Oregon ruling preserves access to federal funding—for now

The U.S. District Court for the District of Oregon has vacated a December 2025 policy issued by the U.S. Department of Health and Human Services (HHS) that threatened federal funding for providers offering gender-affirming care to minors. The ruling provides near-term relief to health care organizations and other federally funded providers facing uncertainty under the policy.

The case focused on a policy statement issued by the U.S. Department of Health and Human Services (HHS) Secretary Robert F. Kennedy Jr., known as the “Kennedy Declaration.” The policy claimed gender-affirming care for minors is unsafe and not supported by medical standards. It also signaled providers offering this care could be excluded from federal health care programs, including Medicare and Medicaid.

What the Court Decided

On March 19, 2026, U.S. District Judge Mustafa Kasubhai ruled that the policy was unlawful and must be set aside. The court found the Kennedy Declaration improperly bypassed state authority to regulate the standard of care, and Secretary Kennedy failed to follow notice-and-comment rulemaking requirements.  

Although the court announced its decision last week, it has yet to issue a written opinion. Judge Kasubhai gave the parties until April 2 to brief the court on potential language for declaratory and injunctive relief.

The federal government is expected to appeal the ruling. 

Why This Matters to Health Care Providers

Under the terms of the Kennedy Declaration, many hospitals and a number of Federally Qualified Health Centers (FQHCs) risked losing critical sources of funding, including in the case of FQHCs, their designation as an FQHC, which is tied to their Section 330 grant funding. 

For now, health care providers, including FQHCs, may be able to continue to provide gender-affirming care to minors if allowed under their state’s licensing and other legal requirements.

The Feldesman Team will continue monitoring this case and other federal actions that could affect health care providers receiving federal funding.  If you have any questions about how this development may impact your organization, please contact Edward T. Waters or Adam J. Falcone.