Nebraska Judge Denies State Request to Dismiss Lawsuit

A district court judge ruled that a legal challenge against a state Medicaid assessment algorithm may proceed.

Updated on Oct. 30, 2026 in Special Needs

Nebraska Judge Denies State Request to Dismiss Lawsuit

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Should the state be allowed to use undisclosed algorithms to set funding for public services?

Judge Darla Ideus denied the Nebraska Department of Health and Human Services request to dismiss a lawsuit challenging its Medicaid funding assessment tool. The court has also lifted a stay on the claims, allowing the case to move forward.

Why it matters

The lawsuit alleges that the state violated due process and the Developmental Disabilities Services Act by using an opaque algorithm to determine service funding. Residents rely on these assessments to secure necessary support for developmental disabilities.

Of the 2,800 Nebraskans assessed using the interRAI tool, 17% were moved to a lower funding tier. Plaintiff Nicholas Bessey saw his annual Medicaid funding cut by 35%, dropping from $194,379 to $126,437.

The players

Darla Ideus

She is the judge presiding over the district court case involving the state's Medicaid assessment tool.

Nicholas Bessey

He is a Bellevue resident whose Medicaid funding was significantly reduced following an assessment by the state.

Nebraska Department of Health and Human Services

This state agency manages Medicaid services and implemented the interRAI assessment tool for disability funding.

The details

The state implemented the interRAI algorithm in July 2025 to streamline Medicaid funding and reduce administrative costs. Plaintiffs contend the tool determines eligibility through undisclosed criteria, violating legal protections for individuals with developmental disabilities.

Nebraska implemented the interRAI assessment tool in July 2025.
The lawsuit was filed in district court in February 2026.
Judge Darla Ideus signed the order denying the dismissal on October 29, 2026.

Culture Shift

This case mirrors growing national scrutiny regarding the use of automated algorithms in state welfare and disability services. The legal challenge reflects a broader tension between administrative efficiency efforts and the protection of due process for vulnerable citizens.

For residents with developmental disabilities, the outcome of this case could force the state to adopt more transparent funding assessment criteria. If the current method is found to be in violation of the law, the state may be required to recalibrate funding tiers for recipients.

The takeaway

This ruling marks a significant procedural victory for those challenging the transparency of automated state funding tools. Families concerned about funding fluctuations should monitor the upcoming court proceedings for potential changes to the assessment process.