backFederal Court Strikes Down Kennedy Declaration Barring HHS from Enforcing Transgender Care Restrictions for Minors
On April 18, 2026, Judge Mustafa T. Kasubhai of the U.S. District Court for the District of Oregon issued a 49-page Opinion and Order and an accompanying final Judgment resolving Counts I through IV of the Plaintiff States’ Amended Complaint in Oregon v. Kennedy, No. 6:25-cv-02409-MTK (D. Or.). See Op. & Order (ECF No. 93); J. (ECF No. 94). The Court granted the Plaintiff States’ Motion for Summary Judgment on all four counts and denied the Government’s Motion to Dismiss and cross-motion for summary judgment in their entirety, vacating the declaration issued by HHS Secretary Kennedy (the Kennedy Declaration), entering declaratory relief, and enjoining Defendants from enforcing the Kennedy Declaration or any materially similar policy against providers in the Plaintiff States.
Background
HHS Secretary Kennedy issued the Kennedy Declaration on December 18, 2025. The Kennedy Declaration stated that puberty blockers, cross-sex hormones, and surgeries are “neither safe nor effective” for treating gender dysphoria in minors and “therefore, fail to meet professional[ly] recognized standards of health care,” and that it superseded statewide or national standards of care. Less than a week later, a coalition of state Attorneys General and one Governor filed suit in the Oregon District Court alleging that the Kennedy Declaration violated the Administrative Procedure Act’s notice-and-comment requirements, exceeded the scope of HHS’s authority to establish professional standards, and was contrary to federal law prohibiting federal control over the practice of medicine. On March 19, 2026, following nearly six hours of oral argument, Judge Kasubhai ruled from the bench granting summary judgment on Counts I through III and taking the fourth count—alleging violations of the Medicaid Act—under advisement. The Court requested supplemental briefing on the scope of injunctive relief, which both sides filed on April 2, 2026. (More information on the oral argument can be found in the March 23 edition of Health Headlines).
The Court’s Opinion
The April 18 Opinion and Order sets forth the Court’s full analysis. As a threshold matter, the Court rejected the Government’s argument that the Kennedy Declaration was not a “final agency action” reviewable under the APA because it reflected only Secretary Kennedy’s “non-binding opinion” and lacked legal effect. Applying the two-prong test from Bennett v. Spear, 520 U.S. 154, 177–78 (1997), the Court found that the Kennedy Declaration’s plain language—which explicitly establishes a standard of care and “supersedes” existing standards—together with Secretary Kennedy’s public statements characterizing it as a “clear directive” and HHS’s subsequent referral of at least seventeen healthcare providers to OIG for exclusion, constituted “clear and compelling evidence” that Defendants had consummated their decision-making. The Court rejected the Government’s characterization of the Declaration as merely one piece of information OIG would consider in exclusion proceedings, finding that when the Declaration categorically states that gender-affirming care falls below professionally recognized standards and supersedes contrary standards, “there can be no other outcome of OIG’s proceeding but exclusion.”
On the second Bennett prong, the Court found the Declaration was “clear about the obligation on healthcare providers (that they must comply with the new standard of care) and the legal consequences flowing from a provider’s failure to comply (the risk of exclusion from federal healthcare programs),” presenting providers with a “Hobson’s Choice to either stop providing gender-affirming care for minors or risk the loss of critical funding necessary to operate at all.” The Court also found that Plaintiffs established both constitutional and prudential ripeness, demonstrating concrete injury through healthcare providers’ suspension of gender-affirming care in their states and injury to their sovereign interest in regulating the practice of medicine. The Court characterized the Government’s jurisdictional arguments as “based on the bald-faced lie that the Kennedy Declaration amounts to nothing more than one man’s musings on gender-affirming care.”
Turning to the merits, the Court granted summary judgment on all four counts. On Count I, the Court held that the Kennedy Declaration violated the Medicare Act’s requirement under 42 U.S.C. § 1395hh(a)(2) that rules establishing or changing a substantive legal standard governing eligibility of providers must go through notice-and-comment rulemaking, citing the Supreme Court’s admonition in Azar v. Allina Health Services, 587 U.S. 566, 575 (2019), that agencies “have never been able to avoid notice and comment simply by mislabeling their substantive pronouncements.” On Count II, the Court similarly held that the Declaration violated the APA’s notice-and-comment procedures under 5 U.S.C. § 553, applying the Ninth Circuit’s test from Mada-Luna v. Fitzpatrick, 813 F.2d 1006, 1013 (9th Cir. 1987), and concluding the Declaration was a “conclusive mandate” that left OIG with no meaningful discretion—not a “general statement of policy” exempt from rulemaking requirements.
On Count III, the Court held that the Kennedy Declaration exceeded Defendants’ statutory authority in violation of 5 U.S.C. § 706(2)(C), finding that the sole authority cited in the Declaration—42 C.F.R. § 1001.2—is a “definitional regulation, not a statutory grant of authority,” and that none of the underlying statutory provisions grant Defendants “the unilateral authority to declare an entire treatment modality unsafe and ineffective.” The Court noted that the Medicare statute specifically prohibits construction of the statute “to authorize any Federal officer or employee to exercise any supervision or control over the practice of medicine or the manner in which medical services are provided.” The Court rejected the Government’s argument that striking down the Declaration would impinge Secretary Kennedy’s First Amendment rights, finding that “several other principles sacred to our constitutional democracy are both implicated and offended: the rule of law and state sovereignty.”
On Count IV—the Medicaid Act claim the Court had previously taken under advisement—the Court held that because each Plaintiff State’s approved Medicaid plan includes coverage for gender-affirming care, and the Kennedy Declaration effectively precludes payment for these services by subjecting providers to exclusion, the Declaration violates HHS’s obligation to pay under approved Medicaid plans without complying with the statutory and regulatory requirements governing disallowance of payments under 42 U.S.C. §§ 1396b and 1396c. The Court concluded its merits analysis by observing it could “scarcely recall an APA action that has come before it in which the agency’s action was so clearly unlawful.”
The Court’s Remedies
As to relief, the Court vacated the Kennedy Declaration, entered declaratory relief clarifying that Defendants lack the authority to unilaterally establish standards of care that supersede professionally recognized standards of care for gender-affirming care in the Plaintiff States or to exclude providers based on their provision of such care consistent with state standards, and enjoined Defendants and their officers, agents, servants, employees, and attorneys, including those at HHS-OIG, from initiating enforcement action, enforcing, implementing, giving intent to [sic], or relying, in whole or in part, on the Kennedy Declaration or any materially similar policy against any provider in the Plaintiff States.
The Government had argued that vacatur alone fully redressed Plaintiffs’ harms and that injunctive relief encompassing “materially similar” policies was improperly raised and would violate Rule 65(d)’s specificity requirements. The Court rejected these arguments, finding that Secretary Kennedy’s public statements “leave no room for doubt that Defendants will attempt to circumvent this Court’s vacatur” and that “administrative agencies under the current administration have a significant and troubling history of evading or flouting prior court orders.” The Court cited multiple examples of federal noncompliance with court orders and found that injunctive relief was warranted because, “unlike declaratory relief, it is ‘backed by the power of contempt.’” On specificity, the Court found the injunction provided adequate notice of prohibited conduct in light of the regulatory definition of “professionally recognized standards of care,” OIG’s own regulatory framework, and the facts of this litigation.
The Judgment also requires Defendants’ attorneys to provide written notice of the Judgment to all Defendants and their employees with responsibility for exclusion determinations within seven calendar days of entry, and the Court retained jurisdiction to enforce the injunction and judgment.
Reporter, Ahsin Azim, Washington, D.C., +1 202 626 5516, aazim@kslaw.com
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