Washington DC - The Department of Health and Human Services reversed its $10 billion funding cut for childcare subsidies and social services in five Democratic states following a legal challenge.
The HHS' Administration for Children and Families (ACF) wrote in a court filing on Monday that it is rescinding its letters requiring states to provide the department with patient data or lose funding for childcare and social services.
"The mechanism that HHS used to enforce the temporary restricted draw downs, as laid out in the January 5 and 6 letters, Defend the Spend, has been terminated," the letter reads.
The ACF notified five states in nearly identical legal letters that they are voiding measures designed to force state compliance. They also sought an injunction to end the legal battle.
It comes as a major blow to the Trump administration, which has vigorously attempted to cut spending and punish waste and fraud, but has failed in court to provide clear evidence of such abuses.
RFK Jr.'s department was already stopped from introducing the funding block after a federal judge paused the policy in January until legal proceedings were concluded.
If introduced, the funding pause would have locked away access to crucial programs which protect thousands of low-income households across the country.
New York State Attorney Rabia Maqaddam, who represents the five states who filed the January lawsuit, pointed out in a separate filing on Monday that the case should not be dismissed just because the HHS backed off its funding threats.
Maqaddam warned that if the case doesn't proceed, the Trump administration could once again attempt to terminate financing.
"Defendants are now taking another tactic to avoid judicial review," Maqaddam wrote, pointing out there had been no "good faith effort to resolve the concerns raised by Plaintiffs."