A federal judge has denied a St. Paul nonprofit's legal efforts to rejoin Minnesota's federal child nutrition program.
Partners in Nutrition sought to reverse the Minnesota Department of Education's decision to terminate the organization as a meals program sponsor after news broke about an alleged multimillion-dollar food fraud scheme in Minnesota.
On Tuesday, U.S. District Judge John Tunheim denied Partners' request for a temporary restraining order, which sought to lift restrictions placed on the organization. Tunheim wrote in his order that the Education Department didn't violate federal rules by terminating the nonprofit from the program.
Kevin Burns, spokesman for the Education Department, said in a statement Wednesday that the state agency is "pleased with the judge's decision."
"We continue to provide diligent oversight of all the USDA child nutrition programs," he said. The U.S. Department of Agriculture funds the meals programs, and the state Education Department administers it in Minnesota.
Partners in Nutrition's attorney, Mark Weinhardt, said in a statement that the nonprofit is evaluating its options and looking forward to the outcome of two other challenges to the Education Department's actions.
Partners in Nutrition, which operates under the name Partners in Quality Care, was one of the top sponsors of the meals program in Minnesota alongside Feeding Our Future, which is at the center of federal charges announced last month in an alleged $250 million fraud scheme.
No one at Partners in Nutrition has been criminally charged, but FBI search warrants unsealed in January named the nonprofit as a sponsor to three subcontractors that investigators alleged spent "little, if any" money on buying food or providing meals to children.
Partners in Nutrition leaders have said they immediately cut ties with those entities.
Partners in Nutrition, which started sponsoring meal programs in 2016, received more than $190 million in 2021, up from $20.5 million in 2020, according to the Education Department. Aimee Bock, the leader of Feeding Our Future, had worked at Partners before starting her own organization.
The Education Department suspended payments to Partners in Nutrition in January after the search warrants were unsealed. Partners in Nutrition's leaders argued that the Education Department rushed to cut its reimbursement payments, requiring them to comply with procedures that were outside federal rules. An internal appeals panel at the Education Department agreed in May that the department hadn't given the nonprofit proper notice and a chance to fix any perceived problems.
But later that month, the department terminated Partners from the meal program, citing a May 20 unsealed search warrant that tied Partners and one of its board members to the fraud investigation.
Partners sued the state in September, claiming the Education Department had illegally forced them to suspend operations. Partners argued in court that it "will not be around to fight to end the administrative overreaches" from the department without court action, and it said the department had persisted in punishing the organization "administratively for crimes it did not commit."
Tunheim wrote in his order that if Partners prevailed in its case, it would receive the reimbursements it is owed, while if it's proven that the organization participated in the fraud scheme, the Education Department may never recoup the funds.
"If Partners is indeed connected to the fraud, as the unsealed affidavits allege, [the Education Department]continuing to funnel money to an entity that knowingly or blindly served as a passthrough for the fraud is not in the public interest," he wrote.
The Education Department argued in court that the USDA gives state agencies discretion in regulating the program.
Partners still has another chance to reverse the termination, appealing to the Education Department's internal review panel, which is expected to make a decision by Oct. 14.
Partners has also challenged a separate action by the Education Department to deny most of Partners' subcontractors' reimbursement claims last fall. An internal appeals panel rejected the nonprofit's arguments, and that case is now at the Minnesota Court of Appeals.