The scales of justice are seen in an undated photo. (Getty Images)
Separation of powers is a foundational principle of this country. We are taught in school that the legislature enacts laws; the judiciary interprets laws; and the executive enforces laws. Executive administrative agencies, such as the U.S. Department of Health and Human Services, or DHHS, simply do not have the authority to create new laws on their own, or to expand the scope of existing laws. The purpose of administrative regulations is to give guidance on how to carry out a statute’s intent — not to be a workaround of the legal, democratic, and political processes.
Section 504 of the Rehabilitation Act is a long-standing and important statute that prohibits recipients of federal funding from discriminating against people with disabilities. For example, public school students with disabilities are able to receive “504 plans” to ensure that they are able to access necessary resources and supports for their education. Section 504 is a critical safeguard for Alaskans with disabilities.
Last year, DHHS finalized a regulation that imposes a one-sided, unfunded, and sweeping set of mandates that jeopardize the continued viability of state programs and services, and that are impossible for any state to fully comply with. The regulation the State challenged claims to be interpreting Section 504, but it goes far beyond — and even acts against — the language and intent of the statute.
In fact, the new regulation is likely to undermine the State’s ability to provide ongoing service and supports. It requires states to redesign their service delivery systems to conform to newly imagined and vaguely defined requirements, regardless of the cost or impact to the state. And penalty for failing to meet those “requirements” is a loss of federal funding. With the new regulation, DHHS acted outside of its authority, ignored significant concerns from public commenters including states, families, and advocates, and disregarded congressional intent and federal court cases.
Alaska joined a lawsuit challenging this regulation due to the negative impact on its Medicaid program, which is relied upon by nearly one-third of Alaskans. The Department of Law began communicating with the public about these concerns and its interest in the lawsuit in September 2024, when it joined, and it will continue to share updates as the case progresses.
As an example of the real world impact to Alaska’s Medicaid program, Alaska has asked — and received — permission from the Centers for Medicare and Medicaid Services (CMS) to waive typical Medicaid rules so that it can provide additional behavioral health and home and community-based services beyond what Medicaid normally allows. Not only does the new regulation impose rules that conflict with CMS requirements for these waivers, but it also imposes substantial costs on states without increasing federal funding for Medicaid. At the same time, it burdens private providers of Medicaid services, who may choose to stop serving Medicaid recipients altogether, rather than take on new costs and administrative burdens.
The regulation imposes sweeping yet extremely vague new requirements on states and other recipients of federal funds and threatens to take away existing federal funding (including Medicaid) if a recipient is not able to meet its impossible demands. It puts states between a rock and a hard place. If the state chooses to provide waiver services, it has to meet CMS’s requirements – but the regulation says that meeting those requirements could result in a loss of federal funding. The overall impact of this rule would be to decrease services and supports available to Alaskans. By joining this lawsuit, Alaska is acting to protect the integrity of the statute and the State’s existing programs and services.
To be clear: this case is not asking the court to eliminate the Rehabilitation Act or Section 504 protections. All 17 participating states have unequivocally stated this fact, most recently in a joint status report filed with the court on Feb. 19, 2025:
Plaintiffs clarify that they have never moved—and do not plan to move—the Court to declare or enjoin Section 504 of the Rehabilitation Act, 29 U.S.C. § 794, as unconstitutional on its face. Plaintiffs have not sought and do not seek to enjoin the disbursement of funds from the Department on the basis that the statute is unconstitutional.
Recent media reports claiming otherwise are likely based on a misunderstanding of the difference between “as applied” and “facial” challenges to statutes. The complaint in this case does not seek to have the Rehabilitation Act declared facially invalid — in other words, struck down. The plaintiff states are not asking and will not ask for the Act to be struck down in totality or in part. Our only concern is the regulation, which cannot be reconciled with a constitutional interpretation of the Rehabilitation Act.
The bottom line is this: If the plaintiffs prevail in this suit, Alaskans will experience no changes to the Section 504 protections and benefits they have always received, and the state of Alaska will continue its efforts to improve service delivery without the threat of losing federal funding due to the new regulation.
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