Federal judge blocks Trump administration’s Medicaid work requirement restrictions in New Jersey co-led lawsuit
TRENTON, N.J. — A federal judge has ruled that the Trump administration unlawfully restricted exemptions from Medicaid work requirements for people with serious or complex medical conditions, delivering a victory for New Jersey and a multistate coalition that challenged the federal policy.
New Jersey Attorney General Jennifer Davenport announced the ruling by the U.S. District Court for the District of Massachusetts, which found that the Centers for Medicare & Medicaid Services exceeded its authority when implementing provisions of the One Big Beautiful Bill Act.
The decision blocks federal rules that would have made it more difficult for medically vulnerable individuals to qualify for exemptions from Medicaid work requirements, potentially putting thousands of New Jersey residents at risk of losing health coverage.
“This win will help people with complex or serious medical conditions stay on Medicaid and keep their healthcare,” said Attorney General Davenport. “I will keep fighting to make sure red tape does not hurt those who are already struggling to stay well and maintain their dignity.”
Davenport co-led a multistate lawsuit filed in June 2026 challenging portions of an interim final rule issued by CMS. The rule sought to narrow exemptions established by Congress for individuals considered medically frail under the federal law.
The One Big Beautiful Bill Act established Medicaid work requirements while also creating exemptions intended to protect people with serious illnesses, disabilities, mental disorders, substance use disorders and other complex medical conditions from losing coverage or experiencing interruptions in care.
However, according to the lawsuit, CMS attempted to impose an additional requirement that states determine whether a person’s medical condition significantly impaired their ability to work before granting an exemption.
The court determined that CMS lacked the legal authority to impose that additional condition, finding that the agency’s interpretation improperly narrowed the categories of individuals eligible for the medical frailty exemption.
As part of its decision, the court vacated the challenged language, issued a permanent injunction and granted the plaintiff states a six-month stay of enforcement to accommodate potential errors or delays associated with implementing the required changes.
New Jersey officials warn of potential coverage losses
According to the New Jersey Attorney General’s Office, the federal rule could have caused thousands of medically vulnerable residents to lose access to health care despite remaining eligible for Medicaid.
State officials argued that the additional requirements would have increased administrative burdens, created unnecessary paperwork and made it more difficult for people with serious medical conditions to maintain their coverage.
The restrictions also could have affected individuals who were already working or otherwise qualified for exemptions but faced additional documentation requirements under the federal government’s interpretation of the law.
Medicaid is a jointly funded federal and state health insurance program that provides coverage to eligible low-income Americans. The federal government pays at least 50% of the cost of covered services, with states contributing the remaining share.
The Attorney General’s Office said previous Medicaid work requirement programs have demonstrated that additional administrative requirements can result in eligible individuals losing coverage, placing greater pressure on state Medicaid systems, safety-net health care providers and hospital emergency departments.
State officials also warned that coverage losses among medically vulnerable residents could increase health care costs as more people become uninsured and seek treatment through emergency services.
Multistate coalition challenged federal rule
Davenport co-led the lawsuit with California Attorney General Rob Bonta and Massachusetts Attorney General Andrea Joy Campbell.
The coalition included attorneys general from Arizona, Colorado, Connecticut, Delaware, the District of Columbia, Hawaii, Illinois, Maine, Maryland, Michigan, Minnesota, Nevada, New Mexico, New York, North Carolina, Oregon, Rhode Island, Vermont, Virginia, Washington and Wisconsin, along with the governors of Kentucky and Pennsylvania.
New Jersey was represented in the case by Deputy Solicitor General Shankar Duraiswamy, Senior Counsel Samuel Dolinger, Deputy Attorney General Jake Mazeitis and Deputy Attorney General Geoffrey McGee.
The ruling prevents enforcement of the challenged interpretation of the medical frailty exemption and requires the federal government to implement the Medicaid work requirement provisions in accordance with the court’s decision.
