Updated at 11:00 a.m. ET on March 6
Opponents of the White House effort to broadly freeze domestic federal funds scored another victory Thursday when a second federal judge granted a preliminary injunction against the administration.
Judge John J. McConnell, Jr., of the U.S. District Court for the District of Rhode Island, sided with a swath of blue states, writing in his order that "the Executive put itself above Congress" with late January's "temporary pause" of congressionally appropriated and obligated federal disbursements.
"Federal agencies and departments can spend, award, or suspend money based only on the power Congress has given to them–they have no other spending power," the judge wrote. "The Executive has not pointed to any constitutional or statutory authority that would allow them to impose this type of categorical freeze."
McConnell again rejected the government's argument that its rescindment of the Office of Management and Budget memo that triggered the freeze rendered the plaintiffs' arguments moot. He pointed to a statement a statement from White House Press Secretary Karoline Leavitt that the administration is not "entitled to a presumption of good faith ... when the government says one thing while expressly doing another."
McConnell had already granted the state plaintiffs a temporary restraining order, though Thursday's preliminary injunction provides a longer pause that maintains the status quo while the legal process plays out.
Last month the judge also chastised the administration for violating his hold after plaintiffs brought testimonies that funds were continuing to be improperly frozen. Community health centers, Head Start programs and university research projects have struggled (PDF) to access funds following the national freeze, the states said.
The Department of Justice, in response, argued that it was working to root out fraud and criticisms that the court's prior temporary restraining order was ambiguous. McConnell had rejected those arguments at the time, telling the agencies they "must immediately restore" the frozen funds and threatened criminal contempt for disobedience.
McConnell's most recent order joins a preliminary injunction granted nine days ago by Judge Loren AliKhan in a concurrent case brought by coalitions of nonprofits.
There, AliKhan also reiterated her rejection of the government's arguments related to the rescinded memo and Leavitt's comment. She again wrote that the plaintiffs are facing irreparable harm and that the government's "ill-conceived from the beginning" freeze is likely unlawful as well as arbitrary and capricious.
"Defendants either wanted to pause up to $3 trillion in federal spending practically overnight, or they expected each federal agency to review every single one of its grants, loans, and funds for compliance in less than twenty-four hours," the judge wrote Feb. 25. "The breadth of that command is almost unfathomable."
Broad language, discrepancies sowed confusion
The administration's freeze was originally set to go into effect at 5:00 p.m. on Jan. 28 before nonprofit organization opponents secured a last-minute delay until Feb. 3 from the courts. It was rescinded in a one-page memo from Jan. 29.
Trumps' sweeping hold, as outlined in Jan. 27's memo, would have included federal grants, cooperating agreements and loans, among other types of obligations or disbursements that OMB contends made up more than $3 trillion of spending in fiscal year 2024.
Footnotes outlined an exception for “assistance received directly by individuals,” and specified that “nothing in this memo should be construed to impact Medicare or Social Security benefits.”
A frequently asked questions explainer from OMB issued on Jan. 29 attempted to offer further clarity on which programs exactly are affected. It said mandatory programs like Medicaid and SNAP will not be paused.
"Funds for small businesses, farmers, Pell grants, Head Start, rental assistance and other similar programs will not be paused," said the OMB in the FAQ. "If agencies are concerned that these programs may implicate the President’s Executive Orders, they should consult OMB to begin to unwind these objectionable policies without a pause in the payments."
However, that promise contradicted alarms raised by industry figures and lawmakers that state Medicaid portals had stopped working or were unreliable.
"My staff has confirmed reports that Medicaid portals are down in all 50 states following last night's federal funding freeze," Wyden said Tuesday in a post on X. "This is a blatant attempt to rip away health insurance from millions of Americans overnight and will get people killed."
Other lawmakers confirmed on X their states had been locked out of the portals. In a statement addressing the broader freeze, Illinois State Comptroller Susana Mendoza said her office is "doing everything it can to process federal funds prior to the deadline" and was fortunate to prioritize Medicaid payments.
"In fact, on Thursday we processed all $518 million in Medicaid bills on-hand and received our federal match yesterday before the administration shut down our access to the Medicaid system," she said.
Organizations, government policy experts and individuals working in care outlined concerns that the memo’s ambiguous language made it difficult to know what health, research and social support programs were caught in the pause—though they suspected that many will be affected.
“Any grants that have not been paid out in their entirety will be paused pending this review,” Will Walters, a healthcare attorney at Epstein Becker Green, said in an emailed analysis of the memo. “This will impact every imaginable state-federal cooperative program, including most run by state health agencies, which receive the lion's share of their resources from the federal government. I am already hearing from state folks that their federal partners have gone radio silent and revised guidance is coming for certain programs.”
Groups also raised concerns about the detrimental impact an immediate and indefinite halt in funding could have for groups and those who rely on federal funding.
"[The] federal funding freeze threatens the nationwide network of health centers that rely on these resources to provide family planning services to people with no or low incomes,” the National Family Planning and Reproductive Health Association said in a statement. “Even a temporary funding pause could cause significant disruption to clinic operations, jeopardizing patients’ access to contraception, cancer screenings, STI and HIV services, and other essential reproductive healthcare. … These funding disruptions could push some health centers to the brink of closure, leaving vulnerable patients without access to the care they need."
"This is extremely disconcerting," said Carl Schmid, executive director of the HIV+Hepatitis Policy Institute, in an emailed statement. "People with HIV/AIDS depend on medications, healthcare and support services for the rest of their lives and we have to take steps to prevent HIV every day, we just can’t stop funding these programs. These lifesaving programs serve a wide array of different populations, and HIV is an infectious disease with serious health consequences if not properly addressed—we can’t overlook any community and must serve everyone.”
The government website on PEPFAR data was offline on Jan. 29.
Amid the pause, each agency would have been required to conduct a comprehensive analysis of their federal financial assistance programs to identify any that could be implicated by President Donald Trump’s flurry of executive orders, OMB Acting Director Matthew Vaeth wrote in the memo.
The agencies would have also been required to pause “other relevant agency activities that may be implicated by the executive orders, including, but not limited to, financial assistance for foreign aid, nongovernmental organizations, DEI, woke gender ideology and the green new deal,” according to the memo.
OMB “may grant exceptions” permitting new awards or other actions “on a case-by-case basis,” Vaeth wrote.
"These are politicized attacks that do not belong anywhere in the context of the operations of the federal government or support for federal programs, and we absolutely have reason to be concerned that the Trump administration, among many other things, is seeking to deny and end fundamentally important life saving services for transgender people," said SAGE CEO Michael Adams in a press briefing on Jan. 29.
OMB's FAQ, distributed Jan. 29, noted that "[a] pause could be as short as day. In fact, OMB has worked with agencies and has already approved many programs to continue even before the pause has gone into effect. Any payment required by law to be paid will be paid without interruption or delay."
It also specified that "the pause does not apply across-the-board" and only affects "programs, projects and activities implicated by the President's Executive Orders"—though OMB is still requesting information on such conflicts from the agencies for 2,623 programs providing federal financial assistance.
The Association of American Medical Colleges (AAMC) and the American Hospital Association (AHA) had both told Fierce Healthcare Jan. 29 they were reviewing the memo to fully understand its scope.
Others working in the industry raised concerns over whether funding for clinical research, suicide prevention and state infectious disease surveillance and other day-to-day work would have seen interruptions due to the pause.
"The first reaction was that it appeared to be a pretty brazen power grab," said Andrea Ducas, vice president of health policy at the left-leaning Center for American Progress, in an interview with Fierce Healthcare. "It's hard to overstate how alarming this is."
She warned the community health center fund, through the Health Resources and Services Administration (HRSA), would have been at significant risk. The fund provides money toward safety net health centers for Medicaid beneficiaries and the uninsured, as well as the National School Lunch Program and the federal food assistance program WIC. Rural hospitals and critical access programs benefit from federal programs as well, she noted.
Farzad Mostashari, M.D., CEO and co-founder of primary care Accountable Care Organization (ACO) company Aledade, noted Jan. 29 that Community Health Centers were unable to access the Department of Health and Human Services' Payment Management System.
"Section 330 grant funding is a significant portion of how [Federally Qualified Health Centers and Rural Health Centers] keep their doors open," he wrote on X. "I suspect (hope) that the freeze will be lifted soon for them, given their strong bipartisan support."
Seemingly contradicting a FAQ released from OMB, state Medicaid programs were also impacted.
"I am hearing numerous reports that states are locked our of their Medicaid accounts," Joan Alker, executive director of the Center for Children and Families at Georgetown University, had written in a post on X on Jan. 29. "This is a major crisis. Many states draw down funding at the end of the month i.e. this week."
The White House's Leavitt said that same day that the administration was "aware of the Medicaid website portal outage. We have confirmed no payments have been affected—they are still being processed and sent. We expect the portal will be back online shortly."
Thousands of programs under scrutiny
Internal materials provided by OMB to agencies—which included a spreadsheet listing questions for federal financial assistance programs and an accompanying document guiding departments on how to fill it out—revealed the scale of the review and just what questions the office is seeking to answer.
By Feb. 7, all federal agencies that provide federal financial assistance would have needed to provide requested information to OMB for any program that has funding or activities planned through March 15, according to the instruction sheet.
The accompanying spreadsheet to be filled out by the agencies outlined 2,623 programs providing federal financial assistance that are subject to OMB’s scrutiny.
Among the listed questions for each of these programs were whether it has any pending funding announcements, if it is under a statutory mandate to provide funds through March 15 and what the estimated date of its next obligation or disbursement of funds is.
Also listed were eight “yes or no” questions centered on the Trump administration’s stated political goals. For instance:
- “Does this program provide Federal funding to non-governmental organizations supporting or providing services, either directly or indirectly, to removable or illegal aliens?”
- “Is this program a foreign assistance program, or provide funding or support activities overseas?”
- “Does this program provide funding that is implicated by the revocation and recission [sic] of the U.S. International Climate Finance Plan?”
- “Does this program include activities that impose an undue burden on the identification, development, or use of domestic energy resources (including through funding under the Inflation Reducing Act of 2022; and the Infrastructure Investment and Jobs Act)?”
- “Does this program provide funding that is implicated by the directive to end discriminatory programs, including illegal DEI and ‘diversity, equity, inclusion, and accessibility’ (DEIA) mandates, policies, programs, preferences, and activities, under whatever name they appear, or other directives in the same EO, including those related to ‘environmental justice’ programs or ‘equity-related’ grants?”
- “Does this program promote gender ideology?”
- “Does this program promote or support in any way abortion or other related activities identified in the Hyde Amendment?”
The Department of Health and Human Services alone would have been required to provide this information on 432 different federal programs that provide grants, loans, scholarships, insurance, and other types of assistance, according to OMB’s distributed spreadsheet.
Among the programs for which OMB requested more information were those from the Centers for Medicare and Medicaid Services (CMS) granting funds to research and evaluation program payments, delivery, access and quality.
Also listed were the Medical Student Education Program and other health education funding; the CDC's Sentinel Surveillance System for infectious disease monitoring; the National Bioterrorism Hospital Preparedness Program; the Medicare Enrollment Assistance Program; several programs funding rural hospitals and healthcare; and the 21st Century Cures Act - Precision Medicine Initiative, which funds NIH's All of Us research program.
Listings in the information request spreadsheet included programs OMB's FAQ said would not face interruptions, such as Head Start, Medicaid and CHIP, plus programs providing grants to states to support Medicaid and CHIP.
Other noteworthy programs include HHS' Unaccompanied Children Program, which provides care for minors apprehended by Homeland Security, Border Patrol or other federal law enforcement pending claims for relief under immigration law; and the Department of Justice's Drug Data Research Center to Combat the Opioid Crisis.
Also included were the Cell and Gene Therapy Access Model. This model was one of three models created by the Biden administration to help lower the cost of drug prices, but it is yet to be implemented. An HHS spokesperson told STAT work is still ongoing to continue the model, however. The fate of the other two models is even less clear at this time.
Threat of pause brought immediate repercussions
Democratic lawmakers said Head Start was already being impacted. House Whip Katherine Clark, D-MA, said organizations in her state were struggling to access its payments.
Laurel Stine, M.A., EVP and chief advocacy and policy officer at the American Foundation for Suicide Prevention (AFSP), told Fierce Healthcare that AFSP was concerned about the potential "detrimental impact on the wellbeing of Americans.” Like other organizations, AFSP does not yet have a grasp on the full implications of the freeze.
“This is beyond a government shutdown," Stine noted prior to the rescindment, adding that even during a government shutdown essential services like healthcare are still operational. Most states today still rely on a combination of federal and state dollars to run the program, she noted.
“It’s going to take political will across both parties in order to really step up and recognize that any type of pause, freeze of the flow of federal funds for crucial lifesaving programs, is not the direction that we need to go," Stine said.
The Head Start program offers education services and health screenings to children. Some Republicans oppose the program and could use the Congressional Review Act to pare the program back, Fierce Healthcare previously reported. Today, the House Committee on Education & Workforce released a statement criticizing the program, citing a recent Government Accountability Office report.