Medicaid freeze ends 25-year care firm
Avalon Home Care closed in June after DHS stopped payments, despite two state agencies declining to investigate fraud claims.
By Nathan Reed ·
Avalon Home Care ceased operations in June 2026, ending a 25-year run in Anoka, Minnesota, due to a prolonged halt in state Medicaid reimbursements.
Owner Jonathon Hansen stated that the Minnesota Department of Human Services, or DHS, stopped paying for services in April 2026. The agency cited a credible allegation of fraud as the reason for the payment freeze.
Hansen reported that the closure resulted in 160 job losses. Additionally, 99 patients experienced disruptions to their care services.
Hansen filed a lawsuit arguing that the payment hold continued for months without a clear explanation or an active criminal probe. Court records indicate that two state agencies turned down DHS referrals to investigate the company.
Emails included in those filings show the Minnesota Attorney General’s Medicaid Fraud Control Unit, or MFCU, declined referrals in June and September. The unit stated that DHS provided limited new information during both instances.
The Attorney General’s office confirmed on Friday that the MFCU received several referrals regarding Avalon. A spokesperson noted that declining a criminal investigation does not prove a provider is free of error. They explained that the standard for criminal fraud charges is higher than what DHS needs for administrative action regarding waste or abuse.
The Minnesota Bureau of Criminal Apprehension, or BCA, said it forwarded a July referral to the MFCU. The BCA stated it has not received a request for assistance from the Attorney General’s office since that time.
A DHS spokesperson said on Friday that details about open investigations or payment holds are protected by state law. The agency said it acts aggressively to prevent fraud and shuts off funds when credible allegations emerge.
Hansen said DHS has not specified the exact allegations against his business. He noted that he spent $200,000 in legal fees to understand the reasons for the freeze.
A Ramsey County judge denied Hansen’s request to force DHS to release the withheld money. The judge wrote that DHS’s obligation to do so is not clear and indisputable. The ruling also noted concerns that the payment withholding appeared based on referrals that had not gained traction.
Hansen said he intends to appeal the court’s decision.
