Federal Judge Rules on Medicaid Funding Delay in Minnesota

A federal judge has declined to halt the Trump administration’s delay in Medicaid funding for Minnesota. The decision marks a temporary legal win for the White House, which is intensifying its anti-fraud measures.

Judge Eric Tostrad, appointed by President Trump, determined that the Centers for Medicare and Medicaid Services (CMS) can currently withhold over $259 million in Medicaid funds from Minnesota. The state must now provide scattered evidence that its Medicaid reimbursements are lawful before receiving any payments.

This ruling supports the Trump administration’s aggressive new anti-fraud strategy, driven in part by a recent and significant welfare fraud scandal in Minnesota.

Tostrad noted in his ruling that Minnesota’s lawsuit against this funding freeze was premature and the request for a preliminary injunction was unwarranted for several reasons.

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Some of Minnesota’s legal arguments were described by Tostrad as novel, suggesting that current law does not back them up.

The White House announced the creation of a Fraud Task Force in March, indicating through an executive order that Minnesota exemplifies significant fraud and waste. President Trump has appointed Vice President J.D. Vance to lead this initiative and take a multi-agency approach to combating fraud.

CMS, under Administrator Mehmet Oz’s leadership, has been encouraged to act more decisively in Medicaid matters by temporarily holding back reimbursements to states based on potential fraud suspicions rather than proven incidents. California, New York, and Maine may also face similar Medicaid funding deferrals, potentially leading to more legal disputes and review by federal judges nationwide.

The notorious $250 million “Feeding Our Future” fraud case out of Minnesota drew national attention in 2022 and resurfaced in 2025 following several convictions. It has since become a pivotal element in a broader debate over public benefits fraud.

This year, a state-commissioned review of Minnesota’s Medicaid program revealed vulnerabilities in 14 vulnerable Medicaid services over four years, indicating that approximately $1.7 billion could be deemed “potentially inadequate.”

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In Minnesota’s suit against the Trump administration and CMS, Attorney General Keith Ellison claimed that “the federal government…weaponized Medicaid against Minnesota as a political punishment,” alleging violations of the Administrative Procedure Act and due process.

Ellison’s complaint asserts that it is unprecedented for the federal government to defer funding categorically across an entire service area in this manner.

Citing a 2019 Supreme Court ruling, Tostrad stated that even if the Trump administration’s actions were politically motivated, that doesn’t render the Medicaid funding deferral illegal.

“Courts cannot invalidate an agency’s policy-making decisions solely because they may have been influenced by political considerations,” Tostrad articulated, emphasizing that agency policymaking is often intertwined with political factors.

No response was received from Ellison’s office regarding the ruling.