Minnesota on Monday sued President Donald Trump's administration in an attempt to stop it from holding back $243 million in Medicaid spending, warning it may have to cut health care for low-income families if the funding is held back.
The lawsuit asked a U.S. court in Minneapolis to block federal health officials from “immediately withholding” the money, which funds the health care safety net for low-income Americans.
The move came after Vice President
JD Vance said last week the administration would “temporarily halt” some Medicaid funding to Minnesota over fraud concerns, as part of what he described as an aggressive crackdown on misuse of public funds.
Minnesota already is appealing CMS withholding $2 billion in annual Medicaid funds announced in early January, said John Connolly, deputy commissioner and state Medicaid director for Minnesota's Department of Human Services.
Minnesota Attorney General Keith Ellison said his office has a strong track record of fighting Medicaid fraud and has won more than 300 convictions and $80 million in judgments and restitutions during his time in office.
“Trump’s attempts to look like he’s fighting fraud only punish the people and families who most need the high-quality, affordable healthcare that all Minnesotans deserve,” Ellison said in a statement. "As long as I am attorney general, I will do everything in my power to defend our tax dollars, both from fraudsters and from the Trump administration’s cruelty.”
The lawsuit names the Department of Health and Human Services and the Centers for Medicare and Medicaid Services as well as Dr. Mehmet Oz, in his official capacity as CMS administrator, and Robert F. Kennedy Jr. in his official capacity as HHS secretary.
CMS said Tuesday it does not comment on litigation. CMS asked Minnesota in a letter last week for documentation for various issues, including $243 million related to 14 “high-risk” Medicaid service areas.
Minnesota was already working to address Medicaid fraud, including with anti-fraud legislation Gov. Tim Walz announced last week, Connolly said.
Minnesota is awaiting feedback from CMS on the state's corrective action plan, “which is why we were surprised and confused" when Oz said last week that the state needed to provide one, Connolly said at a Tuesday news conference.
“Minnesota has been acting aggressively to combat fraud, and the narrative that additional, punitive funding deferrals are necessary to ensure that we are serious about this work does not reflect what we have done and what has been underway for over a year within DHS and Minnesota state government,” Connolly said.
He said it's unclear how the federal government will carry out its intentions.
Last week, Oz said, “We will give them the money, but we’re going to hold it and only release it after they propose and act on a comprehensive corrective action plan to solve the problem.”
The threatened cuts amount to roughly 7% of Minnesota’s quarterly Medicaid funding, Ellison's office said in a news release. Minnesota could be required to significantly cut health care services for low-income families or other government services if the cuts take effect, it said.
Medicaid, which is known as Medical Assistance in Minnesota, provides health insurance to 1.2 million Minnesotans who would otherwise be unable to afford it. A family of four may qualify for Medical Assistance with an income at or under $42,759, the attorney general's office said.
The lawsuit said the administration violated due process procedures because it was taking hundreds of millions of dollars without proving Minnesota's noncompliance with Medicaid regulations through discovery and an evidentiary hearing.
It alleged the administration failed to provide Minnesota with details about its decision, in violation of federal law. It cited legal precedents, including one that said Congress may impose conditions on states’ acceptance of federal funds, but “'the conditions must be set out unambiguously.'"
Minnesota's complaint further charged the administration violated the Constitution because the action imposed retroactive conditions on Minnesota's Medicaid funding.
It said immediately withholding the funds was arbitrary, capricious and part of a pattern of political punishment of Minnesota.
The administration said it would hold off on paying $259.5 million to Minnesota for Medicaid spending in the fourth quarter of 2025. Minnesota's lawsuit challenges the withholding of $243 million of this money.
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Associated Press reporter Jack Dura in Bismarck, North Dakota, contributed to this story.
