A federal judge has denied the Minnesota government’s request to block the Trump administration from withholding more than $243 million in Medicaid funds from the state, which is known for fraud, while an administrative review is underway
A federal judge has denied the Minnesota government’s request to block the Trump administration from
A federal judge has denied the Minnesota government’s request to block the Trump administration from withholding more than $243 million in Medicaid funds from the state, which is known for fraud, while an administrative review is underway.
On Monday, Judge Eric Tostrud, appointed by President Donald Trump, denied the state’s requests for a temporary restraining order and a preliminary injunction. He said that Minnesota officials filed the lawsuit too soon, before any Medicaid cuts were final.
Minnesota Attorney General Keith Ellison, a Democrat, sued the Centers for Medicare and Medicaid Services in early March after the Trump administration stopped the state’s Medicaid payments because too many Medicaid dollars were being stolen from state-run social services programs.
CMS had started an administrative process that required Minnesota to send in paperwork showing that the deferred amounts would be paid out to valid reimbursement claims. Minnesota can’t get to these funds during the back-and-forth verification process.
Ellison filed the case Minnesota v. Oz to force CMS to restore Minnesota’s Medicaid funding in the meantime. He said that the funding freeze is a political punishment against the state that is being done under the guise of preventing fraud.
Tostrud said this week that a federal court usually only steps in when an agency’s decision is final. He also said that “Minnesota has recognized it has a serious fraud problem.”
“Minnesota’s request for a preliminary injunction depends on assuming that predicted future events come to pass,” Tostrud wrote. “As a rule, the law does not allow a preliminary injunction to be issued based on assumptions like these.”
The deferral proceedings that Minnesota is challenging “just started,” Tostrud said, and they have yet
The deferral proceedings that Minnesota is challenging “just started,” Tostrud said, and they have yet to determine whether the flagged funds can be disbursed.
CMS’s Feb. 25 deferral notice simply identified questionable billing from certain care providers and asked that Minnesota accordingly provide documentation to support the disbursement of the funds in question.
“CMS, in other words, identified concerns and requested documents,” Tostrud continued. “It did not express a conclusion that these claims or any part of them would be disallowed.”
Tostrud, however, acknowledged that “Minnesota credibly complains that the federal government’s deferral is historically unprecedented in its size and timing,” though he concluded that the deferral likely complies with federal regulations.
In its complaint, Minnesota asserted that deferrals typically serve as an auditing tool focused on a specific claim, “not … wide swaths of Medicaid funding,” and that it was unusual for CMS to withhold and defer funding at the same time, especially for a single state.
“Unless the deferral is quickly reversed, the state will be irreparably harmed,” Ellison’s office claimed. “The administration has already stated that the deferral will recur every quarter, crippling the state budget.”
Tostrud said that federal rules don’t say how much money can be put off at once, and they don’t stop CMS from going after both deferrals and payment pauses against one state at the same time.
The judge also talked about what Vice President JD Vance, the Trump administration’s “fraud czar,”
The judge also talked about what Vice President JD Vance, the Trump administration’s “fraud czar,” had said before: that the federal government needed to “turn the screws on [Minnesota] so that they take this fraud seriously.”
Tostrud also looked at the announcement from CMS Administrator Mehmet Oz regarding the delay.
“This quarter-billion-dollar deferment is hopefully going to get on the radar screen for the state of Minnesota and make sure they are responsive to our requests,” Oz stated at the time.
In its initial filing, Minnesota argued that Oz and Vance suggested that the deferral, which is intended to be backward-looking, took into account future funding considerations: “Defendant Oz and Vice President Vance made clear that the only way for Plaintiffs to recoup the withheld money is for [the Minnesota Department of Human Services] to act on a corrective action plan that meets their approval.”
Tostrud said Oz’s and Vance’s comments “concern the possibility of future deferrals and sometimes seem to muddle the regulatory distinctions between deferrals and withholdings.”
However, he said their statements do not indicate that the Trump administration acted in bad faith or is improperly trying to compel compliance.
“All of this is not to say that Minnesota cannot prevail,” Tostrud added. “Minnesota has identified reasonable legal concerns regarding the deferral’s nature and scope and the federal government’s motivations for initiating it. It is possible the record may support these concerns in the future. Today it does not.”
