April 9, 2025
On 3/24 the Trump Administration ordered HHS to terminate several SAMHSA federal grant supplemental funds. The termination was effective the same day the state received the notification from SAMHSA. Later that week the state agencies (OMH and OASAS) advised providers as to the federal grant contract #s that were impacted and (largely) expected providers to crosswalk their OASAS/OMH contracts with the federal contract numbers to figure out whether a program or service the provider operates, is impacted. The NYS Council sent all members information that was available (including a 2024 Report to the Legislature regarding the use of Community Mental Health Services Block Grant supplemental funds, to all members to help OMH providers crosswalk and understand the potential impact and the range of programs and services that could be impacted based on the federal funds in those programs). OASAS provided its agencies with the first two letters of the impacted OASAS contracts, presumably to help providers crosswalk their contracts with the impacted federal funds. Later the same week, AG’s from across the country sought injunctive relief from the terminations in a federal court in Rhode Island where the Judge ultimately issued a Temporary Restraining Order (TRO) on the funding terminations. Since the Judge on the case issued the order from the bench (verbally) we had to wait for the written decision. We located it on Saturday and we sent it to all members.
This week impacted providers received communications from OASAS and OMH regarding the issuance of the TRO, and notifying providers they could continue to operate impacted programs and services, and invoice the state for these services.
Looking ahead, on Friday OASAS is hosting an all provider online meeting during which time I think we will hear more about the plans the Office is making or had already made to move at least some of the grant programs that were already set to expire (before the termination notices went out) and perhaps other programs with federal grant funds in them, to other funding streams to ensure continuity of care. In the meantime, OASAS has been meeting with providers that operate certain programs to inform them of the status of the impacted program and accompanying funds. OASAS also indicated that it wants to hear from providers who elect to discontinue vouchering for the impacted programs they operate.
On the OMH side, the Office sent an initial email to impacted providers during the first few days of the TRO, and then yesterday the Office sent another communication indicating the TRO was in force and providers could continue to invoice and draw down funds.
Throughout this process, the NYS Council has shared any/all communications from the National Council, the two state agencies, and the Governor’s Office while arguing very assertively with state leaders for clarity that provides concrete and specific information from both Offices as to which programs and services were/are impacted. To date, I have not seen such a list from either state agency. I see press releases and more generally, puzzle pieces that providers are supposed to put together on their own. This approach is (in our opinion) deeply flawed and unacceptable. It puts at risk continuity of care for the New Yorkers who need and deserve the benefit of these critical programs and services, and it requires providers to make very consequential decisions without (in all cases) full facts. We continue to argue with the powers that be for greater transparency.
So, what’s next?The ultimate goal of the plaintiff (the states) in this case is to obtain a permanent injunction, which would ensure that not only are the terminated funds restored to states that are a party to the suit, but it would also prevent HHS from terminating or withholding the funds at issue going forward. The next step is for the parties to file motions and submit additional evidence for their respective positions (for and against the injunction, and there may be a preliminary injunction issued before a permanent injunction). HHS may try to have the case dismissed on procedural grounds, but it is hard to say exactly what their litigation strategy might be. We will continue to stay on top of court actions, HHS reactions and the critical impact on our members while arguing for two Contingency Fund accounts to be established in the SFY26 enacted state budget that allows the state agencies to help providers mitigate impact to their programs and services, and to ensure continuity of care now and in the days to come.
Use this link to access a multi-part group of motions and decisions (to date) in this case:
Colorado v. U.S. Dep’t of Health & Human Servs., D.R.I., No. 1:25-cv-00121
The article from Bloomberg News (excerpted below) gives us a window into the government’s basis for having filed an emergency motion for reconsideration of the TRO:
Last week…” HHS notified the Court it would comply with the TRO however it also filedan emergency motion for reconsideration saying the federal court judge should have considered whether she had jurisdiction under the Administrative Procedure Act before entering the TRO. In a similar case April 4, the US Supreme Court allowed the federal government to continue withholding education-related grants due to jurisdictional concerns.
Under the federal Tucker Act, the US Court of Federal Claims has exclusive jurisdiction over suits alleging the US is obligated to pay money under a contract or grant, HHS said. The question here, as in the Supreme Court case, was whether the Tucker Act or the APA applied, the agency said. McElroy should vacate her decision in light of the justices’ answer, it said.
McElory explained in an April 5 opinion that the states were likely to win on the merits of their challenge because HHS didn’t reasonably end the grants or provide a reasonable explanation for doing so.
HHS didn’t follow a congressionally mandated procedure for ending grants under Substance Abuse and Mental Health Services Administration programs only for “cause,” McElroy said. The agency didn’t find that the states “materially failed” to comply with grant conditions, or provide notice and an opportunity to be heard before freezing the money, she said.
HHS allegedly ended the grants because they’d been made during the Covid-19 pandemic, but the end of the pandemic didn’t provide “cause” for terminating them, McElroy said.
Ending the other mass grants likely was arbitrary and capricious because there was no evidence they were intended to be used only during the pandemic, McElroy said. Congress previously ended some Covid-era public health spending, but left these grants in place, which suggests it didn’t intend to terminate them all, she said…”