Minnesota Sues Oz and Kennedy Over $243 Million in Withheld Medicaid Funds

Minnesota Attorney General Keith Ellison and state Human Services Commissioner Shireen Gandhi sued the Trump administration on March 3, 2026, in federal district court in Minneapolis, seeking a temporary restraining order against the withholding of $243 million in Medicaid funds. The deferral was part of a $259 million hold announced by Centers for Medicare and Medicaid Services Administrator Mehmet Oz; the suit also names Health and Human Services Secretary Robert F. Kennedy Jr. The administration cited noncompliance tied to fourteen service categories it flagged as high-risk for fraud. The state said the withheld sum represents roughly seven percent of its quarterly Medicaid budget and affects coverage for about 1.2 million residents.

The complaint argues that the administration deferred the money without giving the notice of noncompliance or the opportunity to cure that federal Medicaid law requires, and that imposing conditions retroactively exceeds the agency's statutory authority. The case sits in a broader pattern of federal funding held back from states over policy disagreements.

Minnesota asked for a temporary restraining order at filing; the record reviewed does not report a ruling.