A judge temporarily blocked HHS’ efforts to claw back billions of dollars in child care and family assistance funds aimed primarily at low-income Americans.
HHS freezes Minnesota child care funds after fraud allegations
The federal Department of Health and Human Services has frozen all child care payments to the state of Minnesota, citing “blatant fraud” at the state’s child care centers.
A federal judge on January 9 temporarily blocked the Trump administration’s attempt to freeze $10 billion in federal funding for child care programs in five Democratic-led states.
On January 6, the U.S. Department of Health and Human Services announced it was suspending the funds, a move officials said was based on the government’s allegations of fraud and misuse of tax dollars in state-run programs. They also claim, without providing evidence, that noncitizens who are not eligible for benefits may have misused the funds.
On January 8, top prosecutors from California, Colorado, Illinois, Minnesota and New York filed a lawsuit against HHS seeking restitution of about $10 billion in child care and three programs for low-income families.
The Democratic attorney general warned that millions of Americans will lose access to child care after HHS withholds federal funding for child care and family support assistance programs aimed primarily at low-income Americans.
In a two-page order issued on January 9, U.S. Judge Arun Subramanian of the Southern District of New York granted a temporary restraining order to the states, blocking the administration from freezing the funds for the time being.
“Once again, our most vulnerable families are being forced to bear the brunt of this administration’s campaign of chaos and retribution,” New York Attorney General Letitia James, who has frequently led lawsuits against President Donald Trump, told reporters.
Prosecutors filed the lawsuit in Manhattan federal court. The lawsuit seeks the return of Congress-authorized child care development funds, Temporary Assistance for Needy Families, and social welfare subsidies. Attorneys general say the federal government instituted a “shoot first, ask questions later” approach without going through the statutory process of identifying fraud and other wrongdoing.
“It’s unfortunate that the attorneys general in these Democratic-led states are less focused on reducing fraud and more focused on partisan political stunts,” HHS told USA TODAY, citing a Jan. 8 X post from Mike Stewart, the agency’s general counsel.
“HHS supports the decision to take this action to protect American taxpayers,” Stewart said. “In these states, we have identified serious concerns that require immediate review and action.”
It is unclear what charges he is facing. HHS did not respond to additional questions as Minnesota’s ongoing scandal over pandemic-era loan fraud has emerged as a partisan issue. Trump, a Republican, previously announced plans to investigate other Democratic states, including California, in the wake of the Minnesota scandal.
“We have a responsibility to protect taxpayer dollars and ensure these programs serve the families they were created to support,” Alex J. Adams, HHS assistant secretary for children and families, said in a statement. “When we have a credible concern about fraud or abuse, we take action.”
Five attorneys general said they had not been provided information on the issues raised by the administration.
Minnesota Attorney General Keith Ellison initiated his administration’s first freeze on federal funding for small business loans, citing a viral video posted by right-wing YouTuber Nick Shirley about alleged day care fraud, among other things.
“The administration broke some very clear laws in trying to make these changes,” Ellison said. “They have not provided any legal justification for freezing this funding. They are ignoring clear requirements to make cuts to these programs.”
Rob Bonta, California’s top prosecutor, said the cuts will affect “millions of Californians.” Bonta added that about $5 billion of the $10 billion in the freeze would go to the nation’s largest states.
Colorado Attorney General Phil Weiser said questions should be asked about what fraud exists and how to address it.
“This is not what this is about,” he said. “What matters is how the response is designed. (It’s) not designed to address fraud, but to punish and harm.”
The Jan. 9 order by Subramanian, an appointee of former President Joe Biden, expires in 14 days pending further orders from the court as the litigation continues.
This story has been updated with new information.
Eduardo Cuevas is based in New York City. Contact us via email (emcuevas1@usatoday.com) or Signal (emcuevas.01).
