Judge Rules for Trump Administration in Case Over Deferred Medicaid Funds

The law does not support ‘novel’ theories that Minnesota officials have advanced, the judge said.

A sign in support of Medicaid rests in a walking device in Washington on April 27, 2025. Bryan Dozier/Middle East Images/AFP via Getty Images

The Trump administration’s deferral of hundreds of millions of dollars in Medicaid funds from Minnesota can proceed, a federal judge ruled on April 6.

U.S. District Judge Eric Tostrud denied a motion for a temporary restraining order and preliminary injunction against the Centers for Medicare and Medicaid Services (CMS) and the Department of Health and Human Services.

“The law ordinarily requires a federal court to wait until a federal agency’s proceedings are final before deciding whether the agency’s actions are lawful. Here, the proceedings Minnesota challenges have just started,” Tostrud said in a 42-page decision.

The judge also said he was ruling in favor of the administration because “some of the legal theories Minnesota asserts are novel, and the law does not support them.”

That includes no evidence supporting the contention that a deferral notice it received deprived state officials of a period of discovery and a hearing at which they could question witnesses, because regulations outline both how CMS must share information with a state and provide a state the ability to request a hearing, the judge said.

The case involves the government’s withholding of $259 million in Medicaid funds as part of an anti-fraud effort. Federal officials have asked Minnesota for documents showing the state paid legitimate Medicare claims that warrant reimbursement.

Minnesota Attorney General Keith Ellison sued in March, saying that the Trump administration should not have deferred $243 million in funds because it was already trying to withhold that and other money for alleged noncompliance with the Medicaid Act.

“By immediately denying Minnesota substantial Medicaid dollars for the very Medicaid services for which it is challenging the federal government’s January 6 claim of “noncompliance,” the deferral effectively denies Minnesota the due process it is entitled to prove that no withholding is warranted,” the lawsuit stated.

In its motion for quick relief, Minnesota officials said that the state would be irreparably harmed if the deferral were not blocked, because the lack of funds would “cripple the state budget and require the State to make cuts to Medicaid services.”

Federal authorities said in a brief in response that the deferral was merely a pause and that Minnesota would receive the funds if it provided adequate documentation.

Tostrud said that Minnesota had identified reasonable concerns regarding the deferral, including the reasons for its initiation.

“It is possible the record may support these concerns in the future,” he said. “Today it does not.”

The Minnesota Attorney General’s Office and the U.S. Department of Justice did not immediately respond to requests for comment.