Federal agencies’ use of personal data for immigration enforcement has faced growing legal scrutiny since states sued in 2025 over the transfer of Medicaid records to deportation officials. That dispute sharpened on July 17, when newly public court filings said data improperly shared by Medicaid officials with Immigration and Customs Enforcement was then shared with Palantir. The case is centered in federal court in California, but the records at issue involve Medicaid enrollees across multiple states.
Court filing says ICE passed improperly shared Medicaid data to Palantir
More than 20 Democratic attorneys general said in a motion filed Thursday, July 17, that the Centers for Medicare and Medicaid Services improperly shared a dataset containing millions of names with ICE, and that ICE then shared that data with Palantir, according to the filing and reporting by NPR. The same filings said CMS had first improperly shared the January 7 dataset with ICE, and that the federal government later acknowledged CMS inadvertently reshared it during a later attempt to transfer data from states not involved in the lawsuit.
The scale is significant. California Attorney General Rob Bonta’s office has said 78.4 million people were enrolled nationally in Medicaid and CHIP as of January 2025, while the attorneys general described the January transfer as a large and complex dataset that included data the court had already indicated was off limits, including information tied to citizens and lawful permanent residents. In the July filings, ICE official Alberto Briseno said personnel deleted the file after it was discovered and that it was not used for law enforcement purposes, according to the declaration described in the court record.
The new filing also said federal officials told plaintiffs that data shared with Palantir and other contractors had been sent over a Microsoft Teams chat and deleted from that chat, according to a declaration from California Deputy Attorney General Anna Rich. Judge Vince Chhabria has set further proceedings for August as the court works to clarify what categories of Medicaid information, if any, may lawfully be shared for immigration enforcement.
California is leading the coalition challenging the data-sharing arrangement, and the state attorney general’s office has tied the issue directly to Medi-Cal, which covers one in three Californians. The office also said California’s program covers more than 2 million noncitizens, including lawful residents and others who may receive either federally supported or state-only benefits.
What is confirmed is that California, Illinois and Washington were among the states whose Medicaid data files were transferred to the Department of Homeland Security in June 2025, according to the original complaint in the lawsuit. The complaint said those files contained personal health records representing millions of individuals and included personally identifiable information such as immigration status and addresses. What is not yet known is how many California residents were included in the January 7 dataset later referenced in the July 2026 court filings, or whether a comprehensive state-by-state breakdown will be released.
The federal court’s prior orders have focused on protecting data tied to people lawfully residing in the United States, and the coalition has asked the judge to force the government to explain exactly what was shared and how ICE used it. As of now, state officials have not released a full list of affected California enrollees, counties or local Medi-Cal offices.
The underlying conflict began in 2025, when CMS and the Department of Health and Human Services moved to review Medicaid enrollment data to determine whether federal funds were being used for people with what the agency called unsatisfactory immigration status. According to the multistate complaint filed July 1, 2025, states said they learned on June 13, 2025, that HHS had transferred Medicaid data files to DHS, and they cited reporting that career staff warned the transfer could violate federal law.
The complaint also linked the transfer to a broader federal effort to combine agency records for immigration enforcement. In that filing, the states cited media reports that Palantir had been enlisted to help build large government data repositories and noted reports that DHS and HHS had already adopted a Palantir product known as Foundry. The newer July 2026 filing went further by stating that data improperly obtained by ICE was in fact shared onward to Palantir.
For residents, the immediate practical effect is continued uncertainty over how healthcare enrollment records were handled after they left Medicaid systems. No court finding in the July 17 filing established that Palantir used the data operationally, and ICE said the file was deleted, but the coalition is asking the judge to require a fuller accounting. The next major marker in the case is the August hearing now scheduled in federal court in California.