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Oklahoma has joined three other states in a federal lawsuit against the U.S. Department of Health and Human Services over budget cuts that took effect Monday.

Maine, Maryland and New Jersey filed the lawsuit Friday in Washington, alleging the agency that runs Medicaid overstepped its bounds by passing an emergency rule in December that stripped tens of millions of dollars in appropriations for each state.

Oklahoma stands to lose at least $37 million under the new Medicaid rule. The rule narrows a field of state employees paid by Medicaid to connect troubled youths and the developmentally disabled with appropriate social services.

Several state agencies publicly opposed the new rule, but their objections weren't enough to prevent the rule from taking effect.

Oklahoma's Department of Human Services employs about 300 case managers who work with the state's disabled and children in need of medical care and relies on Medicaid to pay about 70 percent of their salaries, or about $34 million per year.

"This is a very essential link between the kids who need services and the services they need,” said Mike Fogarty, chief executive of the Oklahoma Health Care Authority.

Fogarty said leaders in Oklahoma and the three other states chose to settle the dispute in court as a last resort because Medicaid officials rushed through the normal rulemaking process and didn't allow adequate time for objections to be heard.

As of Monday, Fogarty said his agency can no longer pay claims related to targeted case management because of the new rule. He hopes a judge will rule within the next few days on an injunction to keep the rule from taking effect.

The state Office of Juvenile Affairs loses at least $3 million it receives to pay case workers who work with troubled and at-risk youths.

Gene Christian, the agency's director, said he fears it will lose $5 million more as a result of the new rule if his agency is no longer a qualified Medicaid provider. That lost funding could cause the closure of 74 of the Oklahoma's 222 beds at community group homes that provide mental health and substance abuse treatment.

"Many states have been scrambling to try to figure out how to deal with this situation,” Fogarty said.