Minnesota on Monday filed a federal lawsuit against the Trump administration, accusing federal health officials of illegally withholding $243 million in Medicaid payments to the state.
Attorney General Keith Ellison and Minnesota Human Services Minnesota sued the Centers for Medicare Medicaid Services (CMS) and the U.S. Department of Health and Human Services (HHS), arguing that the funding freeze violates federal law.
The state is seeking a temporary restraining order to immediately block the action.
The dispute arises from a January notification in which the Trump administration announced that it would withhold more than $2 billion annually from the Minnesota Medicaid program for what it described as “noncompliance” with federal regulations, specifically alleged failures to “adequately identify, prevent and address fraud in its Medicaid program.”
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State officials say they have not been told specifically where Minnesota rules or what changes the administration wants to make.
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The lawsuit follows CMS’ February 25 announcement that it was deferring the payment of approximately $260 million in quarterly federal Medicaid funds to Minnesota, including about $243 million related to “unsubstantiated or potentially fraudulent” claims.
CMS said the postponement is part of a broader anti-fraud campaign and cited unusually high spending and rapid growth in personal care services, home and community-based services, and other professional services.
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Vice President JD Vance as Medicare Medicaid Washington, DC Administrator Mehmet Oz speaks about combating fraud at the White House complex in Washington, DC on February 25, 2026.
(Getty Images)
“For decades, Medicare has cost American taxpayers billions, but that ends now,” Department of Health and Human Services (HHS) Secretary Robert Kennedy Jr. said in a statement. “We are replacing the old ‘pay and chase’ model with a ‘spot and act’ strategy in real time, using advanced artificial intelligence tools to identify fraud instantly and stop improper payments before they happen.”
Minnesota contends the measure improperly uses a funding “deferral” mechanism and amounts to denying the state due process before any formal finding of noncompliance.
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The planned cuts represent about 7% of Minnesota’s quarterly Medicaid funding and could force reductions in health services for low-income residents, according to Ellison’s office.
“Trump’s way is to cut first, no matter what the law says or who gets hurt, and ask questions later, if at all,” the attorney general said. “These cuts are the latest in a long line of attempts to circumvent the law to punish Minnesotans, but just as we fought and won when they tried to illegally cut funding for child care, needy families, and our schools, today we are suing them again to enforce the law.”
Original article source: Fraud-riddled state Minnesota calls out the Trump administration for withholding $243 million in Medicaid payments.
