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Who Are The Biggest Fraudsters In Minnesota (And America)? They're Not Somali

It’s been seven weeks since the Department of Justice stepped up its investigation of fraud at Minnesota social service organizations run by citizens of Somali descent. The Department of Homeland Security simultaneously stepped up the Immigration and Customers Enforcement (ICE) presence in the Twin Cities.

The results thus far? One dead, one wounded, and the entire Somali community living in fear after being demonized by President Trump with statements like “we don’t want them in our country” and “they should go back to where they come from.”

A horrified public has rightfully focused on the murderous tactics and egregious civil rights violations perpetrated by out-of-control ICE agents. Nightly newscasts are filled with scenes of masked, camouflaged, machine gun-toting men patrolling the streets of Minneapolis; making warrant-less stops of anyone with brown skin; arresting those not carrying proof of citizenship; and throwing tear gas canisters at peaceful demonstrators. They’ve even entered a hospital and shackled a severely injured patient to his bed. The 2,000-plus ICE agents now in the city is nearly four times the size of the local police force.

Why are they there? The Trump administration was given cover to step up its attacks on the Somali immigrant community by national media coverage of longstanding fraud investigations in the state. The Minnesota Attorney General has issued three indictments over the past two years, while the U.S. Attorney in Minnesota brought one, all begun during the Biden years.

In the wake of its latest incursion, the administration announced it would block all federal social service funding to five blue states including Minnesota, a move that was temporarily blocked in a New York federal court earlier this month.

Media attention drove events

The national media got the ball rolling in late November when a story in the New York Times reported on three fraud schemes at programs that feed the hungry and provide day care, allegedly costing taxpayers over $1 billion. The three cases mentioned totaled a third of that amount. A key paragraph near the top claimed “Minnesota’s fraud scandal stood out even in the context of rampant theft during the pandemic, when Americans stole tens of billions through unemployment benefits, business loans and other forms of aid, according to federal auditors.”

The link (which was included in the original Times story) leads to a Government Accountability Office report that estimated there was at least $100 billion in pandemic-era unemployment insurance fraud. The GAO blamed all 50 states for failing to police the program. That level of fraud would be 400 times greater than the largest fraud scheme so far confirmed in a Minnesota court room.

Meanwhile, the Trump administration is paring back fraud enforcement in red states. Last October, it put on hold a Biden-era order that Mississippi repay $101 million for welfare embezzlement. Agency officials — not patients, not providers — had involved former professional football quarterback Brett Favre in a scheme to channel temporary assistance families money into a fund for building a volleyball stadium on the University of Southern Mississippi campus.

The Times followed up two weeks later with coverage of a press conference held by acting U.S. Attorney Joseph H. Thompson, who was appointed by Trump last June. He announced a new probe of 14 Medicaid-funded programs for suspicious billing practices. Half of the $18 billion spent by those programs since 2018 was stolen, he said, although no specific allegations were included. “What we see in Minnesota is not a handful of bad actors committing crimes,” he said. “It is staggering industrial-scale fraud.”

Then, the day after Christmas, a conservative YouTube influencer named Nick Shirley posted a widely-seen video highlighting shuttered day care centers and Somali daycare workers refusing him entry. A few days later, Homeland Security secretary Kristi Noem, whose department has no jurisdiction over the allegedly defrauded programs, called for a “massive investigation of daycare and other rampant fraud” and unleashed ICE agents to begin investigating sites based on tips from the YouTube video, not FBI investigators, according to CBS News.

There is no doubt greedy operators ripped off Minnesota safety net programs. Several of the nearly 100 people under investigation have already pleaded guilty. Democratic Gov. Tim Walz, who dropped out of his re-election campaign in the wake of the scandals, clearly was slow to heed warnings from local and federal investigators about the large fraud schemes in the state’s programs.

Who’s the biggest alleged fraudster in Minnesota?

But if federal officials in Minnesota really want to go after industrial-scale fraud, they ought to step up their slow-motion investigation of UnitedHealth Group, the nation’s largest health insurer, whose headquarters just happens to be in Minneapolis.

They could start by taking a look at the UnitedHealth Group Abuse Tracker run by the American Economic Liberties Project, a anti-monopoly watchdog organization founded by Fordham Law School professor Zephyr Teachout. UHG, according to the tracker, has been accused of myriad wrongdoings in recent years, including:

Twelve reports and five lawsuits for upcoding and overbilling the federal government;
Three reports and one lawsuit for violating patient privacy;
Fifteen reports and five lawsuits for denying patient care based on cost instead of medical necessity;
Fourteen reports and seven lawsuits for steering patients and providers toward UHG owned subsidiaries in order to increase company profits; and
Eight reports of corrupt practices.

UHG, in its responses to news organizations and in court filings, denied every finding and claim, including those in last week’s report from Sen. Chuck Grassley’s office. After reviewing 50,000 internal documents subpoenaed by the Judiciary Committee, the report found UnitedHealthcare, UHG’s insurance arm, maintained a huge workforce dedicated to inflating risk-adjustment codes on its 8 million Medicare Advantage customers. This upcoding allegedly bilks the government of billions of dollars annually.

Outside analysts and the Medicare Payments Advisory Commission have repeatedly accused private insurers of overcharging the Centers for Medicare and Medicaid Services (CMS)’ MA program, which now covers over half of all seniors. The most recent estimates suggest over-billing based on upcoding needlessly costs taxpayers $84 billion a year.

Yet federal prosecutors bungled the one whistleblower case that finally came to trial after a decade of legal maneuvering. A special master ruled last February that the Department of Justice had failed to prove the insurance giant deliberately exaggerated how sick its Medicare Advantage patients were to increase federal reimbursements.

But there are still numerous cases pending against UHG and other MA providers. Multiple investigations have been announced by the DOJ. Just last week, Kaiser Permanente, a leading Medicare Advantage insurer in California, agreed to pay $556 million to settle claims it bilked Medicare of $1 billion through upcoding between 2009 and 2018. The case took years to make its way through the courts.

Fraud is widespread

If one needs more evidence that the fraud uncovered in Minnesota is not out of line with typical health care and social service fraud schemes across the country, one need only look at the settlements in cases compiled by Bass, Berry & Sims, a law firm with an extensive practice defending corporate clients against False Claims Act suits. (The False Claims Act is a Civil War-era statute that allows whistleblowers and their lawyers to keep as much as a third of money recovered from firms convicted of defrauding the federal government.)

In just the first half of last year:

Walgreens agreed to pay at least $300 million to resolve allegations its stores illegally filled invalid prescriptions for opioids and other controlled substances that were reimbursed by federal health care programs.
Gilead Sciences agreed to pay $202 million to resolve allegations that it funneled kickbacks in the form of speaker fees, costly meals, and travel expenses to physicians to induce them to prescribe its HIV medications.
California-based Seoul Medical Group and an affiliated radiology practice agreed to pay $62 million to settle claims it fraudulently increased Medicare Advantage reimbursements by falsely claiming patients had a severe spinal condition.
A Pfizer subsidiary agreed to pay nearly $60 million to resolve allegations that it provided remuneration to physicians in the form of speaker honoraria and lavish meals in order to induce prescriptions of its migraine medication.
Fresno-based Community Health System agreed to pay $31.5 million to settle allegations that it paid bonuses to physicians and subsidies for electronic health record systems in exchange for referrals and subsidies. The alleged illegal inducements included providing referring physicians with expensive meals, alcohol, and cigars provided in a lounge on premises at the health system.

New York’s St. Vincent Catholic Medical Centers agreed to pay $29 million to resolve allegations that it kept the money despite learning that it had overcharged the Department of Defense for health care provided retired military members and their families.
C.R. Bard Inc. and its affiliates agreed to pay $17 million to resolve allegations that they provided free samples and discounts to urology practitioners in a kickback scheme aimed at inducing use of the company’s catheters.

And, last June, in Minneapolis, NUWAY Alliance, a substance use disorder treatment provider, agreed to pay $18.5 million to resolve allegations that it double-billed for treatment services and paid Medicaid patients to seek outpatient care.

The last case, the only one settled in Minnesota in the first half of last year, involved a non-profit organization whose last federal tax filing showed $28 million in annual expenses. Its CEO, David Vennes, earned $619,000 in 2024. None of the 12 high-paid executives and 8 board members listed on the non-profit’s 990 form have Somali last names.

During last year’s second half, the U.S. Attorney’s office in Minnesota indicted eight Somali residents for stealing millions of dollars from the state’s housing stabilization fund. How much was siphoned from the $300 million in grants made to their organizations from that fund since 2000 was not specified in the press release, but it would probably fall within the lower range of thefts that make various organizations’ tracker lists.

It’s not the immigrants; it’s not the poor

So is Minnesota a hotbed of fraud compared to other states? Does it call into question, as other media accounts have suggested, the very idea that a more generous safety net like the one in that state invites fraud?

No, sadly, the problem of fraud is the same there as it is everywhere, even in redder-than-red places like Mississippi. It is as American as apple pie (it’s the government’s money, so it’s nobody’s money). It is inadequately policed by federal and state officials, Democrats and Republicans alike.

The nation’s tattered social safety net, under assault by the Trump administration and shrinking daily, remains prone to abuse by unscrupulous operators. Medicare and Medicaid are especially juicy targets. Most of the perpetrators are lodged within large corporations run by white executives with excellent and expensive legal representation.

A real crackdown on fraud would go after those big fish first.

Merrill Goozner, the former editor of Modern Healthcare, writes about health care and politics at GoozNews.substack.com, where this column first appeared. Please consider subscribing to support his work.

Reprinted with permission from Gooz News

Universe Of Fantasy: A Tour Of Trump's Alternate Reality Government

Donald Trump is surely the most prolific and brazen liar ever to occupy the White House. From day one of his first term, when he confabulated wildly about the crowd size at his inauguration, he has fabricated nonsense so promiscuously that people—supporters and antagonists—have just come to assume you can’t trust what he says.

But in the last few weeks, Trump and his administration seem to have broken through the lying speed of light, emerging into a whole new universe of bullshit. From the daily diet of blatant lies, fibs, and fabrications, they’ve taken up occupancy in a stratosphere of crazy, as if arriving through a wormhole from the other side of the universe. They’re now regularly peddling assertions that boggle the mind and leave commentators speechless—provoking a “what planet are you from?” kind of response.

What these claims provoke is less indignation than bewilderment—a sense of “I don’t even know where to begin.” In the last few days, two of the country’s most sure-footed cable hosts basically threw up their hands confronting Administration statements that vaulted over false or even ridiculous to the utterly bizarre.

On CNN, Kaitlan Collins—trying to make sense of yet another sweeping claim about what the Justice Department had or had not “authorized”—responded with exasperation: “None of what they’re saying lines up with the actual record, and I don’t know how else to say it.” (Over the weekend, Collins responded to Trump’s asinine tirade calling her “stupid and nasty” with grace and good humor.)

A day later on MSNBC, Nicolle Wallace offered a similar response as she confronted the latest round of reality-defying explanations from senior officials. “This is just not connected to reality as the rest of us understand it,” she said, before adding, almost incredulously, “I mean… what are we even talking about here?” Her guest Miles Taylor stepped in: “They’re describing events from a universe where facts operate under different rules.”

Consider some of these recent extraterrestrial dispatches that Trump and his senior aides have propounded, each one so unhinged that analysts hardly know where to begin.

• The Halligan Fantasy

The Administration continues to treat Lindsey Halligan as a fully empowered United States Attorney for the Eastern District of Virginia, despite a federal judge’s ruling (that the Administration has yet to appeal) that her appointment is invalid. The DOJ is behaving as though the ruling never happened: they continue to sign her name on indictments, even though the court has said such documents are a legal nullity—no different than if they were signed “Mary Poppins.”

• The Illusory Exculpation of Pete Hegseth

Trump now claims Defense Secretary Pete Hegseth has been “exculpated” for the deadly September 2 boat strikes. Exculpated by whom? There has been no investigation or formal findings, and only the slightest beginning of a closed-door congressional inquiry. Hegseth has miles to go before he is out of the woods for the stain of the killings on the country, which Senator Adam Schiff on Sunday called “unconstitutional” and “morally repugnant.”

How about: And the first step on that path is the release to the public of the already infamous video of the strike that Hegseth claims he didn’t order but quickly adds that he “would have made the same call myself.”

• The Signalgate “Total Exoneration”

Hegseth’s separate claim—that the acting inspector general’s review of the Signalgate fiasco “totally exonerates” him—holds no water anywhere on the planet.

In fact, the IG found Hegseth endangered U.S. service members by transmitting imminent-strike details over an unsecured Signal chat on his personal phone, including information mirroring SECRET/NOFORN data from a CENTCOM briefing. For his part, Hegseth refused to sit for an interview, submitting only a nonresponsive written statement, the core claim of which was: “I took nonspecific general details which I determined, using my sole discretion, were either not classified, or that I could safely declassify, and created an “unclassified summary” of the USCENTCOM strike details to provide to participants of the Signal chat.”

But the IG found the details weren’t “nonspecific” at all—they tracked classified operational information. And although Hegseth claimed he could declassify the material, the IG explicitly said he could not determine that Hegseth ever exercised that authority. It is, in effect, a defense that says: the disclosure was permissible because I believed I had the power to make it permissible. More to the point, even if he had borrowed and waved Trump’s magic Mar-a-Lago declassifying wand, it would have no bearing on the finding—as inculpatory as you can imagine for a sitting Defense Secretary—that he risked putting service members in danger. Far from exonerating him, the explanation restates the problem.

• The Hepatitis-B Reversal

The Administration’s flirtation with the idea that the hepatitis-B vaccine is “not recommended” in newborns contradicts decades of CDC guidance and a more than 90 percent reduction in childhood hepatitis-B. The reconstituted ACIP panel making this move was hand-selected after RFK Jr. removed the prior members. This is medical policy by wormhole: the consensus stays the same, the data stay the same, but the conclusion suddenly flips. Public health experts predict catastrophic results—particularly for poorer newborns—and a resurgence of child-onset hepatitis B.

• The “Morally Distinguishable” Bomber

The Administration’s touting of the arrest of the January 5 bomber, Brian Cole, raises the obvious question: what distinguishes the would-be bomber from the marauders of January 6, whom Trump pardoned on his first day in office? It can’t be the potential for violence: Cole’s bombs didn’t go off, while Trump’s clemency extended to thugs who attacked Capitol officers with stun guns and nerve gas.

Here is the Planet Mongo argument Hegseth offered on Fox News for the distinction—echoed by other Administration officials: “Look, the people who were unfairly targeted have been pardoned. The bomber hasn’t been — and that tells you something.”

Everyone follow that? The difference between the January 6 pardoned marauders and the pipe-bomb suspect is that the pardoned 1000+ were pardoned. That might be a cogent response somewhere, but it isn’t on planet Earth.

And Pam Bondi’s recent answer—or more precisely, her refusal to answer—drove the point home. Asked point-blank how Cole differed from January 6 defendants, she simply ducked the question, pivoting to unrelated talking points. They’re going to need something better as the case proceeds—unless, that is, Trump hews to his otherworldly logic and pardons Cole.

• The Fantasy Economy

On the central promise that likely delivered him a second term—fixing an economy he has instead allowed to wobble and stall—Trump continues to offer the alternate-universe characterization that the economy is “flourishing,” waving away indicators of strain, volatility, and falling household confidence.

• And this just in – the FIFA Peace Prize

Finally, there must be a planet somewhere in which the notoriously corrupt soccer organization FIFA enjoys the moral authority of the Nobel Committee on Earth. Wherever that may be, Trump has proudly received the first-ever peace prize for his “historic leadership.” There is the complication that no committee actually awarded this supposed FIFA Peace Prize. FIFA doesn’t give peace prizes. It doesn’t have a peace-prize committee. It has no mechanism for conferring honors outside the world of soccer. The prize exists entirely because Trump said it did. But such critical logic is so, well, earthbound.

Taken individually, any of these might be chalked up to the familiar Trumpian stew of bluster and improvisation. As an ensemble, they represent something else entirely. This isn’t lying in the usual political sense. It is governing from an alternate reality—one in which legal authority, factual accuracy, and empirical verification are dispensable trifles.

And that is what provokes the shift in reaction among commentators. They are no longer challenging claims as much as expressing bewilderment at the absence of any shared factual universe.

The problem, of course, is that a democracy requires such a universe. Trump has always strained against that baseline, but now he and his Administration increasingly operate in a space where the laws of logic bend and the lines never cross. The rest of us—courts, Congress, journalists, citizens—are left trying to stitch reality back together in a world where the government no longer recognizes it.

The only workable response begins with declining to play by the rules of their distant planet. First, call out the move—not just the mistake. These are not ordinary falsehoods. They are claims wholly untethered from evidence, law, or logic, and the point is to overwhelm, not persuade. Institutions should say plainly when a statement has no factual substrate at all.

Second, refuse to litigate the fabricated premise. Wormhole politics depends on forcing opponents to disprove fantasies—“prove Halligan isn’t authorized,” “prove the survivors weren’t traffickers,” “prove the bomber isn’t morally distinct.” The proper move is to reject the burden-shift and insist that the Administration supply actual evidence before the claim enters serious discourse.

Holding a government to account is work enough without having to chase its claims across the universe to an entirely different planet.

Harry Litman is a former United States Attorney and the executive producer and host of the Talking Feds podcast. He has taught law at UCLA, Berkeley, and Georgetown and served as a deputy assistant attorney general in the Clinton Administration. Please consider subscribing to Talking Feds on Substack.

Reprinted with permission from Talking Feds.

'No No No No!" Treasury Secretary Roasted For Denying Inflation Under Trump

Treasury Secretary Scott Bessent on Sunday refused to admit inflation has gone up for Americans after NBC Meet The Press host Kristen Welker confronted him with the numbers.

"Inflation has gone up,” Welker said Sunday. “It's at three percent now up from two percent in April when the tariffs were imposed.”

“No, no no no,” Bessent replied. “So, inflation hasn't gone up. The one thing we're not gonna do is do what the Biden administration did and tell the American people they don't know how they feel. They are traumatized."

Bessent’s remark sparked outrage from observers who noted President Donald Trump’s administration is doing the same thing it accused its predecessor of doing — telling consumers not to believe their own pocketbooks.

As policy analyst Evaristus Odinikaeze posted on X, “the inflation went from 2 percent to 3 percent, literally and no amount of ‘no, no, no’ changes basic math.”

“Telling Americans inflation hasn’t risen right after tariffs pushed prices higher is the same gaslighting they accused others of,” Odinikaeze continued. “You don’t fight economic anxiety by denying lived reality. You solve it. But instead, Trump’s making it worse and lying about it.”

Bulwark Deputy Digital Director Evan Rosenfeld likewise argued, “Trump and Republicans have learned nothing from how badly Joe Biden and the Democrats bungled inflation.”

“Instead they’re repeating some of the same mistakes,” Rosenfeld wrote on X.

Bessent also drew condemnation after offering advice for Americans feeling the pain from Trump’s economic policies.

"You know the best way to bring your inflation rate down? Move from a blue state to a red state. Blue state inflation is half a percent higher,” Bessent told Welker.

“Scott Bessent cannot stop staying really stupid things,” journalist John Harwood said of Bessent’s suggestion.

TreasyReprinted witih permission from Alternet

How Trump's Patent Office Appointees And Big Pharma Delay Low-Cost Drugs

What’s the easiest and smartest thing a president could do right now to bring down drug prices? That’s easy. Allow quicker market entry for generic versions of biologics.

What’s the biggest thing the Trump administration has done in recent months to impact biologic prices? It made it far more difficult for biologic generics, better known as biosimilars, to enter the market.

How did that happen when the president is constantly using his Truth Social platform to brag about how much he’s doing to lower the price of drugs? He appointed leaders at the Patent and Trademark Office (PTO) who are imposing policies that will make it far more difficult for biosimilar manufacturers to challenge improperly granted patents.

They are already allowing Big Pharma companies to maintain their illegitimate patent portfolios, known as patent thickets, which they use to deny market entry to cheap, generic competitors. These delays can last for years — even decades — beyond the expiration of an initial patent.

Why is this such a big deal and such a big gift to Big Pharma? While biologics make up only two to five percent of prescriptions (estimates vary), they generated around half of the pharmaceutical industry’s $634 billion in revenue in 2024. When still on patent, the price of individual biologic treatments can reach as high as several hundred thousand dollars per year. But when biosimilars enter the market, patients and their insurers save nearly 80 percent on average, according to a recent study in Health Affairs.

Before I get into the shenanigans at the PTO and how it will delay biosimilars, allow me to share some background for those not familiar with the complexities of the pharmaceutical industry and its biotechnology offspring, which was birthed by government-funded inventions that began in the mid-1970s.

Biologics are large organic molecules produced through genetic engineering that are usually delivered through injection or intravenous drips. Many of the greatest advances in drug therapy over the past half century have been through biologics.

The genomic revolution allowed scientists to replace proteins that patients’ bodies cannot produce because they have organ failure or genetic mutations. Genetic engineers also created monoclonal antibodies that target specific cancer mutations and the blood vessels that feed tumors. Vaccines are biologics. Scientists are now working on gene therapies that may permanently repair genetic birth defects.

Producers of biologics – like all drug makers – get patents on their inventions, a right guaranteed in the Constitution (thank you, James Madison) to promote innovation in “science and useful arts.” The idea was to create a limited period that incentivized creation of new inventions, but eventually ended so patent owners couldn’t use their patent monopoly to permanently levy exorbitant prices.

Patent terms have been changed repeatedly over the nation’s history. In 1994, Congress established a 20-year term for patents that began with the date of filing, an increase from the previous 17 years. In 2010 it added a 12-year guarantee of exclusivity to biologic manufacturers, whose products often remain in development for years after the initial patents are filed.

While that add-on was controversial, potential biosimilar manufacturers embraced the bill because it finally provided them with a pathway for entering the market. They also stood to benefit from the 2011 America Invents Act, which created a streamlined process at the PTO for challenging questionable patents. Instead of long and costly litigation in federal court, patent challenges would be heard by expert judges inside the PTO at a fraction of the cost. Appeals would be heard by an internal appeals board.

Information technology’s role

The impetus for the streamlined challenge process came from leading information technology firms (Google, Amazon, Facebook, etc.) who were being besieged by so-called patent trolls, who would buy or write patents they never intended to use that were similar to cutting edge info-tech technologies. The trolls, often backed by private equity investors, used those patents to file patent infringement lawsuits against well-heeled high-tech firms who had actually developed, patented, and used similar technologies. The goal: To extract huge settlements through patent purchases or licensing fees.

One major user of the new challenge process, called inter partes reviews (IPRs), turned out to be biosimilar manufacturers, who wanted a faster and cheaper way to challenge the patent thickets being erected by Big Pharma and biotech firms. Virtually every company that produces FDA-approved biologics and small molecule drugs (pills and capsules) files follow-on patents at the PTO. Any individual product may win a dozen or more, usually involving small changes in dosages, formulations or routes of administration.

“By creating large patent portfolios, companies can make it more difficult for competitors to enter the market by increasing transaction costs and/or delaying US Food and Drug Administration (FDA) approval,” law professors Sean Tu of the University of Alabama and Ana Santos Rutschman of Villanova University wrote this month in JAMA Health Forum. “Patent thickets can also be leveraged to force competitors to settle litigation, thus delaying market entry, or to enter under unfavorable conditions (such as restricted volume entry).”

One study they cited showed 78 percent of all “new” drug patents are part of a post-approval patent thicket for an already approved drug. This tactic has slowed adoption of biosimilars to a crawl. Fifteen years after passage of the law creating a pathway for biosimilar market entry, there are still fewer than 50 on the market, despite there being over 600 FDA-approved biologics, according to the Association for Accessible Medicines, the trade group for biosimilar manufacturers.

The process sped up during the Biden administration as biosimilar manufacturers increasingly turned to the IPR process to challenge questionable patents. They were aided by the fact that the administrative process at the PTO takes only 12 months and costs about $725,000, according to another recent paper co-authored by Tu. Patent litigation in federal court, by contrast, costs on average over $6 million and takes years to resolve.

Biosimilar manufacturers started racking up an impressive IPR win rate at the PTO. Another recent study showed biosimilar manufacturers won 14 of 20 challenges that were holding up market entry for their products. They eventually won FDA approval and saved patients and their insurers tens of billions of dollars. Five are shown in the following chart.

(Note: The bottom scale (-4 to 4) represents the years before and after a biosimilar manufacturer won a patent invalidation case at the PTO. The solid lines represent five of the more expensive biologics that lost exclusivity over the past decade. In each case, the sharp drop in revenue due to lost sales to biosimilars didn’t show up until a year after the PTO ruled because the Big Pharma firm defending the patents had a year to appeal. The bottom dotted line shows how one representative biologic that didn’t face biosimilar competition more than doubled its revenue over a similar time period.)

Big changes at PTO

But the PTO reversed field this year. PTO acting director Coke Morgan Stewart, who had worked at PTO during the first Trump administration before joining O’Melveny & Myers, a major corporate law firm, began using a process she dubbed “discretionary denial” to block patent challenges. In 2024, the patent appeals board had approved nearly 75 percent of all patent challenges. By September of this year, the first under Trump, that rate had declined to 35 percent, according to another study by Tu, this time with Arti Rai of Duke University and Aaron Kesselheim of Harvard Medical School.

The scholars reviewed Stewart’s decisions and found she had created a novel rationale for dismissing patent challenges. She argued that after six years (about the average age for drug patents being challenged), the patent holder should expect they will no longer be administratively challenged. “Before 2025, the ‘settled expectations’ rationale never even existed,” Tu and his colleagues wrote. “It now accounts for a large percentage of denials and is even used when administrative review petitions raise reasonable technical grounds for invalidation.”

In September, the Senate approved John Squires to run the PTO, though he is not a registered patent attorney. He did chair the Emerging Companies and Intellectual Property practice at Dilworth Paxson LLP in Washington where he represented numerous AI, blockchain, crypto, and financial technology companies. He also made campaign contributions to both of Donald Trump’s victorious election campaigns and more recently to the Never Surrender PAC, which is one of the president’s vehicles for supporting GOP candidates in the 2026 mid-term elections.

One of Squires’ first acts after winning Senate approval was to centralize the IPR decision-making process in the director’s office, thus removing it from the experts who understood the technical issues. He also limited the length of briefs that petitioners could file. Then, in mid-October, Squires announced that “he would personally decide every IPR proceeding,” which cannot be reviewed judicially. He also declared he could issue “summary notices,” that may include little or no explanation for denials.

“By aggressively invoking discretionary denials, the USPTO is subverting an important administrative pathway that Congress specifically created to check weak patents,” Tu, Rai and Kesselheim wrote. Seven lawsuits have already been filed challenging the new policy. They call on Congress to “step in” and “explicitly prohibit denials based on non-merit-based criteria such as ‘settled expectations’.”

This Congress? Fat chance. Look for a dramatic slowdown in the pace of biosimilar adoption over the next few years and for a continuing sharp rise in consumer and payer spending on biologics, the most expensive drugs on the market.

Reprinted with permission from Gooz News

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