Attorney General James Sues HHS for Threatening to Withhold Billions from States That Refuse to Discriminate Against Transgender People

January 13, 2026

NEW YORK - New York Attorney General Letitia James today led a coalition of 11 other attorneys general in suing the U.S. Department of Health and Human Services (HHS) for unlawfully conditioning hundreds of billions of dollars in federal funding on states' agreement to discriminate against transgender people. Under a new HHS policy, recipients of federal health, education, and research funding must certify compliance with a presidential executive order that seeks to deny the existence of transgender people and impose rigid, unscientific definitions of sex. HHS threatens to terminate grants, demand repayment of funds already spent, or pursue civil or criminal penalties against any state or institution it deems to be non-compliant. Attorney General James and the coalition argue that HHS has no authority to impose these conditions and is illegally using federal funding to coerce states into discriminating against their residents, in violation of state laws protecting transgender people from discrimination. They are asking the court to step in and strike down the unlawful funding conditions.

"The federal government is trying to force states to choose between their values and the vital funding their residents depend on," said Attorney General James. "This policy threatens health care for families, life-saving research, and education programs that help young people thrive in favor of denying the dignity and existence of transgender people. New York will not abandon our values, our laws, and above all, our residents. My office is suing to block this cruel and unjust directive."

HHS's sweeping policy requires states, public universities, health agencies, hospitals, and other recipients of federal funds to certify compliance with Title IX protections, which it characterizes as "including the requirements" of the president's executive order redefining sex in a way that excludes transgender people. HHS has made this certification a condition of funding across the agency and has warned that recipients could face termination of grants, repayment of funds, and even civil or criminal liability if they are found to be out of compliance. The policy applies not only to new grants, but also to existing funding, placing ongoing programs at immediate risk. At the same time, HHS has failed to clearly explain what compliance requires, leaving states, universities, hospitals, and health care providers uncertain about which actions or policies could jeopardize their funding.

Attorney General James and the coalition argue that this policy will have far-reaching and potentially dangerous consequences across a vast spectrum of health care and social services. In New York, over $80 billion in grant funding is at risk due to these conditions. These funds help cover the costs of critical health services, support cutting-edge research, and ensure that vulnerable communities can access essential care. HHS grants also fund immunization programs, maternal and infant health services, HIV prevention and treatment, substance use and mental health programs, among many other initiatives.

The attorneys general argue that HHS lacks the authority to impose these conditions and is unlawfully attempting to rewrite Title IX through executive action and agency policy. The lawsuit alleges that the policy violates the U.S. Constitution by overriding Congress' power of the purse, breaks federal law by attaching vague and retroactive conditions to funding, and violates the Administrative Procedure Act by imposing a major policy change without notice or explanation. The policy also contradicts decades of court opinions and settled federal guidance recognizing that Title IX protects people from discrimination based on gender identity.

Attorney General James and the coalition also emphasize that the president's discriminatory executive order conflicts with laws in many states, including New York, that protect the rights of transgender individuals. New York's constitution protects the right of New Yorkers to express their gender identity free from discrimination. The New York Human Rights Law prohibits discrimination based on gender identity or expression, and the State Education Law expressly forbids educational institutions from excluding or discriminating against individuals on that basis.

The coalition is asking the court to declare the policy unlawful and block HHS from enforcing it, allowing states to continue providing health care, education, and other essential services without being forced to discriminate.

Joining Attorney General James in filing the lawsuit are the attorneys general of California, Colorado, Delaware, Illinois, Michigan, Minnesota, Nevada, Oregon, Rhode Island, Vermont, and Washington.