The late mother-in-law of Sen. Edward W. Brook (R-Mass.) fraudulently collected $72,531.75 in Medicaid payments from 1972 to 1977, according to a state Bureau of Welfare auditing report.

The investigation has so far found no evidence to refute Brooke's continued assertions that he did not know Teresa Ferrari-Scacco was on Medicaid, according to published reports here.

The state Fraudulent Claims Control Commission, including the state attorney general, welfare commissioner and secretary of administration and finance, are to meet today to decide whether the senator or his former wife, Remigia, should be prosecuted in connection with the alleged fraud.

The bureau's findings show that Remigia Brooke and one of the couple's two daughters prepared most of the Medicaid application forms, according to published reports. Which daughter was not specified. However, the Boston Globe quoted Brooke's daughter, Remi Petit, as saying "he [the senator] told her [Mrs. Brooke] to go down and sign the forms the best she could."

"It's a regular welfare fraud case," Assistant Attorney General Thomas Kiley said. "It was false welfare application, but whether or not there are other indictable offenses I don't know yet. We obviously can't prosecute the mother-in-law."

The attorney general could file civil charges to recover the funds paid to Ferrari-Scacco or criminal charges on a general conspiracy to defraud the government, Kiley said.

The investigation is also to be reviewed by the U.S. attorney's office here and the U.S. Department of Health, Education and Welfare to determine whether federal law has been violated.

The report was turned over to the Massachusetts attorney general last Friday.

Under state and federal welfare regulations persons with assets over $2,000 are ineligible for Medicaid benefits. Ferrari-Scacco, however, collected the funds after receiving a $100,000 insurance settlement in 1972 for an automobile accident that left her paraplegic.

The state welfare department on June 8 filed a motion in court listing itself as a creditor to Ferrari-Scacco's estate.

Sen. Brooke, who handled the insurance settlement for his late mother-in-law and her administered those funds, filed a complaint in Middlesex Probate Court the same day, stating that he thought she was covered by Blue Cross-Blue Shield medical insurance and by Medicare, which places no limit on assets.

The senator filed check with the court for $39,198, which he said was the balance of her insurance fund, and he noted that the money would be available for reinbursement to the state if it found she had improperly collected Medicaid benefits.

"The senator feels that report has vindicated him; that the statements he made in June were correct," an aide to Brooke said. "It is not true that the senator knew anything about his mother-in-law being on Medicaid, and she had stated that all along."

Brooke faces an increasingly tougher primary election in just four weeks in his bid for reelection to a third term.

The issue of the Ferrari-Scacco estate, the money in it and Brooke's handling of it came to light, along with allegations of income tax irregularities, during a bitter divorce fight between the Brooks. Both daughters gave depositions against their father. The divorce has since been resolved.