New York Attorney General Letitia James (D) sued the federal government Tuesday, arguing that a new Department of Health and Human Services (HHS) policy unlawfully ties major federal funding streams to compliance with the Trump administration’s new restrictions on gender-related medical care for minors.
The lawsuit challenges an HHS policy that, according to the attorneys general, conditions billions of dollars in health, education and research funding on compliance with a presidential executive order addressing sex and gender-related treatments.
Fox News reports:
“The federal government is trying to force states to choose between their values and the vital funding their residents depend on,” James said in a statement. “This policy threatens healthcare for families, life-saving research, and education programs that help young people thrive in favor of denying the dignity and existence of transgender people.”
The dispute stems from President Donald Trump’s January 2025 executive order directing HHS to take steps to curb what the administration calls “chemical and surgical mutilation” of children. President Trump has made limits on transgender-related medical care for minors a central part of his second-term domestic agenda.
Last month, HHS announced a sweeping package of proposed regulatory actions aimed at ending what it described as “sex-rejecting procedures” for minors. In guidance accompanying the announcement, the department warned that doctors and health systems could be excluded from federal health programs — including Medicare and Medicaid — if they provide treatments such as puberty blockers, hormone therapy, and gender surgeries to minors.
James’ lawsuit argues that the federal government is using funding leverage to pressure states, hospitals, universities, and other institutions to change policies on transgender care.
The attorneys general also claim HHS lacks legal authority to impose the conditions and is attempting to rewrite federal law through executive action. They argue the policy is vague and fails to spell out what recipients must do to remain compliant, creating uncertainty for states and institutions that rely on federal dollars.
Failure to comply with the policy could lead to termination of grants, repayment of funds already spent, or potential civil or criminal penalties, according to the complaint.
The lawsuit asks a federal court to declare the policy unlawful and block HHS from enforcing it, allowing states and institutions to continue receiving federal funding without changing existing policies.
The legal fight also adds to the long-running political and courtroom clash between Trump and James. James has positioned herself as one of the country’s most aggressive state-level opponents of Trump, repeatedly using New York’s legal powers to pursue high-profile cases involving his businesses and allies. Trump has frequently accused James of pursuing politically motivated investigations.
Trump officials have defended the executive order as a child-protection measure and a pushback against what they say is ideological medicine being imposed through federal agencies and school systems.
The case is expected to intensify a national debate already playing out in Congress and state legislatures, where Republican-led states have moved to restrict or ban gender-related treatments for minors, while Democrat-led states have expanded protections and access.
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