Alliance Note: A lawsuit brought by nine states threatens one of the most important civil rights protections that allows people with disabilities, including those with mental health and substance use challenges, to live in their communities instead of institutions. This legal challenge puts decades of progress toward recovery, independence, and full community inclusion at risk.
What is Section 504 and why does it matter?
Section 504 of the Rehabilitation Act is a cornerstone federal disability civil rights law. It requires that any program or service receiving federal funding, including health care, housing, education, and social services, must not discriminate against people with disabilities.
Together with the Americans with Disabilities Act (ADA) and the landmark Olmstead Supreme Court decision, Section 504 helps ensure that:
- People with disabilities receive services in the least restrictive, most integrated setting possible
- States invest in community-based services and supports
- Individuals are not institutionalized when they can live in the community
- Public programs are accessible and provide reasonable accommodations
In 2024, the U.S. Department of Health and Human Services strengthened these protections through an updated Section 504 Final Rule. The rule clarified that states must actively prevent policies and practices that put people at risk of institutionalization and must ensure access to community services.
What’s at risk?
Nine states, Texas, Alaska, Florida, Indiana, Kansas, Louisiana, Missouri, Montana, and South Dakota, are now asking a federal court to:
- Declare the Section 504 Final Rule unlawful
- Stop federal enforcement of these protections
- Ultimately strike down Section 504 itself
If successful, this lawsuit could weaken or eliminate key protections that have prevented a return to large-scale, long-term institutionalization. It could make it harder for people to enforce their right to live in the community and could allow states to scale back investments in housing, crisis services, family supports, and other community-based services.
At the same time, national trends are already moving in a concerning direction, with growing investments in institutional capacity and renewed efforts to expand long-term psychiatric facilities. Without strong civil rights protections, the risk of re-institutionalization increases significantly.
Why this matters for our community
For people in recovery, community integration is not just a policy goal. It is the foundation of recovery. Access to housing, peer support, employment, crisis alternatives, and community-based treatment allows people to live meaningful lives with dignity and autonomy.
Weakening Section 504 would put these gains at risk and shift the system away from recovery and toward more restrictive, costly, and less effective institutionalization.
A call for collective advocacy
Disability rights organizations across the country are urging action. Collective advocacy is especially critical in the nine states that have filed this lawsuit, where governors and attorneys general have the authority to withdraw their participation.
We encourage advocates, providers, family members, and people with lived experience to:
- Contact the governors and attorneys general in these states and urge them to drop the lawsuit
- Share information about what Section 504 means for community living and recovery (Find information from DREDF here (Texas v. Kennedy (formerly Texas v. Becerra): What it is and How You Can Help Stop the Attack on Section 504 | DREDF)
- Stand in solidarity with national disability rights partners working to protect these essential civil rights
The disability community fought for decades to secure the right to live in the community. Now we must work together to protect it.
Community integration is not optional.
Civil rights are not negotiable.
Recovery is only possible when people have the freedom to live, work, and belong in their communities.
An Assault on Community Integration
By Rob Wipond | PsychForce Report | February 13, 2026
A lawsuit from nine states threatens to tear down core elements of the legislative framework that is preventing a return to mass-scale, long-term institutionalization of disabled people in America. Disability rights advocates are urging the public to speak out. Meanwhile, new data show that the numbers of psychiatric hospital beds, both for-profit and state-run, are rising across the country.
Background on the ADA and RA
The Americans with Disabilities Act (ADA) and the Rehabilitation Act (RA) together create a broad framework to prevent discrimination against, and promote community integration of disabled people, including those labeled with psychiatric diagnoses as well as those with physical, intellectual, or developmental disabilities.
There’s a concise explanation on the website of BraunAbility (a designer of accessible transportation solutions) of how the RA, especially its key section 504, requires federally funded programs and services to be non-discriminatory, and intertwines with the ADA, which applies more broadly across the public and private sector. A legal education website also describes how the RA and specifically Section 504 impose “anti-discrimination and affirmative action requirements on federal agencies, federal aid recipients, and government contractors” to help “ensure that people with disabilities have the opportunity to live independently, achieve self-determination, and participate fully in all aspects of society.”
The applications are countless. For example, these statutes uphold children’s rights to get individualized educational programs in schools, require employers to fairly consider reasonable accommodations for people in wheelchairs, and mandate that government services be accessible to people with hearing or sight impairments, and so on.
Both statutes were key aspects of the seminal U.S. Supreme Court Olmstead decision of 1999 (in this case, the two plaintiff-respondents were labeled as having both intellectual disabilities and psychiatric disorders). Olmstead declared that disabled people have the right to receive services in the “least restrictive” setting possible. The decision upheld people’s rights not to be unnecessarily subjected to long-term confinement in institutions, and to instead be “integrated” into society in community residential settings.
So for instance, in a subsequent court decision that was monitored for many years, the U.S. Department of Justice recently congratulated and released the state of Georgia from a settlement that had required the state to build supportive housing and other community services to promote “self-determination” for people who were being unnecessarily confined in psychiatric hospitals and other large institutions. (And notably, it’s these kinds of settlements that Trump’s 2025 executive order seemed to be targeting for shutdown in favor of more long-term involuntary commitments.)
Resistance to the Latest Section 504 “Final Rule”
Periodically, agencies responsible for overseeing and enforcing important federal statutes like these will issue updates or guiding “rules” to clarify how the laws are expected to be applied. These updates are often based on public consultations, new understandings, societal changes, and precedent court decisions that have occurred in the intervening time. In 2024, under the Biden Administration, the federal Department of Health and Human Services (HHS), issued a new “Final Rule” regarding how state agencies receiving federal funding are expected to comply with Section 504 of the Rehabilitation Act.
According to the Disability Rights Education and Defense Fund (DREDF), at the time, many disability rights advocates celebrated:
“Many disability advocates wrote to the government about what to put in the rules. The updated rules are stronger and have more examples about what disability discrimination is. The updated rules gave more explanation about how state and local agencies must make sure that people with disabilities can get services in the community and not be forced into institutions.”
However, likely seeing an opportunity after Trump came to power, in 2025, seventeen states launched a lawsuit challenging this new Final Rule—and further sought to have the entirety of RA Section 504 declared unconstitutional.
Some public furor erupted, and eight states subsequently backed out of the lawsuit—after protections for people diagnosed with “gender dysphoria disorder” were specifically removed from the Final Rule by HHS. However, nine states decided to continue on.
The New Attack
In the new, amended lawsuit, the states of Texas, Alaska, Florida, Indiana, Kansas, Louisiana, Missouri, Montana, and South Dakota have renewed their legal efforts to get the Final Rule and all of Section 504 of the RA declared unconstitutional. According to a statement from The Arc of the United States and other organizations:
“In the new complaint, the states are now asking the court to:
- declare that the entire Section 504 rule is unlawful,
- stop HHS from enforcing the entire rule, and
- stop HHS from telling states they cannot take actions that place people with disabilities at “serious risk” of institutionalization.”
Mainly, these states argue that Section 504 costs them too much financially already, and limits their abilities to be “innovating” their practices in whatever ways they believe is best. While their attack is specifically against the Final Rule and Section 504, the possible impacts could be even broader—as the states’ themselves make clear is their intent.
Indeed, a core component of the argument in the states’ lawsuit is that federal Medicaid primarily pays only for institutionalization and medical interventions—so, why should states be required to foot the bill for creating any community services at all?
The states also object to sections of the Final Rule that were designed to protect people more broadly from being discriminated against or institutionalized. For example, in their submission to the court, the states highlight a part of the Final Rule they find especially objectionable. This part says states should give equal family supports to parents with disabilities, that they should not take away a person’s child simply because the parent has a disability, and that they should not institutionalize a child against the parents’ will merely because the child has a disability, and so on. These examples, the states argue, demonstrate “how broad an impact” the Final Rule will “inflict” on state governments.
Another offshoot of the Olmstead decision has been that states have been required to build more robust crisis supports—such as facilities and services that provide short-term emergency assistance to help reduce the risk of people getting involuntarily committed to institutions. The states in the lawsuit object to this requirement as well, claiming that HHS “apparently gave no thought to whether that result was even achievable, or how much it might cost.”
Fighting Back
In their joint letter, The Arc of the United States, Bazelon Center for Mental Health Law, Center for Public Representation, and others write:
“If the states are successful in their challenge, it may be harder for disabled people to enforce their right to live and participate in the community. As a result, more people with disabilities may be forced into institutions when they can and want to live in the community instead. The disability community has fought long and hard for strong disability rights laws, and we cannot allow them to be weakened.”
The Disability Rights Education and Defense Fund has provided information and letter-templates on its website, and asks people to contact the governors and attorneys general of these nine states to request that they drop the lawsuit.
Paralleling Developments
Asking the states to drop the case appears to be the best strategy. With the quixotic HHS Secretary Robert F. Kennedy Jr. the new defendant in this amended case, Trump’s well-known desire to expand institutionalization, and this current U.S. Supreme Court frequently issuing sweeping decrees without any rationale, there’s no telling how devastating the result could be if this case advances.
There are also other worrying re-institutionalization efforts afoot.
There’s a new bill before Congress to repeal the law that limits Medicaid funding for larger psychiatric institutions (the so-called “IMD Exclusion”). This change continues to be heavily pushed by the influential pro-force lobby groups Treatment Advocacy Center and (pharma-funded) National Alliance on Mental Illness.
Simultaneously, the numbers of for-profit psychiatric hospitals has continued to increase significantly. In addition, an analysis last year found that the trend towards closing state hospital beds has stopped and, for three years running, state hospital bed numbers have been trending upwards nationally, and new state hospitals are also being built. One of the states in the Section 504 lawsuit, for example, is Texas — which in 2024 allocated $1.5 billion to construct seven new state psychiatric hospitals.
So, without more public resistance, on multiple fronts, the dismal prospect of a return to larger-scale, warehouse-like, long-term institutionalization appears ever more real.