Minnesota sues to block Trump administration’s withholding of Medicaid funds

Minnesota on Monday sued President Donald Trump’s administration in an attempt to stop it from withholding $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 issue a temporary restraining order to block the withholding for Medicaid, which is 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 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.

The Department of Health and Human Services, which includes CMS, didn’t immediately return messages seeking comment late Monday.

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 withholding imposed retroactive conditions on Minnesota’s Medicaid funding.

It said 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.