25 States + DC Sue HHS/CMS Over the Work-Requirement Rule's Narrowed 'Medically Frail' Exemption — the First Direct Legal Challenge to the IFR

A coalition of 25 states plus the District of Columbia — with California AG Rob Bonta among the co-leads alongside Massachusetts and New Jersey — filed Commonwealth of Massachusetts v. Oz (1:26-cv-12962, U.S. District Court for the District of Massachusetts) on June 29, 2026: the first direct legal challenge to CMS's Medicaid work-requirement interim final rule (CMS-2454-IFC).

The suit targets 42 CFR 435.554(c)(5)(i). H.R. 1's statute exempts people with qualifying conditions (disability, substance use disorder, serious mental illness) as 'medically frail' — but the rule adds a requirement that they ALSO prove the condition 'significantly impairs' their ability to comply with the 80-hour/month community-engagement requirement, a 'sick enough' test the states argue violates the APA and dramatically narrows who stays exempt.

The medical-frailty exemption is the single biggest determinant of how many of the ~5.6M community health center patients subject to the requirement keep coverage after January 1, 2027 — and FQHC clinical and eligibility teams are the ones who will document frailty either way. The August 31, 2026 deadline for states to begin beneficiary notification adds urgency: watch for a preliminary-injunction ruling before then.