Minnesota AG Keith Ellison testifies before House committee.
Photo: Anna Moneymaker/Getty Images
Minnesota Attorney General Keith Ellison and the Minnesota Department of Human Services have sued the Centers for Medicare and Medicaid Services and the Department of Health and Human Services for withholding $243 million in Medicaid payments from the state.
In February, the Trump administration said it would defer $259.5 million of quarterly federal Medicaid funding to Minnesota in a government "crackdown on healthcare fraud." This was to prevent payment of questionable claims while further investigation was completed, according to HHS.
Today, Ellison and Minnesota Gov. Tim Waltz were scheduled to testify before the House Committee on Oversight and Government Reform on a report of alleged fraud taking place within the Minnesota Department of Human Services (DHS).
Congress designed Medicaid to be a program of shared responsibility between the federal government and states, said the lawsuit filed Monday in federal court in Minnesota.
"Recently in Minnesota, however, the federal government has instead weaponized Medicaid against Minnesota as political punishment," the lawsuit said.
Medicaid provides health insurance for more than 1 million Minnesotans. Currently, a family of four may qualify for Medical Assistance if their income is at or under $42,759, according to information released by Ellison's office. The threatened cuts challenged in the lawsuit amount to roughly 7% of Minnesota's quarterly Medicaid funding.
"If these cuts are allowed to take effect, Minnesota could be required to significantly scale back healthcare services for low-income families across the state or other government services," the statement said.
Ellison and DHS are requesting that the court stop the government from deferring the Medicaid payments and will request a temporary restraining order to block what they called "this unlawful action."
The Oversight Committee today released an interim staff report, "The Cost of Doing Nothing: How Tim Walz and Keith Ellison Fueled Minnesota's Fraud Explosion."
The report is based on transcribed interviews with nine current and former Minnesota state employees and documents that include information that senior officials in Minnesota state government, including Walz and Ellison, were aware for years of widespread fraud in federally funded social services programs and repeatedly failed to take action.
"Testimony obtained by the Committee reveals that Governor Tim Walz and Attorney General Keith Ellison were aware of widespread fraud in social service programs, lied about their knowledge of the fraud, and retaliated against employees who dared to raise concerns," according to a committee statement from Chairman James Comer (R-Ky.). “Instead of protecting vulnerable Americans, they handed over billions in taxpayer dollars to fraudsters and threw their own state employees under the bus."
The House Oversight Committee said it launched an investigation in December 2025 into alleged money laundering and fraud in Minnesota's social services programs that was uncovered by the U.S. Attorney's Office for the District of Minnesota.
CMS was aware that Minnesota has been working to identify and address fraud, according to John Connolly, Minnesota Department of Human Services deputy commissioner and state Medicaid director.
"The Trump Administration's M.O. is to cut first, no matter what the law says or who gets hurt, and ask questions later, if at all," Ellison said. "My office has a strong track record of success in fighting Medicaid fraud: we've won more than 300 convictions and $80 million in judgments and restitution since I’ve served as Attorney General, and I’ve asked the Legislature for more tools and more resources to hold more fraudsters accountable. Fighting fraud should be bipartisan but the Trump Administration not only hasn't helped the fight against fraud, they've actually harmed it."
On Jan. 6, the Trump administration announced that more than $2 billion annually would be withheld from Minnesota's Medicaid funding based on vague assertions of Minnesota's "noncompliance" with Medicaid regulations, the AG's office said. Despite asking, Minnesota has not yet been told how it is noncompliant or what changes the Trump administration wants to see. Minnesota appealed the noncompliance notice.
Of the $259 million being withheld, approximately $243 million targets the same Medicaid service areas in the Jan. 6 announcement.
Email the writer: SMorse@himss.org