The lawsuit, filed against the US Department of Health and Human Services in federal court in Washington on behalf of three Medicaid recipients in the state, claims that the federal Medicaid law does not allow the administration to approve work requirements.
The case, filed by lawyers at the National Health Law Program Legal Aid of Arkansas and Southern Poverty Law Center, is similar to an earlier challenge to a work requirement program in Kentucky, which a judge has halted.
"This lawsuit has one goal, which is to undermine our efforts to bring Arkansans back into the workforce, increase worker training, and to offer improved economic prospects for those who desire to be less dependent on the government," Arkansas Governor Asa Hutchinson said in a statement.
He said it was necessary to have "an accountable system that does not leave thousands of able-bodied recipients on the Medicaid rolls."
HHS did not immediately respond to requests for comment.