The suit, filed in U.S. District Court in Eugene, was brought by Oregon Attorney General Dan Rayfield and the attorneys general of Washington, Minnesota and New Mexico. It asks a judge to rule by Dec. 31 that the federal government cannot withhold states' existing Medicaid funding if they choose not to implement the rules, which are scheduled to take effect nationwide Jan. 1.

Starting in January, many low-income adults covered by the Oregon Health Plan, the state's Medicaid program, will have to document at least 80 hours a month of work, volunteering or job training. Attending school at least half time or earning a certain income can also satisfy the requirement. The rules largely apply to adults who gained coverage through the Affordable Care Act's Medicaid expansion, though pregnant women, parents of children 13 and younger, and people with disabilities or serious medical conditions are exempt.

The requirements stem from the sweeping tax and spending law President Donald Trump signed last year, known as the "One Big Beautiful Bill Act."

About 564,000 Oregonians receive coverage through the Medicaid expansion, accounting for roughly $5.1 billion in federal funding to the state this fiscal year, according to the complaint. In a separate court filing, the states estimate that as many as 200,000 Oregon Health Plan members could lose coverage because of the work requirements.

Oregon has already begun updating its Medicaid system to verify employment records, identify exemptions and determine who must submit additional paperwork. The state has notified roughly 600,000 OHP members about the upcoming rules. Gov. Tina Kotek urged the Trump administration last month to delay the requirements, warning that federal guidance issued in June forced states to overhaul eligibility systems they had spent months building, leaving too little time to prepare.

The lawsuit raises similar concerns, warning that administrative errors and paperwork problems could cost people their health insurance even if they work or qualify for an exemption.

"It would be the height of bureaucratic cruelty to rip away someone's life-saving health care just because of unreasonable paperwork," Rayfield said in a statement. "And yet, that's exactly what Trump's bill does."

The suit names U.S. Health and Human Services Secretary Robert F. Kennedy Jr. and Centers for Medicare & Medicaid Services Administrator Dr. Mehmet Oz as defendants. HHS did not immediately respond to a request for comment, and CMS declined to comment.

Beyond the practical concerns, the legal challenge centers on whether Congress can make major changes to Medicaid by threatening to withdraw funding states already receive. Medicaid has provided health coverage to low-income Americans since 1965, with costs shared by states and the federal government. The states point to a 2012 U.S. Supreme Court ruling that barred the federal government from taking away states' existing Medicaid funding if they refused to expand coverage under the Affordable Care Act. They argue that Congress could have ended Medicaid expansion outright but instead imposed new conditions on a program states have spent years building, leaving them little choice but to comply.

State Sen. David Brock Smith, R-Port Orford, criticized the lawsuit on Friday, saying the new rules would help prevent improper Medicaid payments and protect taxpayer dollars.

"These work requirements are not about taking coverage away from people who need it," Smith said in a statement. "They are about making sure limited resources go to the Oregonians who truly depend on them, our children, seniors and people with disabilities."

Smith also questioned why the states waited until after Election Day to sue, more than a year after Congress approved the rules, calling the timing "pure politics."

The case is being heard in federal court in Eugene.