The ruling stemmed from a lawsuit filed in August by the states seeking to prevent the federal government from implementing the rule to expand the Affordable Care Act (ACA), also known as Obamacare, to recipients of Deferred Action for Children Arrivals (DACA).

U.S. District Judge for the District of North Dakota Daniel M. Traynor granted the states a preliminary injunction and stay against enforcing the rule, stating that the Centers for Medicare and Medicaid Services (CMS) had "acted contrary to law" by providing federal health care benefits to DACA recipients, who are, by definition, not lawfully present in the United States.

The Department of Health and Human Services said on May 3 that the CMS had modified the definition of "lawfully present"—which is used to determine eligibility for coverage—to enable DACA recipients to legally enroll on the marketplace exchange.