Minnesota filed a lawsuit against the Trump administration after it withheld $243 million in medicaid payments, a move the state claims is illegal.
According to Minnesota Attorney General Keith Ellison and the Minnesota Department of Human Services (DHS), the state is victim to “political punishment.”
“Impatient that it cannot withhold the $2 billion until Minnesota is provided a hearing and other due process, the Administration ‘deferred’ $243 million from the State on February 25, 2026,” the lawsuit says, adding that the deferral “effectively denies Minnesota the due process it is entitled to prove that no withholding is warranted.”
“The Trump Administration’s M.O. is to cut first, no matter what the law says or who gets hurt, and ask questions later, if at all. These cuts are the latest in a long series of efforts to go around the law to punish Minnesotans — but just as we fought back and won when they illegally tried to cut funding for childcare, hungry families, and our schools, we are suing them again today to make them follow the law,” Ellison said in a statement. His office noted that the February 25 deferral is “more than 15 times larger than any past deferral Minnesota has been issued.”
The lawsuit comes as the administrator for the Centers for Medicare and Medicaid Services, Dr. Mehmet Oz, said the Trump administration’s move seeks “to ensure that the state of Minnesota takes its obligations seriously to be good stewards of the American people’s tax money.”
“This is not a problem with the people of Minnesota, it’s a problem with the leadership of Minnesota and other states who do not take Medicaid preservation seriously,” he noted.
A recent Minnesota audit found that between July 1, 2022, and December 31, 2024, the Department of Human Services’ (DHS) provided more than $425 million in grants to 830 organizations, many of which were nongovernmental. Furthermore, the audit found “incomplete financial reconciliations for 63 of 71 grant agreements,” including a lack of or no documentation. Auditors also discovered that some documentation appeared to be created after the report, suggesting that files were generated retroactively to show compliance.
