Judge Denies Preliminary Injunction in Medicaid Work Requirements Case
By Sabrina McCrear / July 30, 2026
A federal judge in Massachusetts has denied 26–25 states’ request to block the implementation of Medicaid work requirements set for January 1, 2027, leaving the rules in place while the underlying lawsuit proceeds.
Richard G. Stearns of the U.S. District Court for the District of Massachusetts denied a motion for a preliminary injunction in Commonwealth of Massachusetts et al. v Oz et al., a lawsuit brought by 25 states and the District of Columbia challenging portions of CMS' interim final rule implementing Medicaid work requirements.1 As a result, the rule stays in effect while the underlying lawsuit continues.
Stearns based the ruling on the states' failure to demonstrate irreparable harm, noting that CMS has agreed to reimburse 90% of states' costs to implement the rule and that the decision doesn't reflect any view on the underlying legality of the policy.
The decision was announced July 29, 2026, following the preliminary hearing on July 28. The lawsuit addresses CMS’s Interim Final Rule (IFR)—posted for public inspection on June 1, 2026, and officially published in the Federal Register on June 3—implementing provisions of the Working Families Tax Cut (WFTC) Act of 2025, which requires Medicaid beneficiaries to report 80 hours per month of community engagement to continue receiving assistance.2 At issue is a narrower provision within that rule: the IFR's definition of who qualifies as "medically frail" and therefore exempt from the reporting requirement.
CMS said the rule was informed by evidence suggesting community engagement requirements may increase employment among some beneficiaries.2 However, the plaintiffs argue that the IFR misinterprets the WFTC Act of 2025, creating a barrier for states to protect beneficiaries who are “medically frail” from losing their coverage. Additionally, the administrative processes needed to report and enforce the requirements would place a significant strain on beneficiaries, which could also cause them to lose their coverage.
States Argue CMS Narrowed Congress' Medically Frail Exemption
The lawsuit filed on June 29, 2026, sought to block implementation of restrictive declarations from the IFR, specifically, references to those who are “medically frail or otherwise have special medical needs.”3 Individuals who fall into this category must be one of the following:
Blind or disabled.
Have a physical, intellectual, or developmental disability limiting their ability to perform one or more activities of daily living.
Have a substance use disorder or “disabling” mental disorder.
Those with “serious or complex” medical conditions.
Other individuals eligible for exemption include those who are former foster care youth, parents or caretakers of children under 14 years old, and Native Americans and Native Alaskans.2 While the WFTC Act itself defines medical frailty and specifies who is exempt, the plaintiffs argue the IFR adds a condition and that the condition must “significantly impair” the ability to comply, which narrows that statutory exemption.
The IFR defines a medically frail individual as someone who falls within one of the statutory categories and whose condition "significantly impairs the individual's ability to comply with the community engagement requirement.”
In addition to the plaintiff’s argument that the IFR limits the definition of medically frail, the lawsuit also contends that certain provisions in the IFR violate the Administrative Procedure Act because they are contrary to law and arbitrary and capricious.
What the Preliminary Injunction Could Mean for Medicaid Implementation
The list of plaintiffs includes Arizona, California, Colorado, Connecticut, Delaware, District of Columbia, Hawaii, Illinois, Kentucky, Massachusetts, Maine, Maryland, Michigan, Minnesota, New Jersey, New Mexico, New York, Nevada, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia, Washington, and Wisconsin.
The plaintiffs are asking the court to block CMS from implementing the restrictive provisions in the IFR about the definition of “medically frail” individuals. While the current proceeding is ongoing, states are still required to establish infrastructure to support the IFR, which requires states to comply by January 1, 2027.
In denying the motion, the court was not persuaded by the plaintiffs' claim about unrecoverable monetary damages incurred from staffing and implementing the IFR reporting requirements, noting that CMS represented in its opposition brief that it would reimburse 90% of states' costs to design, develop, and install the eligibility systems needed to implement the rule.1 The order states that the court “is not convinced” the plaintiffs have proven their expenditures will likely be irrecoverable.
As states continue to prepare for the implementation deadline, the court's decision could affect how they apply the “medically frail” exemption, shaping eligibility determinations and the continuity of Medicaid coverage for beneficiaries.