Attorney General Mayes Sues Federal Government Over Unlawful Implementation of Medicaid Work Requirements for Medically Frail Individuals

PHOENIX — As part of a coalition of 24 attorneys general and two governors, Attorney General Kris Mayes today announced 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.

"Medicaid exists to protect the most vulnerable Arizonans, and this interim final rule unlawfully undermines that protection,” said Attorney General Mayes. “It ignores the law and puts medically frail people at risk of losing the healthcare they depend on. Arizonans otherwise eligible for coverage shouldn’t lose access to their healthcare because of unnecessary red tape."

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.

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.

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.

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

A copy of the complaint is available.