In March 2019, Judge James Boasberg of the U.S. District Court for the District of Columbia issued decisions that halted work requirement implementation in Arkansas and Kentucky. The rulings found that the Department of Health and Human Services had approved state waivers without adequately considering whether work requirements would further Medicaid’s statutory objectives of providing coverage to low-income populations. By that point, Arkansas had already terminated coverage for 18,164 people over seven months, primarily among individuals who were working or qualified for exemptions but could not navigate the online-only reporting system.
Those decisions fundamentally changed work requirement politics. States saw what happened when requirements were implemented and challenged. CMS revised its approval processes. The threat of litigation became itself a policy constraint, shaping state implementation choices even where no lawsuit was filed. Governors and Medicaid directors considering aggressive enforcement approaches had to weigh not just policy preferences but legal vulnerability. The shadow of Stewart v. Azar extended far beyond the courtroom.
Under the One Big Beautiful Bill Act, the legal landscape shifts dramatically. Work requirements are now statutory mandates, not waiver experiments. The legal theories that succeeded in 2018 and 2019 targeted administrative discretion in waiver approvals; with Congress directly mandating requirements, that particular avenue closes. But litigation remains a potential constraint. Implementation challenges targeting how states design and operate verification systems may succeed where challenges to the policy itself cannot. The Americans with Disabilities Act, constitutional due process, and administrative procedure law all offer potential frameworks for legal attack.
For advocates, litigation is one tool among several, neither a silver bullet nor a distraction from other strategies. For states, legal risk is one factor in implementation design, creating incentives for due process protections and accessible systems that litigation threat amplifies. Understanding the legal landscape helps all stakeholders anticipate constraints and opportunities as December 2026 approaches.
Stewart v. Azar and Its Legacy#
The litigation that defined work requirement policy originated in Kentucky. In January 2018, CMS approved Kentucky HEALTH, Governor Matt Bevin’s comprehensive Medicaid transformation that included work requirements, monthly premiums, elimination of retroactive eligibility, and removal of non-emergency transportation benefits. The approval came weeks after CMS Administrator Seema Verma issued guidance actively encouraging states to submit waiver applications for “community engagement requirements.”
Plaintiffs, represented by the National Health Law Program, the Southern Poverty Law Center, and the Kentucky Equal Justice Center, sued in federal court, arguing that CMS had failed to consider whether the waiver would further Medicaid’s core objective of providing healthcare coverage. The Administrative Procedure Act requires agencies to engage in reasoned decision-making that considers relevant factors; plaintiffs argued CMS had focused exclusively on employment objectives while ignoring projections that tens of thousands of Kentuckians would lose coverage.
Judge Boasberg agreed. In June 2018, he found the Secretary’s approval “arbitrary and capricious” because it did not adequately address projected coverage losses. Kentucky’s own application estimated the program would cause more than 95,000 people to leave Medicaid rolls by year five. Amici maintained the real figure was between 175,000 and 297,500. CMS had simply not grappled with this central issue. The court vacated the approval and remanded to the agency.
CMS responded by reopening the comment period and re-approving the waiver with modified reasoning. The second approval emphasized that while work requirements might cause coverage losses, those losses would be “dwarfed” by the 450,000 people who would lose coverage if Kentucky ended its expansion entirely, which the state had threatened to do if the waiver was denied. This fiscal sustainability argument essentially held coverage hostage: approve our terms or we’ll terminate expansion altogether.
Judge Boasberg rejected this reasoning in March 2019. Taking a cue from Chief Justice Roberts’ “gun to the head” language in the 2012 Medicaid expansion decision, Boasberg found the fiscal sustainability rationale would allow any waiver to be “coverage promoting” compared to no coverage at all. Could a state decide it didn’t wish to cover pregnant women? The blind? All but 100 people? The Secretary offered no reason his position would not allow any such results.
The same day, Boasberg vacated CMS approval of Arkansas Works, the only work requirement that had actually been implemented. Arkansas had begun disenrolling people in June 2018; by year’s end, 18,164 had lost coverage. The state argued the court should allow the program to continue while CMS reconsidered, but Boasberg disagreed. The harm to those losing coverage outweighed disruption to the state’s data collection efforts. Arkansas Works could not stand.
The legal template was now established. CMS could not approve work requirements without genuinely analyzing their coverage effects. The issue was not whether work requirements were good policy but whether the Secretary had followed proper administrative procedures in approving them. This seemingly technical distinction proved fatal across multiple cases.
New Hampshire’s waiver, which would have required 100 hours monthly of work or community activities for most non-disabled adults, was vacated in July 2019 on identical grounds. CMS had still not contended with the possibility that work requirements would cause substantial coverage losses. The D.C. Circuit Court of Appeals affirmed the lower court decisions in February 2020, and the Supreme Court declined to hear the cases after the Biden administration withdrew the waivers.
The impact extended beyond the courtrooms. States that had received waiver approvals but not yet implemented faced uncertainty about whether to proceed. States considering applications calculated litigation risk. The Trump administration had approved work requirement waivers in thirteen states, but by the time the COVID-19 pandemic triggered continuous enrollment requirements in March 2020, no state was actively implementing Medicaid work requirements under federal waiver authority.
The Changed Legal Landscape Under OB3#
The One Big Beautiful Bill Act transforms the legal framework surrounding work requirements. What was once administratively permitted through waiver discretion is now congressionally mandated through statute. This shift closes some litigation avenues while potentially opening others.
The Stewart v. Azar theory targeted administrative discretion. CMS had approved waivers under Section 1115 authority, which permits experiments “likely to assist in promoting the objectives of the Medicaid program.” Courts found CMS had not adequately explained how coverage-reducing requirements promoted coverage-providing objectives. But when Congress directly mandates work requirements, the coverage-promoting analysis becomes a policy judgment the legislature has made rather than an administrative determination subject to judicial second-guessing.
Congressional statutes receive different judicial treatment than agency actions. Courts defer substantially to legislative policy choices, particularly in complex areas like social welfare programs. Challenges arguing that work requirements are bad policy or will cause harm face much higher barriers when the policy is statutory rather than administrative. The fundamental shift from waiver to mandate changes the legal playing field.
This does not mean work requirements are litigation-proof. Several alternative legal frameworks remain viable.
Due process theories target implementation rather than policy. The Constitution requires adequate notice and opportunity to respond before government deprives individuals of property or liberty interests. Medicaid coverage constitutes a protected interest. States that terminate coverage without adequate notice, that provide insufficient time to cure compliance failures, or that operate verification systems individuals cannot reasonably navigate may violate due process regardless of whether the underlying policy is valid. These theories don’t challenge work requirements; they challenge how work requirements are implemented.
The due process framework proved potent in Arkansas. Many who lost coverage reported never receiving notice of requirements, not understanding what they needed to do, or being unable to access the online-only reporting portal. A state that implements requirements through processes that systematically fail to provide meaningful opportunity to comply faces due process challenge regardless of whether Congress authorized the requirements.
Americans with Disabilities Act and Section 504 of the Rehabilitation Act offer disability-focused frameworks. These laws prohibit discrimination against people with disabilities in programs receiving federal funding, which includes all state Medicaid programs. Exemption systems that fail to provide reasonable accommodation to people with disabilities, verification portals inaccessible to people with vision or cognitive impairments, and documentation requirements that effectively exclude people whose disabilities prevent compliance all raise disability rights concerns.
When Arkansas implemented its ten-step exemption process, only 11 percent of the 30 percent of applicants with disabilities obtained exemptions, due to website difficulties, confusion, and inaccessibility. Similar patterns likely await other states that fail to design disability-accessible systems. The ADA and Section 504 provide litigation frameworks for challenging these failures.
State constitutional claims offer additional avenues in some jurisdictions. Several state constitutions provide healthcare-related protections that federal law does not. Litigation in state courts under state constitutional theories might succeed where federal challenges fail. The outcomes would vary by state, but the possibility creates incentive for careful implementation in states with protective constitutional provisions.
Regulatory challenges may target CMS implementation of the statute. The Administrative Procedure Act governs federal rulemaking; if CMS issues regulations implementing OB3 that exceed statutory authority or fail to follow proper procedures, those regulations are vulnerable to challenge. States dissatisfied with federal interpretation might pursue such claims, as might advocates who believe CMS guidance improperly restricts exemption flexibility.
Current and Anticipated Litigation#
As implementation approaches, litigation strategies are taking shape. The National Health Law Program, which coordinated the Stewart v. Azar litigation, has launched its “Prepare. Enforce. Protect.” initiative to equip advocates with tools for legal challenges. State-based legal aid organizations are identifying potential plaintiffs and building case files. Disability rights organizations are monitoring exemption system designs for ADA violations.
Known challenges will likely target early-implementing states with aggressive enforcement approaches. States that implement before the December 2026 deadline under CMS-approved acceleration will become test cases for post-OB3 litigation theories. If those states design systems with inadequate notice, inaccessible portals, or discriminatory exemption processes, lawsuits will follow.
Organizational capacity for litigation constrains what can be challenged. Public interest law organizations have limited resources. The National Health Law Program, legal aid societies, and disability rights programs must choose which cases to bring. Not every problematic state implementation will generate a lawsuit. Strategic choices about which states to challenge, which implementation features to target, and which legal theories to deploy shape what litigation actually occurs.
The choice between facial and as-applied challenges carries strategic implications. A facial challenge argues that a law or regulation is unconstitutional in all applications; an as-applied challenge argues it is unconstitutional as applied to particular plaintiffs. Facial challenges are harder to win but produce broader relief. As-applied challenges are easier to prove but may leave problematic systems in place for others. Litigation strategy must balance these considerations.
Class action possibilities affect litigation scope. Individual claims aggregate into class actions when plaintiffs share common legal questions and representative plaintiffs can adequately represent class interests. Certification creates efficiency but also complexity. Class actions against state Medicaid programs have succeeded in other contexts; similar structures may emerge for work requirement challenges.
The timeline for litigation intersects with implementation. Lawsuits filed before implementation begins seek to enjoin harmful systems before they cause damage. Lawsuits filed after implementation addresses documented harm. Pre-implementation challenges face standing questions, since plaintiffs must demonstrate imminent injury. Post-implementation challenges benefit from concrete evidence of harm but come after people have already lost coverage.
How Litigation Threat Shapes State Choices#
The shadow of litigation affects implementation design even where no lawsuit is filed. State attorneys general assess legal vulnerability when advising on implementation approaches. Agency counsel review system designs for due process adequacy. The memory of Stewart v. Azar creates caution that explicit legal challenges would not produce on their own.
Legal risk assessment varies across states. Some states have cultures of aggressive litigation defense, willing to fight challenges through multiple appeals regardless of likelihood of success. Others prefer to minimize legal exposure, designing systems that avoid litigation rather than fighting cases that arise. Red states may view litigation as political attack to be resisted; blue states may see litigation as highlighting problems they want to fix anyway.
Design modifications to reduce legal exposure shape implementation in ways advocates might otherwise struggle to achieve. Due process protections, accessible verification systems, reasonable cure periods, and meaningful good cause exceptions all reduce litigation risk. States that build these features partly to avoid lawsuits nevertheless provide benefits to members who would otherwise face coverage loss. Litigation threat creates policy change through anticipation rather than adjudication.
Documentation and record-building reflect awareness of potential judicial scrutiny. Agencies creating administrative records that can withstand court review must actually consider factors courts will examine. This discipline improves decision-making quality regardless of whether litigation occurs. The requirement to justify choices in terms that courts will accept constrains arbitrariness.
Settlement possibilities shape litigation dynamics. States facing litigation may settle by modifying implementation rather than fighting to judgment. Consent decrees, court orders embodying negotiated agreements, can require specific implementation features for years. A state that settles early in litigation may accept more restrictions than it would have without litigation but avoid years of legal uncertainty and potential broader adverse rulings.
Preliminary injunctions represent the most immediate litigation threat. Courts can halt implementation pending full adjudication if plaintiffs demonstrate likelihood of success, irreparable harm, and public interest. Arkansas’s experience demonstrates that courts will stop ongoing coverage terminations when legal grounds are present. States considering aggressive implementation must weigh the possibility that courts will halt their programs mid-stream, creating administrative chaos and political embarrassment.
Litigation as Advocacy Strategy#
Beyond legal outcomes, litigation serves political and advocacy functions. Court cases attract media coverage that administrative proceedings do not. When Judge Boasberg struck down Arkansas’s work requirements, news organizations reported the coverage losses, the legal reasoning, and the human stories of people affected. The litigation created a visibility event that policy briefs and press releases could not replicate.
Discovery processes can reveal information that advocacy research cannot access. Litigation discovery compels production of documents, depositions of officials, and interrogatory responses that agencies would never provide voluntarily. Internal communications about implementation decisions, analyses of expected coverage losses, and deliberations about exemption design become part of public court records. Even litigation that fails on the merits may succeed in exposing information that supports other advocacy.
Delay as objective may be legitimate litigation strategy. Even unsuccessful challenges take time. Filing deadlines, preliminary injunction motions, discovery periods, briefing schedules, and appeals extend timelines. A lawsuit filed in early 2026 that is not finally resolved until 2028 may prevent years of coverage terminations even if the plaintiffs ultimately lose. For people who would lose coverage during that period, delay represents victory regardless of final judgment.
Building the record for future challenges extends litigation’s horizon beyond immediate cases. Current litigation that loses may establish precedent or generate evidence useful for future cases or policy advocacy. Judicial opinions discussing due process requirements, disability accommodation obligations, or administrative procedure standards become resources for subsequent challenges. Evidence of harm documented through discovery informs future advocacy even if the immediate case fails.
The coordination between litigators and non-litigator advocates presents both opportunities and tensions. Litigation can complement legislative and regulatory advocacy by increasing pressure on decision-makers and raising issue visibility. But litigation can also complicate other advocacy by locking in legal positions, diverting resources, and creating adversarial dynamics that poison negotiating relationships. Effective advocacy requires conscious coordination about when litigation helps and when it hinders.
The Shadow of Stewart in a Changed World#
The legal landscape for work requirements has fundamentally shifted, but the shadow of Stewart v. Azar persists. States designing implementation remember what happened in Arkansas. Legislators and governors understand that courts can halt programs they create. Agency officials know their decisions may face judicial scrutiny. This awareness shapes behavior in ways that formal legal doctrine does not fully capture.
The policy differences between waiver-era and OB3-era work requirements are substantial. Courts are more deferential to congressional choices than administrative discretion. The “promoting Medicaid objectives” analysis that drove Stewart outcomes does not apply when Congress has determined the policy directly. Litigation challenging the policy itself faces much higher barriers.
Yet implementation challenges remain viable. Due process requirements apply regardless of congressional authorization. Disability rights laws bind state Medicaid programs regardless of what federal statute mandates. Administrative procedure governs regulatory implementation regardless of underlying policy. The tools for challenging how states implement work requirements survive the shift from waiver to mandate.
For advocates, litigation represents one tool among several, neither a silver bullet nor a distraction. The Stewart litigation did not eliminate work requirements; it delayed and complicated them. OB3 represents policy defeat that litigation alone cannot reverse. But implementation litigation can constrain harmful approaches, document harms that support future policy change, and protect individuals from unlawful terminations even where the underlying policy stands.
For states, legal risk is one factor in implementation design. The calculation involves probability of challenge, likelihood of adverse ruling, consequences of preliminary injunction, costs of litigation, and political implications of various outcomes. States that design systems minimizing legal vulnerability may also minimize coverage harm, aligning legal risk management with member protection. The threat of litigation creates pressure toward due process even where underlying policy is aggressive.
The December 2026 deadline will test these dynamics. States that implement early become test cases for post-OB3 litigation theories. Outcomes in those cases will shape implementation across all states. Litigation filed in the coming months will define the legal parameters within which work requirements operate. The Stewart legacy persists not as controlling precedent but as institutional memory shaping expectations about what courts might do.
Strategic Implications#
Stakeholders preparing for December 2026 should incorporate litigation considerations into their planning.
States designing implementation should assume legal challenge and build systems accordingly. Due process protections, accessible verification, reasonable timelines, and meaningful exemption processes reduce litigation risk while serving members. Documentation of decision-making rationale creates administrative records that can withstand judicial scrutiny. Consultation with attorney general offices during design identifies vulnerabilities before implementation rather than during litigation.
Advocates considering litigation strategy should assess which states present strongest targets. States with restrictive designs, poor due process protections, inaccessible systems, or documented harm offer better litigation opportunities than states with protective approaches. Coordination among national and state legal organizations prevents duplicative efforts and enables strategic case selection. Building relationships with potential plaintiffs before implementation creates capacity for rapid response when violations occur.
Healthcare stakeholders with interests in coverage maintenance should understand how litigation shapes implementation. Hospitals, MCOs, and providers who prefer minimal coverage loss benefit when litigation threat creates pressure for protective implementation. Industry association statements supporting due process protections, amicus briefs in active cases, and quiet encouragement of state attorneys general to recommend protective designs all contribute to litigation’s policy effects.
Policy researchers should track litigation outcomes for evidence about implementation effects. Court records from work requirement challenges contain data about coverage losses, exemption processes, and system functioning that may not be available elsewhere. Documenting the gap between design and reality, the failure of exemption processes to reach intended beneficiaries, and the administrative burden imposed on individuals builds the empirical foundation for future policy advocacy.
The litigation landscape for work requirements will evolve as cases proceed through courts. Early implementation produces the first post-OB3 legal tests. Outcomes in those cases shape expectations and strategies for subsequent litigation. The shadow of the law, cast by Stewart v. Azar and extended by whatever comes next, continues to influence work requirement implementation even where no lawsuit is filed.