhold indicated th at all Minnesota Health Care Programs
(MHCP) payments to Brighter Home would be withheld starting August 21, 2017. The
notice informed Brighter Home that DHS wo uld continue to withhold the payments until

2 When the complaint was filed, the commissioner was Emily Johnson-Piper. Pam
Wheelock was substituted for Johnson-Piper as the acting commissioner on July 16, 2019.
Jodi Harpstead, the current commissione r, was substituted for Pam Wheelock on
September 6, 2019.

4
DHS or a prosecuting authority determined that there was insufficient evidence of fraud or
until the completion of any legal proceedings re lated to the alleged fraud. It stated that
Brighter Home could submit written evidence to DHS to explain why payments should not
be withheld. The notice also st ated that Brighter Home must notify affected clients and
assist them in transitioning to other services if Brighter Home was unable to continue
providing services.
Brighter Home, through an attorney, res ponded to DHS with documents and a letter
stating that Brighter Home agreed to disassociate from Farah and asking that the payment
withhold be lifted. DHS did not lift the payment withhold; rather, it issued a notice of
continued payment withhold to Shire in November. It de scribed how, after investigating
Brighter Home’s claims and service documentation, DHS determined that Brighter Home
had submitted claims with mismatched numbers of units, claims that had no timesheet or a
timesheet that indicated no work had been done, and claims for services that could not have
been provided. DHS concluded that these su spicious claims, plus Farah’s operational
control and access to Brighter Home’s business holdings, amounted to a credible allegation
of fraud. This second notice again explained the circumstances under which the hold would
be lifted, informed Brighter Home that it could submit evidence and explanations to DHS,
and informed Brighter Home of its obligations to notify affected clients and assist them in
transitioning to other services if Brighter Home could not continue to serve them.
Appellant Family Care, meanwhile, was su bject to a similar action. Family Care
provided transportation services to Medicaid recipients from 2011 until July 2017. On
July 21, 2017, it received a notice of paymen t withhold from DHS. The notice stated that

5
DHS had determined that there was a cred ible allegation of fraud and that it had
information that Family Care had “billed trips without documentation to support the claim,
billed rides with multiple riders as separate trips rather than prorated, and participated in a
kickback scheme with recipients.”
This notice was structured the same way as the notices received by Brighter Home,
stating that the MHCP payment withhold would start July 21, 2017, and that the payment
withhold would last until either a determination that there was insufficient evidence of
fraud or the completion of any legal proceedings related to the alleged fraud. The notice
also informed Family Care that it coul d submit written evidence to DHS about why
payments should not be withheld and that, if Family Care was unable to continue providing
services to its clients, it would need to notify them and assist them in transitioning to other
providers.
On September 5, 2018, Shire, Ahmed, and their business entities sued the
commissioner in her official capacity. They allege that the commissioner deprived them of
their protected interests wit hout due process and that the commissioner engaged in ultra
vires actions. The commissioner moved the district court, pursuant to Minn. R. Civ. P.
12.02(e), to dismiss the case for failure to state a claim upon which relief could be granted.
The district court granted the motion and dismissed the complaint.
This appeal follows.
D E C I S I O N
When reviewing the dismissal of a compla int for failure to state a claim under Minn.
R. Civ. P. 12.02(e), appellate courts “review the legal sufficiency of the claim de novo to

6
determine whether the complaint sets fort h a legally sufficient claim for relief.” Graphic
Commc’ns Local 1B Health & Welfare Fund “A” v. CVS Caremark Corp. , 850 N.W.2d
682, 692 (Minn. 2014). Appellate courts “accept the facts alleged in the complaint as true
and construe all reasonable inferences in favor of the nonmoving party.” Walsh v. U.S.
Bank, N.A., 851 N.W.2d 598, 606 (Minn. 2014).
In their complaint, appellants seek decl aratory and injunctive relief based on two
legal theories. They allege that the commissioner violated their due-process rights and that
she acted in excess of her authority. Both theories relate to the commissioner’s authority to
temporarily suspend Medicaid payments to providers.
Medicaid is a cooperative federal-state pr ogram, which states may administer and
regulate consistent with federal law. Getz v. Peace, 934 N.W.2d 347, 356-57 (Minn. 2019).
Under the Minnesota Medicaid statutory scheme, which reflects federal requirements, the
DHS commissioner is required to withhold paym ents to a Medicaid provider if “the
commissioner determines there is a credible allegation of fraud for which an investigation
is pending.” Minn. Stat. § 256B.064, subd. 2(b) (2018); see also 42 C.F.R. § 455.23(a)(1)
(2018). An allegation is considered credible when it has “indicia of reliability and the state
agency has reviewed all allegations, facts, and evidence carefully and acts judiciously on a
case-by-case basis.” Minn. Stat . § 256B.064, subd. 2(b). A payment withho ld must end
“after the commissioner determines there is in sufficient evidence of fraud by the vendor,
or after legal proceedings relating to th e alleged fraud are completed.” Minn. Stat.
§ 256B.064, subd. 2(c) (2018); see also 42 C.F.R. § 455.23(c) (2018).
With that background, we turn to the legal sufficiency of each of appellants’ claims.

7
I. The complaint fails to state a due- process claim because appellants lack a
protected interest.

Appellants argue that the payment withholds violate their due-process rights under
the United States and Minnesota Constitutions because the payment withholds effectively
deprive them permanently of a protected inte rest without procedural due process. The
district court rejected the due-process clai m, concluding that appe llants do not have a
constitutionally protected interest in the receipt of Medicaid payments.
“Procedural due process protections rest rain government action which deprives
individuals of ‘liberty’ or ‘property’ interests within the meaning of the due process clause
of the Fifth and Fourteenth Amendments of the United Stat es Constitution and Article I,
Section 7 of the Minnesota Constitution.” Sweet v. Comm’r of Human Servs., 702 N.W.2d
314, 318 (Minn. App. 2005) (quotation omitted), review denied (Minn. Nov. 15, 2005).
The due-process protections un der the United States and Minnesota Constitutions are
identical. Sartori v. Harnischfeger Corp., 432 N.W.2d 448, 453 (Minn. 1988).
In evaluating a procedural due-process claim, courts must first identify “whether the
government has deprived the individual of a pr otected life, liberty, or property interest.”
Sawh v. City of Lino Lakes , 823 N.W.2d 627, 632 (Minn. 2012). If the government has
deprived a party of a protected interest, the next step of the analysis is to determine whether
the government provided constitu tionally sufficient procedures. Id. But if no deprivation
of a protected interest is identified, there can be no due-process violation and the analysis
ends. Id.

8
The precise protected interest that appe llants allege that the government has
deprived them of is somewhat difficult to ascertain; they appear to broadly assert an interest
in the ability to do business th at spans both property and liber ty interests. The complaint
frames the matter as a deprivation of their property interests: it focuses on how appellants’
businesses were effectively cl osed by the government th rough its ongoing temporary
suspensions and by its required transfer of appellants’ clients. Appellants’ argument on
appeal, however, shifts its emphasis, framing the issue more as deprivation of their liberty
interests: this argument focuses on damage to appellants’ reputations for honesty and
integrity and to their ability to pursue their chosen business. The commissioner argues that
appellants forfeited their liberty-interest theory by not raising it in the district court. While
we acknowledge the shift in emphasis, we note that appellants did raise both a property-
interest and a reputational-liberty-interest argument to the district court, so we agree with
appellants that they have not forfeited their liberty-interest theory. We thus consider
whether appellants’ complaint alleges deprivation of either a protected property interest or
a protected liberty interest.
A. Appellants do not allege a protected property interest.

Property interests are protected, but not created, by the Constitution. Bd. of Regents
of State Colls. v. Roth , 408 U.S. 564, 577, 92 S. Ct. 27 01, 2709 (1972). Rather, property
interests arise from an independ ent source, such as a statute or contract “that secure[s]
certain benefits and that support[s] claims of entitlement to those benefits.” Id. A property
interest does not arise simply from a party’s unilateral expectation of it. Id.

9
Appellants frame the deprivation of their property right as the closure of their
businesses. But appellants do not and cannot allege that DHS required that appellants close
their businesses. DHS suspended appellants’ ability to receive reimbursement under the
Medicaid program; DHS did not prohibit them from serving customers. Appellants may
have structured their businesses based on th e unilateral expectation of continued support
from the Medicaid program, but a strong financia l interest in the program does not give
rise to a property interest. See Highland Chateau, Inc. v. Minn. Dep’t of Pub. Welfare, 356
N.W.2d 804, 811 (Minn. App. 1984) (holding th at participation in Medicaid did not give
rise to a protected property in terest such that a taking occurs when a statute modifies
Medicaid rates, despite strong financial inducements to participate in the program), review
denied (Minn. Feb. 6, 1985).
Nor do appellants have a property intere st in Medicaid payments while an
investigation is pending. The statute in this case makes clear that the government retains
the power to temporarily suspend payments wh en there are credible allegations of fraud.
See Minn. Stat. § 256B.064, subd. 2(b); cf. Personal Care Prods., Inc. v. Hawkins , 635
F.3d 155, 159 (5th Cir. 2011) (observing th at “Texas regulations plainly permit” the
Medicaid withholding). Because the statute authorizes paym ent withholds pending fraud
investigations, it confers on appellants no entitlement to the payments during an
investigation. Appellants therefore have no protected property interest created by statute.
See Roth, 408 U.S. at 577, 92 S. Ct. at 2709.
The persuasive authorities that have considered the matter have generally concluded
that participation in the Medicaid program as a provider does not create a protected

10
property interest. See, e.g., Erickson v. United States ex rel. Dep’t of Health & Human
Servs., 67 F.3d 858, 862 (9th Cir. 1995) (holding that provider did not have a property
interest in continued participation in Medicare, Medicaid, or other similar programs); Kelly
Kare, Ltd. v. O’Rourke, 930 F.2d 170, 175-76 (2d Cir. 1991) (holding that the government
reserved vast discretion over the continued participation of parties in Medicaid, and thus
the provider had no protected property interest); see also Minn. Ass’n of Health Care
Facilities, Inc. v. Minn. Dep’t of Pub. Welfare, 742 F.2d 442, 446 (8th Cir. 1984) (holding
that a statute imposing rate limits on nursing homes did not violate substantive due process
or result in a taking, as participation in th e Medicaid program is voluntary). And courts
have specifically rejected the claim th at a temporary suspension from Medicaid
participation pending a fraud investigation implicates a protected property right. See, e.g.,
Hawkins, 635 F.3d at 158-59 (holding there is no property right in Medicaid
reimbursements pending a fraud investigation); Guzman v. Shewry, 552 F.3d 941, 953 (9th
Cir. 2009) (holding that temporarily suspended provider did not have a property interest in
continued Medicaid participation); cf. Clarinda Home Health v. Shalala , 100 F.3d 526,
531 (8th Cir. 1996) (noting “[t]he private in terest that will be affected by a temporary
withholding of Medicare payments is not as serious in nature as an exclusion from the
Medicare program”).
Courts have also reached similar conclu sions with respect to other government
benefits programs, such as Medicare. See, e.g., Key Med. Supply, Inc. v. Burwell, 764 F.3d
955, 965 (8th Cir. 2014) (holding there was no protected property interest in preventing a
competitive bidding regime for Medicare contract bids); Clarinda, 100 F.3d at 531

11
(holding that “it is not a violation of due process to temporarily withhold Medicare
payments during an ongoing investigation for acts of fraud”). Appellants argue that
temporary suspensions under Medicare are diffe rent, as they are generally limited to 180
days, see 42 C.F.R. § 405.372(d) (2018), while temporary suspensions under Medicaid do
not have a time limitation. See Minn. Stat. § 256B.064, subd. 2(c). But, as DHS pointed
out at oral argument, the 180-day limit under Medicare does not apply to payment
suspensions based on credible allegations of fraud. 42 C.F.R. § 405.372(d)(3).
Appellants argue that these cases are di stinguishable because they are either
Medicare cases or cases in which the tempor ary suspension starte d after a criminal
proceeding had begun. Those dis tinctions, however, do not re medy the fundamental flaw
in appellants’ claim—the fact that the Medica id statute does not create an entitlement to
Medicaid payments while a fraud investigation is pending.
Appellants also argue that, even if they are not entitled to future reimbursement from
Medicaid, they should at least be entitled to reimbursement for services already rendered.
Again, this argument fails because the stat ute confers no such entitlement. The statute
authorizes the withholding of funds while allegations of fraud are investigated, so
appellants do not have a protected property interest in reimbursements for services already
rendered.
Appellants point to Fosselman v. Comm’r of Human Servs. as an example where
this court concluded there was a protected property interest in Medicaid participation. 612
N.W.2d 456 (Minn. App. 2000). In Fosselman, DHS disqualified three providers from
working in direct contact with individuals receiving services from DHS programs or certain

12
other organizations based on the providers’ failure to report child maltreatment. Id. at 459.
We determined that the providers had a property interest based on their licenses to practice
medicine and a liberty interest in their reputation that was tarnished by the allegations that
they had failed to carry out provisions of a law embodying an important policy. Id. at 461.
In Fosselman, the commissioner “all but concede[d] on appeal” there were protected
interests at stake. Id. Even disregarding that concession, Fosselman is distinguishable from
this case. In Fosselman, the parties were disqualified fr om employment in direct-contact
positions. Id. We analogized their situation to the government’s suspension of a license
essential to one’s livelihood, such as a drive r’s license or a license to practice medicine,
and concluded that a property interest was at stake. Id. Here, in contrast, the temporary
suspension of reimbursement for assisting Medicaid recipients does not prevent appellants
from continuing to participate in their respective fields—t hey can still pr ovide PCA or
transportation services to non-Medicaid clients.
The core of appellants’ clai m, we recognize, is their a ssertion that the suspensions
here are not temporary but have, in fact, beco me permanent due to the length of time that
the investigation has lasted and that they have a property interest in the permanent loss of
Medicaid payments. We do find it troubling that the temporary suspensions in this case
have apparently lasted for more than two years without any investigative results. The
statute certainly appears to contemplate that the government will be diligent in
investigating alleged fraud, as the suspensions are described as “temporary” and only end
upon the completion of the g overnment’s investigation. See Minn. Stat. § 256B.064,
subd. 2(c) (stating that the affected party will be informed that the withholding is

13
“temporary” and will end when the commiss ioner “determines there is insufficient
evidence of fraud by the vendor, or after legal proceedings relating to the alleged fraud are
completed”). But the statute does not impose a time deadline, either on the investigation or
on the temporary suspension. Given that statutory scheme, we conclude that the length of
the investigation and the correlated tempor ary suspension does not give rise to a
constitutionally protected interest.3
B. Appellants do not allege a protected liberty interest.

Appellants also assert that they were depr ived of a protected liberty interest. They
make two arguments: first, th at they had a liber ty interest in pursuing their chosen
occupation, which DHS prevented by de facto closing their businesses; and, second, that
they have a liberty interest in their reputation for hones ty and integrity, which DHS
harmed, impeding their ability to do business.
As for their closure-of-their-business ar gument, the reasoning above that rejects
appellants’ asserted property in terest also defeats their asse rted liberty interest. As we

3 We recognize that federal and state law require the commissioner to report allegations of
fraud to the Medicaid Fraud Control Unit (MFCU) of the Minnesota Attorney General and
that the MFCU is not within the commissioner’s control. See Minn. Stat. § 256B.12 (2018)
(granting the authority to prosecute violati ons of Minnesota Medicaid statute to the
Minnesota Attorney General); see also 42 C.F.R. § 455.23(d)(1) (2018); Minn. Stat.
§ 256B.064, subd. 2(c) (2018). But, contrary to the suggestion in the commissioner’s brief,
the duration of a temporary suspension is not entirely dependent on the MFCU’s action;
the Minnesota statute provides that a payment withhold will end after the commissioner
determines that there is in sufficient evidence of fraud or after legal proceedings are
completed. Minn Stat. § 256B.064, subd. 2(c). We do not find the duration of the temporary
suspensions in this case partic ularly mitigated by the fact that MFCU has not yet taken
action.

14
discussed, DHS did not require that appellant s’ businesses be closed when it withheld
Medicaid payments. As with the property-inter est analysis, the gove rnment’s decision to
temporarily withhold payments under the Me dicaid statute is not equivalent to a
government decision to terminate a business, even if that busine ss relies heavily on
Medicaid reimbursements. See Guzman , 552 F.3d at 954-55 (rejecting liberty-interest
claim by physician subject to temporary su spension in Medicaid program pending
investigation of fraud). Nor are the payment withholds the equivale nt of the permanent
disqualification of a provider from performi ng the essential functions of their job. Cf.
Fosselman, 612 N.W.2d at 462 (involving permanent disqualification of medical providers
from holding direct-contact positions).
As for their reputation argument, a liberty interest is implicated when government
action results in a loss of reputation combined with the loss of some other tangible interest.
Boutin v. LaFleur , 591 N.W.2d 711, 718 (Minn. 1999). This “stigma-plus” test requires
the injured party to suffer “more than mere stigma.” Id. The party must also suffer the loss
of some other recognizable interest. Id. A “recognizable interest” is a liberty or property
interest that receives constitutional pr otection under due-process analysis. See id. (citing
Paul v. Davis, 424 U.S. 693, 710, 96 S. Ct. 1155, 1165 (1976)).
Appellants contend that the government damaged their reputations by informing
third parties about the allegations of fra ud and that the stigma resulted in the
discontinuation of contracts and the inevitable closure of their businesses. Specifically, in
their complaint, appellants allege that DHS informed managed-care organizations (MCOs)
that purchase services from appellants that appellants were subject to a Medicaid payment

15
withhold based on credible allegations of fraud and that, as a result, the MCOs suspended
their business with appellants.
Minnesota law permits DHS to conduct its Medicaid program through contracts
with MCOs. See Minn. Stat. § 256B.035 (2018). Unde r federal Medicaid regulations,
MCOs that contract with a state to provide health care to Medicaid recipients are required
to suspend Medicaid payments to providers with whom the MCOs, in turn, contract if the
state determines there is a credible alle gation of fraud against those providers. See 42
C.F.R. § 438.608(a)(8) (2018 ). The MCOs’ suspension of pa yments to appellants thus
resulted from the MCOs’ legally required contra ctual obligation triggered by the credible
allegations of fraud. To satisfy the stigma-plus requirement, appellants would have to have
a recognizable interest in the payments; in ot her words, they would need to be entitled to
continue receiving payments from the MCOs even though there was a credible allegation
of fraud against them. Because, under the Me dicaid regulations, appellants were not
entitled to continued reimbursement from MCOs pending a fraud investigation, they were
not deprived of a protected right. Thus, the suspended payments from MCOs cannot satisfy
the stigma-plus additional-harm requirement of the deprivation of a liberty interest.
Because appellants did not allege the deprivation of a protected property or liberty
interest, the district court did not err by dismissing appellants’ due-process claim for failure
to state a claim.

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II. The complaint fails to state a claim that the commissioner exceeded her
authority.

Appellants also argue that the commiss ioner engaged in ultra vires action by
enforcing invalid unpromulgated rules. First, they argue that the commissioner improperly
amended the state Medicaid statute by effectively adding sanctions against appellants that
do not fall under the plain language of the statute. Second, they argue that the commissioner
has abandoned a longstanding interpretation of the temporary-suspension provision of the
statute without properly engaging in the rule-making process.4
An administrative agency’s authority to adopt rules is governed by the Minnesota
Administrative Procedure Act (MAPA). Minn. Transitions Charter Sch. v. Comm’r of
Minn. Dep’t of Educ. , 844 N.W.2d 223, 2 33 (Minn. App. 2014), review denied (Minn.
May 28, 2014). MAPA defines a rule as “ever y agency statement of general applicability
and future effect, including amendments, susp ensions, and repeals of rules, adopted to
implement or make specific the law enforced or administered by that agency or to govern
its organization or procedure.” Minn. Stat . § 14.02, subd. 4 (2018). MAPA requires
agencies to promulgate rules “after giving public notice and providing interested persons
the opportunity to be heard.” Minn. Transitions Charter Sch. , 844 N.W.2d at 233. This
requirement applies to both legi slative and interpretive rules. Id. “Interpretive rules are

4 DHS argues that we should not reach the issue of whether the commissioner acted outside
her authority because appellants have not identified the statute that grants them a cause of
action and appellants failed to exhaust poten tial administrative remedies. Because we
conclude that DHS acted within its statutor y authority, we decline to address these
arguments.

17
those that make specific the law enforc ed or administered by the agency.” Id. (quotation
omitted).
But an interpretive rule that has not properly been promulgated may still be valid if
(1) the agency’s interpretation corresponds with the plain meani ng of the statute or (2) if
the statute is ambiguous and the agency’s interpretation is a longstanding one. In re PERA
Salary Determinations Affecting Retired & Active Empls. of City of Duluth , 820 N.W.2d
563, 570 (Minn. App. 2012). If an unpromulgated interpretive rule falls under one of these
exceptions, “the agency is not deemed to have promulgated a new rule,” and the agency’s
interpretation is not invalid, but it does not have the force and effect of law. Id. (quotation
omitted). If the interpretive rule is not properly promulgated, and does not fall into one of
the two exceptions, then the rule “cannot be used as the basis for agency action.” Id.
A. Appellants’ complaint fails to state a claim that the commissioner
improperly added sanctions to the Medicaid statute.

Appellants allege that the commissioner exceeded her statutory authority by
applying an invalid unpromulgated rule that adds sanctions to the Medicaid statute. Minn.
Stat. § 256B.064 (2018) outlines the sanctions available against Medicaid providers. The
statute includes a temporary suspension of pa yments pending inves tigation of credible
allegations of fraud. Minn. St at. § 256B.064, subd. 2(b). Appellants argue that the plain
language of the statute does not permit actions that they allege the commissioner took here:
imposing a suspension of indeterminate length, notifying MCOs regarding DHS
suspension, and ordering appellants to transfer their clients within 30 days.

18
We assume for purposes of argument that the commissioner’s actions amount to the
adoption of a policy of general applicability and future effect—in other words, a rule under
MAPA. See Minn. Stat. § 14.02, subd. 4. An unp romulgated interp retive rule that
corresponds with the plain language of the statute is not invalid. PERA Salary
Determinations 820 N.W.2d at 570. “If an interpre tation is consistent with the plain
meaning of the statute or rule, the agency’s action is authorized by the statute itself . . . .”
Good Neighbor Care Ctrs., Inc. v. Minn. Dep’t of Human Servs., 428 N.W.2d 397, 402-03
(Minn. App. 1988), review denied (Minn. Oct. 19, 1988).
As described above, section 256B.064 do es not set a deadline on the temporary
suspension; rather, its duration is determined by the lengt h of the investigation and any
resulting legal proceedings. Minn. Stat. § 256B.064, subd. 2(b). The commissioner’s
imposition of the temporary suspensions here co rresponds with the plain language of the
statute. Similarly, state law permits DHS to contract with MCOs, and Medicaid regulations
require notification to participating MCOs to enable MCOs to implement a payment
suspension. See Minn. Stat. § 256B.035; 42 C.F.R. § 438.608(a)(8). The commissioner’s
notification to MCOs to susp end payments corresponds with the plain language of these
provisions. Thus, the commissi oner’s action was not based on an invalid unpromulgated
rule. See PERA Salary Determinations, 820 N.W.2d at 570.
As for the alleged order to transfer clie nts, the notifications from DHS, which are
attached to and incorporated in to appellants’ complaint, info rmed appellants that, if they
are unable to continue providing services to Medicaid recipients, they needed to notify the
recipients of the change and assist them in transferring to other providers. The notices did

19
not order the transfer of appellants’ clients. Appellants have failed to allege that DHS made
such a demand.
For these reasons, the complaint fails to state a claim that the commissioner added
sanctions that are not authorized by the Medicaid statute.
B. The complaint fails to state a clai m that the commissioner exceeded her
authority by implementing a temporary suspension without a probable-
cause determination.

Appellants argue that the commissioner exceeded her statutory authority by
implementing temporary suspensions in the abse nce of a district court’s probable-cause
determination that fraud had occurred. Appell ants contend that the agency was bound by
what they call the “Ker ber rule.” They allege that, in 2012, the former DHS inspector
general, Jerry Kerber, enacted a policy that would reserve immediate notice of payment
withholds for cases in which a district court had made a finding of probable cause sufficient
to either issue a search warrant or arrest the provider. Appellants argue that that policy was
an interpretive rule of section 256B.064, subd. 2(b). They further allege that, when Kerber
retired, DHS began imposing with holdings without a district court finding of probable
cause. They claim this practice amounts to an unpromulgated and invalid rule repealing the
Kerber rule.
We again assume for purposes of argument that the commissioner’s action amounts
to an interpretive rule. Again, an unpromulga ted rule is not invalid if it corresponds with
the plain meaning of the statute. See PERA Salary Determinations , 820 N.W.2d at 570.
The statute here directs the commissioner, not a court, to make a determination of whether
there is a credible allegation of fraud. See Minn. Stat. § 256B.064, subd 2(b). It provides

20
that the commissioner and DHS make the determ ination by verifying that the allegations
have indicia of reliability and by reviewing the “allegations, facts and evidence carefully.”
Id. DHS’s interpretation that the commissioner, not a court, determines the existence of a
credible allegation of fraud co rresponds with the plain me aning of the statute. The
commissioner’s action in determining the exis tence of a credible allegation of fraud is
therefore authorized by the statute itself. See Good Neighbor Care Ctrs. , 428 N.W.2d at
402-03.
But appellants argue that the commissioner’s interpretive rule is invalid because it
repealed the Kerber rule. They assert that the Kerber rule was a “longstanding, historic
interpretation of an ambiguous law” and th at “[a]n agency may not repeal such a
longstanding rule without engaging in the ru le-making process.” They cite two cases in
support of that proposition: St. Otto’s Home v. Minn. Dep’t of Human Servs., 437 N.W.2d
35, 42-43 (Minn. 1989), and Cable Commc’ns Bd. v. Nor-West Cable Commc’ns P’ship ,
356 N.W.2d 658, 667 (Minn. 1984).
Cable Commc’ns explains that longstanding inte rpretive rules that interpret an
ambiguous authority may be valid even without proper promulgation. 356 N.W.2d at 667.
But the Kerber rule did not interpret an ambiguous authority. As we just discussed, Minn.
Stat. § 256B.064 unambiguously gives the commissioner the au thority to determine that
allegations of fraud are credible with out a judicial determination. The Cable Commc’ns
rule of longstanding interpretive rules does not apply.
Nor does St. Otto’s Home support appellants’ position. It is true that St. Otto’s Home
held that an agency’s new interpretation of a phrase was invalid due to the agency’s failure

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to properly promulgate the rule, despite the new interpretation’s consistency with the plain
meaning of the relevant authority’s language. 437 N.W.2d at 43. But this holding was based
on the particular circumstances in that case. There, the regulated parties had received
significant benefits for four years unde r—and had made decisions based on—one
interpretation of the rule and would have had the “rug quickly pulled from under them by
a new interpretation of that rule.” Id. at 45. No similar reliance interest is present here:
appellants did not allege that they engaged in conduct based on the belief that DHS would
only suspend their Medicaid reimbursement up on a judicial determination of probable
cause. Thus, it is appropriate for the plain meaning of the statute to apply.
In sum, the district court did not err by determining that DHS’s implementation of
a temporary suspension based on the commissi oner’s determination of an allegation of
fraud was within the plain meaning of the statute and not an ultra vires action.
Because appellants’ complaint failed to set forth a legally sufficient claim for relief,
we affirm the thorough and well-reasoned de cision of the district court dismissing
appellant’s complaint.
Affirmed.