Image: Minnesota Attorney General Keith Ellison testifies during a Senate Homeland Security and Governmental Affairs Committee hearing in February. (Tom Williams/CQ Roll Call)

Minnesota sued the Trump administration late Monday for withholding $243 million in payments to the state over allegations of fraud within the state’s Medicaid program.

In the lawsuit, Minnesota Attorney General Keith Ellison argues that the Trump administration’s actions violate the Fifth Amendment’s right to due process as well as the Administrative Procedures Act’s prohibition against arbitrary and capricious actions by federal agencies. The suit is in response to a move last week by Vice President JD Vance to indefinitely pause, or defer, allocated federal funding.

While there is a typical process that can result in deferred funds, “deferral has never been used to categorically deny funds to a state across entire service areas, as is being done here,” Minnesota argues in the suit. Minnesota says it has only heard vague assertions of noncompliance from the federal government despite the state’s Medicaid fraud rate being “dramatically lower” than the national average, according to the Centers for Medicare & Medicaid’s own reporting.

More than 1.1 million Minnesota residents are enrolled in Medicaid, including 42 percent of the state’s children, with the federal government paying for more than half of the cost, according to the state. The $243 million amounts to a 7 percent cut across the board to the state’s Medicaid program, the Minnesota Department of Human Services estimated.

“Unless the deferral is quickly reversed, the state will be irreparably harmed,” the suit says.

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