Section 504 Lawsuit: The 2024 HHS Rule and States Suing

The Section 504 lawsuit currently before a federal court is Texas v. Kennedy, in which seven state attorneys general are asking a judge in the Northern District of Texas to strike down key parts of a 2024 federal rule implementing Section 504 of the Rehabilitation Act. The case originally involved 17 states and included a constitutional attack on Section 504 itself, but it has narrowed sharply. What remains is a focused challenge to the rule’s “integration mandate,” which requires federally funded programs to serve people with disabilities in community settings rather than institutions. The court is on a summary judgment track, with briefing running through July 2026.

What Section 504 Does

Section 504 of the Rehabilitation Act of 1973 prohibits disability discrimination in any program or activity that receives federal financial assistance. That sweep is wide: public schools, hospitals, state Medicaid agencies, child welfare systems, colleges, and social service providers all fall under it.¹

In schools, Section 504 is the legal basis for “504 plans,” which provide accommodations such as extended testing time, preferential seating, and access to assistive technology for students with conditions like ADHD, dyslexia, diabetes, and anxiety who may not qualify for special education under the IDEA.² Roughly 3.2 percent of students use a 504 plan, a figure that tripled between 2010 and 2021.³ Outside education, Section 504 governs how hospitals make treatment decisions, how child welfare agencies treat parents with disabilities, and whether federally funded programs are physically and digitally accessible.⁴

The 2024 HHS Rule Behind the Lawsuit

In May 2024, the Department of Health and Human Services finalized the first comprehensive update to Section 504 regulations in more than 50 years.⁵ The rule did several things at once:

Codified the Supreme Court’s 1999 Olmstead v. L.C. decision by requiring federally funded programs to serve people with disabilities in “the most integrated setting appropriate” to their needs.⁶
Barred providers from denying life-sustaining treatment, organ transplants, or emergency care based on disability stereotypes or judgments that a disabled person’s life has lesser value.⁷
Required individualized assessments in child welfare custody and visitation decisions rather than reliance on disability-based stereotypes.⁴
Adopted Web Content Accessibility Guidelines (WCAG) 2.1 Level AA for websites and mobile apps and required accessible medical equipment such as height-adjustable exam tables.⁷
Included preamble language stating that individuals with gender dysphoria may qualify as having a disability under Section 504.⁵

HHS estimated the rule would cost recipients roughly $564 million to $590 million per year to implement.⁸ It took effect on July 8, 2024.⁴

Who Is Suing and Who Has Dropped Out

On September 26, 2024, Texas and 16 other states filed suit in the U.S. District Court for the Northern District of Texas, Lubbock Division, case number 5:24-cv-00225, before Judge James Wesley Hendrix. The original plaintiffs were Texas, Alaska, Alabama, Arkansas, Florida, Georgia, Indiana, Iowa, Kansas, Louisiana, Missouri, Montana, Nebraska, South Carolina, South Dakota, Utah, and West Virginia.⁹ The complaint asked the court to strike down the 2024 rule and, more strikingly, to declare Section 504 itself unconstitutional as a coercive exercise of Congress’s spending power.³

Two developments shrank the case. On April 10, 2025, the Trump administration’s HHS published a Federal Register notice declaring that the preamble language about gender dysphoria “does not have the force or effect of law” and “cannot be enforced.” The next day, the states officially abandoned their constitutional challenge to Section 504.⁵ Eight of the original 17 states then left the litigation. The remaining nine filed an amended complaint on January 25, 2026, refocused on the integration mandate.¹⁰

The plaintiff group has shrunk further since. Indiana filed a notice of voluntary dismissal on May 1, 2026. Attorney General Todd Rokita said his primary objective had been removing gender dysphoria from the protected disabilities list, calling the Trump administration’s action a “core victory,” and added: “we have dismissed our claims.”¹¹ South Dakota filed a voluntary dismissal on May 12, 2026, without a detailed public explanation.¹⁰

Seven states remain as plaintiffs: Alaska, Florida, Kansas, Louisiana, Missouri, Montana, and Texas.¹⁰

What the Remaining States Are Arguing

The amended complaint targets three parts of the 2024 rule. The states object to the integration mandate itself, requiring services in the “most integrated setting.” They challenge the rule’s codification of an “at risk” theory, which allows discrimination claims when a person faces a serious risk of unnecessary institutionalization even without being institutionalized. And they argue the rule improperly extends these mandates into areas like child welfare, infringing on state authority over custody and parental rights.⁸

Their legal theories break down this way:

Neither Section 504 nor the ADA, the states contend, empowers HHS to mandate community-based care or regulate the mere prospect of institutionalization. They read Olmstead narrowly, arguing it applies only when community placement is appropriate, not opposed by the person, and can be reasonably accommodated.⁸
They rely heavily on United States v. Mississippi, 82 F.4th 387 (5th Cir. 2023), in which the Fifth Circuit rejected the “at risk” theory and held that a risk of institutionalization without actual institutionalization does not constitute actionable discrimination under the ADA. That precedent is binding on the district court.⁸
They argue the rule violates the Spending Clause by imposing unexpected, costly conditions on federal funds, and that it is arbitrary and capricious under the Administrative Procedure Act because it creates conflicting obligations between agencies and prevents states from innovating their service delivery.⁸

An Unusual Posture: Republican States Suing a Republican Administration

The case has a peculiar shape. Republican-led states are suing a Republican administration. After taking office, the Trump HHS moved to strip out the gender dysphoria provisions and issued rules restricting care for transgender individuals.¹² The remaining states pressed on, now targeting the integration mandate that the administration has not disavowed. On March 9, 2026, the federal government and the plaintiff states jointly asked the court to lift the administrative stay and set a summary judgment briefing schedule, signaling both sides thought the case could be decided on the existing record.¹⁰ How vigorously the federal government will defend the integration mandate in its own briefing is an open question.

The Schedule and What Comes Next

The case is on a summary judgment track:¹⁰

May 4, 2026: The seven plaintiff states filed their summary judgment papers.
June 15, 2026: The federal government is scheduled to file its response.
June 22, 2026: Disability advocacy organizations plan to file amicus briefs supporting the integration mandate.
July 7, 2026: The states are scheduled to file their rebuttal papers.

After briefing closes, Judge Hendrix will rule on whether the challenged provisions survive. Whichever side loses is widely expected to appeal to the Fifth Circuit, and the case could eventually reach the Supreme Court.¹³

What a Ruling Could Change

The integration mandate, rooted in Olmstead, is the legal foundation that has driven states to move hundreds of thousands of people with disabilities out of institutions and into community-based housing and services over the past quarter century.¹⁴ If the court strikes down the 2024 rule’s integration provisions, disability advocates warn it could create legal uncertainty about whether Olmstead obligations survive in any enforceable regulatory form, particularly within the Fifth Circuit, where the Mississippi ruling has already narrowed “at risk” claims.¹⁵

The scale is large. As of 2023, roughly 692,000 people, primarily individuals with intellectual or developmental disabilities, were on Medicaid home and community-based services waiting lists, a number projected to grow as the population over 65 is expected to double by 2040.¹⁴

The constitutional challenge to Section 504 itself was dropped, so 504 plans in schools are not directly on the line in this case. Even so, disability education advocates have said a ruling weakening the regulatory framework could set a precedent for limiting what qualifies as a disability, making it harder for students to obtain 504 plans in the future. Texas, which is leading the lawsuit, has the highest percentage of students on 504 plans of any state, with over 400,000 students enrolled as of the 2023–24 school year.³

1
U.S. Department of Labor. Section 504, Rehabilitation Act of 1973
2
U.S. Department of Education. Section 504
3
New America. Section 504 Under Threat
4
U.S. Department of Health and Human Services. OCR Detailed Section 504 Fact Sheet
5
Judge David L. Bazelon Center for Mental Health Law. Update on Texas v. Kennedy
6
U.S. Department of Health and Human Services. Serving People With Disabilities in the Most Integrated Setting
7
Administration for Community Living. Section 504 Rule
8
DREDF. First Amended Complaint, Texas v. Kennedy
9
Civil Rights Litigation Clearinghouse. Texas v. Kennedy
10
DREDF. Protect 504
11
Indiana Capital Chronicle. Indiana Withdraws From Lawsuit Challenging Federal Disability Protections
12
STAT News. States Lawsuit Challenge Section 504 Rehabilitation Act
13
DREDF. Texas v. Kennedy 2026 Webinar
14
Harvard Law Review. Community Integration of People With Disabilities a Quarter Century After Olmstead v. L.C.
15
NASDDDS. Plaintiffs in Texas v. Kennedy Challenge Section 504 Integration Mandate