Attorney General Bonta Sues Trump Administration over Unlawful Implementation of Medicaid Work Requirements for Medically Frail Individuals

OAKLAND - Co-leading a coalition of 24 attorneys general and two governors, California Attorney General Rob Bonta today filed a lawsuit over the Trump Administration's unlawful implementation of new Medicaid work requirements included in the One Big Beautiful Bill Act. Specifically, the lawsuit challenges provisions of an interim final rule published by the U.S. Department of Health and Human Services (HHS) and Centers for Medicare & Medicaid Services (CMS) on June 3, 2026. Medicaid is the nation's safety net healthcare program for low-income Americans and is jointly funded by states and the federal government, with the federal government providing at least 50% of the cost of services.

Congress created exemptions from Medicaid's work requirements to ensure that people with serious illnesses and disabilities do not lose coverage or face interruptions in care. Despite months of working with states on implementation, CMS surprised states with the interim final rule, "Community Engagement Requirement for Certain Individuals," which adopted a new interpretation of key terms like "medically frail" and makes it harder for medically vulnerable individuals to be excused from the work requirements. While the work requirement provision applies beginning January 1, 2027, states must notify Medicaid recipients about these changes by August 31, 2026, and need significant lead time to prepare those communications. They cannot wait for CMS to address the deficiencies through the ongoing rulemaking process. As a result, the coalition is seeking to block implementation of the interim final rule's illegal provisions and to have them ultimately struck down. States had already made substantial investments in reliance on the plain language of the One Big Beautiful Bill Act and CMS's prior guidance and now face the risk of harsh financial penalties for noncompliance with the interim final rule.

"People with serious illnesses or disabilities already face major challenges in their daily lives - they shouldn't also have to worry about losing their healthcare because of work requirements or related barriers. That was Congress's will, and it must be respected," said Attorney General Bonta. "Time and again, the Trump Administration has pursued policies that threaten the most vulnerable among us. The interim final rule is the latest example. We won't stop fighting back."

The interim final rule makes other changes that increase administrative burdens, create unnecessary red tape, and put eligible people at risk of losing their health coverage - including those who are already working or qualify for an exemption. The rule disregards substantial evidence that should have been considered, fails to adequately evaluate reasonable alternatives, and does not give states clear or workable guidance. Past Medicaid work requirement programs have shown that added red tape causes eligible people to lose coverage, placing greater strain on state Medicaid programs, safety net providers, and emergency rooms, while increasing costs as more medically frail residents become uninsured.

States raised concerns with CMS about potential last-minute changes. For instance, Medi-Cal, California's Medicaid program, contacted CMS to express California's "significant concerns should CMS materially alter its prior guidance on Medicaid work requirements in the forthcoming interim final rule." California explained that it had "relied extensively on CMS's preliminary guidance over the last several months to design, build, and operationalize major programmatic, systems, and staffing changes in order to comply with H.R. 1 by January 1, 2027."

In today's lawsuit, the coalition alleges that the interim final rule:

• Unlawfully narrows Congress's protections for medically frail Medicaid recipients.
• Violates the Administrative Procedure Act by ignoring substantial evidence that work reporting requirements cause eligible individuals to lose healthcare coverage because of administrative barriers rather than a failure to work.
• Fails to adequately consider the significant harms that will be imposed on states, Medicaid beneficiaries, healthcare providers, and state healthcare systems.
• Unconstitutionally coerces states by imposing new compliance requirements after states had already begun implementing the One Big Beautiful Bill Act based on the statute's plain language and CMS's prior guidance.

The lawsuit was co-led by Attorney General Bonta, Massachusetts Attorney General Andrea Joy Campbell, and New Jersey Attorney General Jennifer Davenport. They were joined by the attorneys general of Arizona, Colorado, Connecticut, Delaware, the District of Columbia, Hawai'i, Illinois, Maine, Maryland, Michigan, Minnesota, Nevada, New Mexico, New York, North Carolina, Oregon, Rhode Island, Vermont, Virginia, Washington, and Wisconsin, and the governors of Kentucky and Pennsylvania.