Michigan Attorney General Dana Nessel, alongside a coalition of 23 other attorneys general and two governors, has filed a lawsuit challenging the federal government’s implementation of new Medicaid work requirements.
The legal action focuses on an interim final rule published on June 3, 2026, by the U.S. Department of Health and Human Services (HHS) and the Centers for Medicare & Medicaid Services (CMS) under the One Big Beautiful Bill Act.
The lawsuit challenges federal interpretations of exemptions for individuals with serious illnesses and disabilities. While Congress established these exemptions, the coalition contends that the newly adopted definition of terms like “medically frail” reduces the number of vulnerable individuals who qualify to be excused from the work requirements.
According to the filing, states face logistical hurdles due to conflicting timelines. The work requirements are set to begin on January 1, 2027, but states are required to notify Medicaid recipients of the changes by August 31, 2026. The plaintiffs argue that updating eligibility systems and preparing communications requires substantial lead time, and that failing to comply with the interim rule could result in financial penalties for states that have already invested in complying with the original legislation.
In a statement, Nessel outlined her office’s position on the impact of the policy.
“Medicaid exists to protect our most vulnerable, but this arbitrary rule would strip healthcare from thousands of Michiganders who would otherwise qualify and who desperately need it,” Nessel said. “On top of that, state Medicaid agencies remain in the dark on how to even administer these new requirements, which could cost Michigan millions. Anytime this administration unlawfully acts to block healthcare access, I will not hesitate to protect residents and our state’s budget.”
The legal complaint alleges that the rule increases administrative burdens, which may cause eligible individuals—including those who are currently employed or qualify for other exemptions—to lose health coverage. The coalition asserts that the rule failed to adequately review historical data showing that administrative barriers can lead to coverage losses, which in turn could increase operational costs for local emergency rooms and state healthcare programs.
The lawsuit formally alleges that the interim rule unlawfully restricts congressional protections for medically frail recipients, violates the Administrative Procedure Act by overlooking evidence regarding reporting barriers, fails to assess potential harms to state healthcare systems, and unconstitutionally coerces states by introducing new requirements late in the implementation process.
Michigan is joined in the lawsuit by the attorneys general of Arizona, California, Colorado, Connecticut, Delaware, the District of Columbia, Hawai‘i, Illinois, Maine, Maryland, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Rhode Island, Vermont, Virginia, Washington, and Wisconsin, as well as the governors of Kentucky and Pennsylvania.
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